ACIT, New Delhi V. M/s. Karna Seaga Industries Ltd., New Delhi

ITA 2434/DEL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77727 (ITAT-DELHI)
• Duration Of Justice: 44 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Department
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: S N BHATIA
• Assessee Lawyers: SANJAY VOHRA
• Keywords: Reopening of assessment; Capital asset; Search and seizure; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 147; 148; 37

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI G. D. AGARWAL, HONBLE VICE PRESIDENT AND SHRI A. T. VARKEY, JUDICIAL MEMBER I TA NO. 2433 /DEL/ 2010 (ASSESSMENT YEAR: 2004 - 05) ACIT, CIRCLE - 8(1), ROOM NO. 163, C.R. BUILDING, NEW DELHI VS. KARNA SEAGA INDUSTRIES LTD., (NOW SEAGA INDIA (P) LTD.), D - 302, RAJASTHAN APARTMENTS, PLOT NO. 36, SECTOR - 4, DWARKA, NEW DELHI PAN AAACK0236D (APPELLANT) (RESPONDENT) I TA NO. 2434 /DEL/ 2010 (ASSESSMENT YEAR: 2006 - 07) ACIT, CIRCLE - 8(1), ROOM NO. 163, C.R. BUILDING, NEW DELHI VS. KARNA SEAGA INDUSTRIES LTD., (NOW SEAGA INDIA (P) LTD.), D - 302, RAJASTHAN APARTMENTS, PLOT NO. 36, SECTOR - 4, DWARKA, NEW DELHI PAN AAACK0236D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. N. BHATIA, SR. DR RESPONDENT BY: SANJAY VOHRA, CA O R D E R PER A. T. VARKEY , JUDICIAL MEMBER TH ESE TWO APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - VIII , NEW DELHI DATED 20.01.2010 , FOR THE ASSESSMENT YEAR S 2004 - 05 AND 2006 - 07 . 2. THE GROUNDS RAISED BY THE REVENUE IN ITA NO. 2433/DEL/2010 FOR ASSESSMENT YEAR 2004 - 05 ARE AS FOLLOWS: - 1. LD COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER U/S 147/ 143(3) IS NOT SUSTAINABLE IN LAW. 2. LD COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELETING T HE ADDITION OF RS. 34,88,584/ - MADE BY THE ASSESSING OFFICER BY CAPITALIZING THE EXPENDITURE INCURRED BY THE ASSESSEE DURING THE YEAR FOR DEVELOPING NEW PRODUCTS. 3. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND OF APPEAL AT ANY TI ME BEFORE OR DURING THE HEARING OF THIS APPEAL. PAGE NO. 2 3. THE GROUNDS RAISED BY THE REVENUE IN ITA N O . 2434 /DEL/2010 FOR ASSESSMENT YEAR 2006 - 07 ARE AS FOLLOWS: - 1. LD COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELETING THE ADDITION OF RS. 43,85,584/ - MADE BY THE ASSESSING OFFICER BY CAPITALIZING THE EXPENDITURE INCURRED BY THE ASSESSEE DURING THE YEAR FOR DEVELOPING NEW PRODUCTS. 2. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER ADD OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 4 . APROPOS GROUND NO. 1, IN ITA NO. 2433/DEL/2010 FOR ASSESSMENT YEAR 2004 - 05, WHEREIN THE LD CIT(A) HELD THAT THE REOPENING OF ASSESSMENT IN TERMS OF SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) FOR ASSESSMENT YEAR 2004 - 05 IS NOT SUSTAINABLE IN LAW. 5 . BRIEF FACTS OF THE CASE IS THAT THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF MOULDS AND DIES, VISI COOLERS AND