Deduction Claimed as R&D Expense For Development on Mechanism to Produce Customised Products Allowed
Case Law Details
Harsha Engineers Ltd. Vs DCIT (ITAT Ahmedabad)
The issue under consideration is whether deduction can be claimed under Research and Development (R&D) for Amount incurred towards development on a mechanism to produce customised products?
ITAT states that, the nature of the expenditure noted by the AO in the reply of the assessee and extracted (supra) then it would indicate that these are the expenditure which were incurred by the assessee for preparing pro-type or preparing a product specifically required by its customers. In other words, it has incurred certain expenditure for development on a mechanism which can help it to produce a product specifically demanded by a specific customer, and according to the needs of that customer. If any amount is being incurred towards R&D for the purpose of business for manufacturing customized products, then that can be considered under R&D which can be allowed under section 35(1)(iv) r.w.s. 35(2)(ia) of the Act. In view of the above discussion, ITAT are of the view that the claim of the assessee deserves to be allowed, and delete disallowance. In the result, appeal of the assessee is allowed.
FULL TEXT OF THE ITAT JUDGEMENT
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