Product Development Charges – Revenue or Capital Expense?

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 allow...