D EEP FREEZERS, HOT BEVERAGE VENDING MACHINES AND TRADING IN REFRIGERATION APPLIANCES AND STABILIZERS. IN THE ASSESSMENT PROCEEDING FOR THE ASSESSMENT YEAR 2004 - 05 AND RETURN OF INCOME IN THIS CASE RETURN WAS FILED U/S 139(1) OF THE ACT ON 29.10.2004 REFLECT ING A LOSS OF RS. 1,73,05,130/ - . THE SAME WAS ASSESSED AT A REDUCED LOSS OF RS. 1,7 1 , 44,330 / - VIDE ORDER U/S 1 43 (3) DATED 2 8 .09.2005. SUBSEQUENTLY , A NOTICE U/S 148 WAS ISSUED IN THIS CASE ON 31.01.2008. IN RESPONSE TO THE SAID NOTICE VIDE LETTER DATED 26.08.2008 THE ASSESSEE HAS FILED A RETURN DEPICTING LOSS OF RS. 1, 71,44,227/ - I.E. AT WHICH THE LOSS WAS ASSESSED VIDE ORDER U/S 143 ( 3). VIDE LETTER DATED 26.03.2008 , THE ASSESSEE RAISED OBJECTIONS REGARDING INITIATION OF REASSESSMENT PROCEEDINGS IN THIS CASE. THE SAID OBJECTION WAS REJECTED BY THE ASSESSING OFFICER VIDE ORDER DATED 10.10.2008 AND THE ASSESSING OFFICER PROCEEDED TO REASSESS THE ASSESSE E. THE REASON STATED WAS THAT SINCE THE ASSESSEE HAD WRONGLY CLAIMED DEDUCTION OF RS. 34,88,584/ - ON AC COUNT OF DEVELOPING NEW PRODUCT S FOR ITS COMPUTATION OF INCOME , EVEN THOUGH, THE ASSESSEE IN ITS OWN ACCOUNT HAS NOT CLAIM ED THE SAID EXPENDITURE AS REVE NUE AND REPRODUCED THE NOTE 8 TO PART - B OF SCHEDULE 15(NOTES TO THE ACCOUNTS & STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES): EXPENSES ON DEVELOPING NEW PRODUCTS INCLUDES EXPENDITURE ON MATERIAL COST, FOREIGN TRAVEL, SALARY, WAGES & OTHER DIRECT COST AMOU NTING TO RS. 34,88,854/ - INCURRED DURING THE YEAR WHICH HAVE BEEN CERTIFIED BY THE MANAGEMENT AS A RESEARCH & DEVELOPMENT COST & HAS BEEN AMORTISED AS PER THEIR ASSESSMENT OVER A PERIOD OF TEN YEARS. PAGE NO. 3 6 . THEREFORE THE ASSESSING OFFICER FINDS THAT THE ASSESSEE COMPANY HAS ADOPTED A DIAMETRICALLY OPPOSITE POLICY IN CLAIMING THE SAID EXPENSES AS REVENUE EXPENDITURE IN THE COMPUTATION OF ITS INCOME FOR INCOME - TAX PURPOSE, WHICH ACCORDING TO THE ASSESSING OFFIC ER IS CONTRARY TO ITS OWN CLEAR CUT POLICY AS ENUNCIATED IN THE NOTES TO THE ACCOUNT AS STATED ABOVE AND ON THE BASIS OF THE SAME THE ASSES SING OFFICER HELD THAT S INCE ENDURING BENEFITS ARE ACCRUING T O THE ASSESSEE BY INCURRING THE SAID EXPENDITURE FOR DEVELOPING NEW PRODUCTS , THE SAID EXPENSES COULD NOT BE ALLOWED AS REVENUE EXPENDITURE AND THE SAME IS REQUIRED TO BE CAPITALIZED. ACCORDINGLY THE SAID CLAIM OF RS. 34,88,584/ - WAS DIS ALLOWED BY ASSESSING OFFICER AND THUS THE ASSESSED LOS S WAS COMPUTED TO RS. 1,36,55,746/ - . 