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TMI Blog2023 (6) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... n on account of capital expenditure as made by the AO has been rightly done by the CIT(A) without any ambiguity so as to warrant interference. Appeal filed by the revenue is dismissed. - ITA No. 115/AHD/2019 - - - Dated:- 14-6-2023 - Shri Waseem Ahmed, Accountant Member And Shri T.R Senthil Kumar, Judicial Member For the Revenue : Shri Rakesh Jha, Sr. D.R For the Assessee : Shri Astha Maniar, A.R ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: By virtue of the order of the ITAT in MA No. 147/Ahd/2021 in (ITA No. 115/Ahd/2019) for AY 2014-15, vide order dated 03/06/2022, the ground of appeal bearing No. 4 in the appeal of revenue has been recalled for fresh adjudication which is reproduced as under: On the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable profit of the assessee company. On the contrary statutory auditor of the assessee is of the view that such excess wastage would ultimately result into benefit of enduring nature once we are successful in developing new product. Therefore it is clear that the assessee is not able to develop any new product and increase any profitability of the assessee concern. Further if any new product will be developed the same will give benefit of enduring nature. Therefore amount expended for product development of the assessee is not a revenue expenditure but a capital expenditure. Thus, the expenditure of product development expense shall be disallowed and added to the income of the assessee. 3. Aggrieved assessee preferred an appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .77,27431/- respectively. However, the A.O has not agreed with the contention of the appellant. On failure of the appellant to produce any documentary details and evidences regarding these expenses as well as by relying on the note of the statutory auditor of the appellant that the expenses of Rs. 5,31,82,295/- being related to R D activities, the A.O has proceeded to disallow the said amount 9.5 During the appellate proceedings the appellant has submitted that it is engaged in the business of manufacture and sale of HDPE bags. It admitted that apart from the regular commercial production it was also involved in the R D activities. The statutory auditors have determined the expenses towards development of new products by adopting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in respect of product development expenditure which were not examined by the A.O during the assessment proceedings. After considering the facts that the A.O has not examined these expenses during the assessment proceedings the said additional evidences were admitted and the A.O submitted its remand report on 7th October, 2016. It is observed from the remand report of the A.O that neither during the assessment proceedings nor during the remand proceedings the AO has ever raised the doubt about the genuineness of expenditure incurred for the product development. The only issue that remains on hand is whether the expenditure incurred is of capital in nature or revenue in nature. The appellant further submitted that it has not claimed in doub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee before us submitted that the ITAT in the own case of the assessee for the AY 2013-14, has allowed the identical issue in favour of the assessee. The Ld. AR before us vehemently supported the order of the Ld.CIT(A). 6. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the identical issue in the own case of the assessee for the AY 2013-14 in ITA No. 709/Ahd/2017, the ITAT vide order dated 04/08/2021 has allowed the issue in favour of the assessee. The relevant extract of the order is reproduced as under: 5. It is a fact that the appellant has not claimed double deduction in respect of the said expenditure. Although the amount amortized in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X
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