Case Law Details
ACIT Vs Rinder India Pvt. Ltd (ITAT Pune)
We note that the assessee company is engaged in the business of manufacturing of automobiles signaling lights and other electrical items. The assessee filed its return of income declaring a total income of Rs.2,56,73,220/- and the AO determined the same at Rs.4,31,12,090/- inter alia making disallowance of Rs.3,17,32,165/- vide its order dated 2912-2016 passed u/s. 143(3) r.w.s. 92CA(3) of the Act.
We note that the AO by placing reliance on his order for A.Y. 2011-12 treated the expenditure relating to product development charges as capital and allowed depreciation on the same. We note that the assessee treated the said expenditure as revenue. The ld. DR submits that though an appeal was filed before the CIT(A) for A.Y. 2011-12 challenging the order of AO and claiming the expenditure relating to product development charges as revenue was withdrawn. The ld. AR submits that in A.Y. 2012-13 the AO treated the said expenditure as capital but assessee treated as revenue in its books and claimed as revenue expenditure in the return of income. The CIT(A) however, allowed the same as revenue again which an appeal was preferred by the Revenue which was dismissed as withdrawn being low tax effect. The ld. AR submits that all along the assessee was treating the said expenditure which was incurred by the assessee for every two three months for development and designing for single light of motor vehicles as revenue in the books of the assessee. Likewise, in A.Y. 2013-14 also the assessee claimed said expenditure as revenue expenditure in the return of income and also treated the same as revenue in its books. The AO by following the A.Y. 2011-12 allowed only depreciation treating the same as capital. The ld. AR drew our attention to the Page No. 5 of the paper book and submits that the ground challenging the action of AO for A.Y. 2011-12 was withdrawn only to avoid further litigation by earlier management. On perusal of the same, we note that in A.Y. 2013-14 the assessee claimed as revenue expenditure in the return of income and treated the same as revenue in its books also. Thus, the CIT(A) however placing on its own order allowed the same as revenue expenditure vide Para No. 6 of the impugned order. The ld. AR vehemently argued that there was no concession made by the assessee before the AO, but, all along the assessee was challenging the disallowance made by the AO on account of product development charges treating expenditure incurred thereon as capital expenditure. Having considering the facts and circumstances of the case and also arguments of ld. AR and ld. DR, the issue of revenue expenditure as was not examined by the AO, therefore, we deem it proper to remand the issue to the file of AO for its fresh consideration.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the Revenue against the order dated 19-04-2018 passed by the Commissioner of Income Tax (Appeals)-6, Pune [‘CIT(A)’] for assessment year 2013-14. The assessee has filed Cross Objections in the appeal filed by the Revenue.
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