7 . AGGRIEVED BY THE SAID ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A) WHO WAS PLEASED TO ALLOW THE APPEAL AND DIRECTED DELETION OF THE SAID ADDITION MADE BY THE ASSESSING OFFICER VIDE ORDER DATED 21.11.2010. ASSAILING THE SAID ORDER OF THE LD CIT(A), THE REVENUE IS BEFORE US. 8 . THE LD DR CONTENDED THAT THE ASSESSING OFFICER RIGHTLY FOUND THAT THE ASSESSEE COMPANY HAD ADOPTED A DIAMETRICALLY OPPOSITE POLICY IN CLAIMING THE SAID E XPENSES AS REVENUE EXPENDITURE IN THE COMPUTATION OF INCOME WHICH WAS TOTALLY CONTRARY TO ITS CLEAR - CUT POLICY, WHICH CAN BE NOTICED WHILE PERUSING SCHEDULE 15 WHEREIN IT HAS BEEN CLEARLY MENTIONED THAT THE EXPENSES INCURRED ON DEVELOPING NEW PRODUCTS WILL BE AMMORTISED AS PER THE ASSESSMENT OVER A PERIOD OF TEN YEARS. THEREFORE THE LD DR CONTENDS THAT THE ASSESSING OFFICER RIGHTLY REOPEN ED THE ASSESSMENT AND HAS BROUGHT ON RECORD THE WRONG DISALLOWANCE CLAIMED BY THE ASSESSEE IN THIS CASE. IN THE SAID FACTUAL GROUND, ACCORDING TO THE LD DR THE LD CIT(A) ERRED IN HOLDING THAT THE REOPENING OF ASSESSMENT WAS BAD IN LAW AND THEREFORE, THE IMPUGNED ORDER IS N OT SUSTAINABLE IN LAW AND SO INVALID . ON THE OTHER HAND THE LD AR SUBMITTED THAT THE REASSESSMENT P ROCEEDING HAVE BEEN INITIATED WITHOUT COMPLYING AND SATISFYING THE REQUIREMENT OF THE PROVISIONS OF SECTION 147 OF THE ACT AND CONTEN D ED THAT IF AN ASSESSING OFFICER HAS TO REASSESS ANY INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT FOR AN ASSESSMEN T YEAR ONLY IF HE HAS REASON TO BELIEVE OF ESCAPEMENT OF SUCH INCOME. ACCORDING TO THE LD AR REOPENING OF ASSESSMENT PROCEEDINGS OF A PREVIOUS ASSESSMENT YEAR CAN TAKE PLACE ONLY (A) AFTER THE ASSESSING OFFICER HAS SATISFIED THE ASSESSEE THAT THERE ARE CLINCHING EVIDENCE AND MATERIALS WHICH HAS COME TO HIS NOTICE NOW ; AND THAT NON - DISCLOSURE OF THE SAME AT PAGE NO. 4 THE TIME OF ASSESSMENT PROCEEDINGS RESULTED IN UNDER ASSESSMENT OF INCOME AND (B) NOT WITHSTANDING THAT THERE HAS BEEN AN OMISSION OR FAILURE ON THE P ART OF THE ASSESSEE, AND HE (ASSESSING OFFICER) IS IN POSSESSION OF AN INFORMATION WITH WHICH HE HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THEREFORE ACCORDING TO THE LD AR IN THE PRESENT CASE THERE WAS NO NEW TANGIBLE MATE RIAL BEFORE THE ASSESSING OFFICER TO REOPEN THE CASE AND THE MATERIAL THAT CAME TO THE NOTICE OF THE ASSESSING OFFICER WAS MERELY AN INFERENCE BASED ON THE ACCOUNTING POLICY READ FROM THE NOTE TO THE ACCOUNTS A S STATED IN THE ANNUAL REPORT FURNISHED BY THE ASSESSEE . IT WAS SUBMITTED THAT THE ISSUE OF DEFERRED REVENUE EXPENDITURE WAS EXAMINED AND DULY COVERED DURING THE SCRUTINY ASSESSMENT PROCEEDINGS U/S 143(3) WHICH CAN BE SEEN FROM THE REPLY FILED ON 14.09.2005 BY THE ASSESSEE AND IT WAS STATED THAT TH E ASSESSEE HAS DISCLOSED FULLY AND HONESTLY ALL THESE FACTS IN ITS RETURN FILED . IT WAS ALSO POINTED OUT BY THE LD AR THAT THE IN THE PAST ASSESSMENTS ALSO THE TREATMENT OF THE EXPENSES INCURRED ON RESEARCH AND DEVELOPMENT OF PRODUCTS WERE CONSIDERED AND A CCEPTED AS ALLOWABLE EXPENDITURE AND THE ASSESSING OFFICER CANNOT TAKE A DIFFERENT VIEW IN THIS REGARD CONSIDERING THE PAST HISTORY OF THE CAS E. THE LD AR SUBMITTED THAT THE ISSUE OF DEFERRED REVENUE EXPENSES WAS RAISED IN THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS AND THE SAME WAS EXPLAINED IN DETAIL BY ASSESSEES REPLY LETTER DATED 14.08.2005 BEFORE THE PREDECESSOR AO AND THEREFORE IT WAS NOT OPEN TO THE PRESENT ASSESSING OFFICER TO TAKE A DIFFERENT VIEW AS THE S AME WOULD AMOUNT TO REVIEW OF ASSESSMENT. ACCORDING TO THE LD AR THE POWER TO REOPEN THE ASSESSMENT HAVE TO BE EXERCISED WITH DUE CAUTION AND IT SHOULD NOT BE EXERCISED ARBITRARILY ON THE BASIS OF MERE CHANGE OF OPINION. THEREFORE THE LD AR PLEADED THAT THE REASON FOR REOPENING ARO SE NOT OUT OF THE REASON TO BELIEVE BUT MERELY WAS A CHANGE OF OPINION AND THERE FORE, THE REOPENING OF THE CASE SHOULD BE TREATED AS BAD IN LAW AND HENCE CANNOT BE SUSTAINED IN THE EYES OF LAW AND PLEADS THAT LDCIT(A) HAS RIGHTLY DECIDED THE ISSUE AND THER EFORE WE MAY NOT DISTURB THE SAME. 9 . THE LD DR CITED THE FOLLOWING CASES TO JUSTIFY THE REOPENING AND REASSESSMENT: - S. SRINIVASAN VS. CIT (1975) 101 ITR 94 (MAD), VE.A. VAIRAVAN CHETTIAR VS. CIT (1973) 92 ITR 474 (MAD) AND SMT. NIRMLA BIRLA VS. ITO (1976 ) 105 ITR 483 (CAL) . 10 . THE LD AR CITED THE FOLLOWING CASES TO CONTEND THAT MERELY ON CHANGE OF OPINION, ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT: - PAGE NO. 5 PHOOL CHAND BAJRANG LAL VS. ITO (1993) 203 ITR 456, BALDEO RAM SALIG LTD. VS. ITO (1991) 198 ITR 554, ALLAHABAD BANK VS. CIT (1993) 199 ITR 664, CIT VS. PUNJAB FINANCIAL CORPORATION (1990) 183 ITR 438 11 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE RECORDS AND THE CASE LAWS CITED BEFORE US . A PERUS AL OF THE ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE EXPENSES OF RS. 34,88,584/ - INCURRED ON DEVELOPING NEW PRODUCTS AND HELD THAT THE SAME ARE NO T REVENUE EXPENSES AND THEREFORE IT WAS REQUIRED TO BE CAPITALIZED AS THEY PROVIDE ENDURING BENEFITS TO THE A SSESSEE. A PER USAL OF THE NOTICE ISSUED U/S 147 OF THE ACT ON 31.01.2008 REVEALS I HAVE REASON TO BELIEVE YOUR INCOME CHARGEABLE TO TAX IN ASSESSMENT YEAR 2004 - 05 HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT ; AND IN THE REASONS GIVEN FOR REOPENING OF THE CASE IT HAS BEEN RECORDED BY THE ASSESSING OFFICER THAT IT IS SEEN FROM RECORDS THAT ASSESSEE HAD CLAIMED AND WAS ALLOWED DEDUCTION OF RS. 34.89 LAKHS ON ACCOUNT OF DEVELOPING OF NEW PRODUCTS IN COMPUTATION OF TAXABLE INCOME/ LOSS. AS EXPENSES INCURRED ON DEVELOPING OF NEW PRODUCTS GAVE AN ADVANTAGE OF ENDURING BENEFITS TO THE ASSESSEE, IT WAS REQUIRED TO BE CAPITALIZED. THE EXPENDITURE OF RS. 34.89 LAKHS WAS CAPITAL EXPENDITURE AND WAS LIABLE TO BE DISALLOW ED/ADDED BACK. THEREFORE, I HAVE REASONS TO BELIEVE THAT INCOME OF RS. 34.89 LAKHS HAS ESCAPED ASSESSMENT BY WAY OF OVER - ASSESSMENT OF LOSS. NEITHER F ROM A PERUSAL OF THE NOTICE TO RE - OPEN , NOR IN THE REASON TO REOPEN, OR IN THE IMPUGNED ASSESSMENT ORDER T HERE IS A WHISPER ABOUT ANY NEW MATERIAL OR INFORMATION IN THE HANDS OF THE ASSESSING OFFICER, WHICH COULD HAVE BEEN THE BASIS FOR THE ASSESSING OFFICER TO FORM A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) WHERE THE COURT HELD THAT: - ' ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO RE - OPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO RE - OPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO RE - ASSE SS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO RE - ASSESS. BUT RE - ASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRE - CONDITION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT. THEN, IN THE GARB OF RE - OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 1989, ASSESSING OFFICER HAS POWER TO PAGE NO. 6 RE - OPEN , PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR VIEW GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 OF THE ACT, AS QUOTED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BELIEVE' BUT ALSO INSERTED THE WORD 'OPINION' IN SECTION 147 OF THE ACT. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES AGAINST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIAMENT RE - INTRODUCED THE SAID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT IT WOULD VEST ARBITRARY POWERS IN THE ASSES SING OFFICER. WE QUOTE HEREINBELOW THE RELEVANT PORTION OF CIRCULAR NO.549 DATED 31ST OCTOBER, 1989, WHICH READS AS FOLLOWS: '7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO REINTRODUCE THE EXPRESSION REASON TO BELIEVE' IN SECTION 147. - A NUMBER OF REPRES ENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS REASON TO BELIEVE' FROM SECTION 147 AND THEIR SUBSTITUTION BY THE OPINION' OF THE ASSESSING OFFICER. IT WAS POINTED OUT THAT THE MEANING OF THE EXPRESSION, REASON TO BELIEVE' HAD BEEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN PAST ASSESSMENTS ON MERE CHANGE OF OPINION. TO ALLAY THESE FEARS, THE AMENDING ACT, 1989, HAS AGAIN AMENDED SECTION 147 TO REINTRODUCE THE EXPRESSION HAS REASON TO BELIEVE' IN PLACE OF THE WORDS FOR REASONS TO BE RECORDED BY HIM IN WRITING, IS OF THE OPINION'. OTHER PROVISIONS OF THE NEW SECTION 147, HOWEVER, REMAIN THE SAME. ' FOR THE AFORE - STATED REASONS, WE SEE NO MERIT IN THESE CIVIL APPEALS FILED BY THE DEPARTMENT, HENCE, DISMISSED WITH NO ORDER AS TO COSTS.' 12 . THE REASON S RECORDED BY THE ASSESSING OFFICER TO RE - OPEN THE ASSESSMENT, DISCLOSE THAT THE ASSESSING OFFICER REACHED THE BELIEF THAT THERE WAS ESCAPEMENT OF INCOME WHILE GOING THROUGH THE VERY SAME RECORDS OF THE ASSESSEE WHICH WERE THERE BE FORE THE PREDECESSOR ASSESSING OFFICER AND THERE WAS NO MENTION OF ANY NEW MATERIAL OR ANY NEW INFORMATION OR ANY NEW FACTS WHICH WAS NOT DISCLOSED BY THE ASSESSEE EMERGE D FROM THE RECORD AND ITS IS EVIDENT FROM THE WORDS OF THE ASSESSING OFFICER ITSELF IT IS SEEN FROM THE RECORDS AND THEREFORE IT WAS NOTHING MORE THAN THE DIFFERENCE OF OPINION IN RESPECT TO THE IMPUGNED EXPENSE , WHICH CANNOT BE T HE REASON TO BELIEVE ESCAPEMENT OF TAX AS CONTEMPLATED IN SECTION 147 OF THE ACT AS HELD BY THE HONBLE APEX COURT AND JURISDICTIONAL HIGH COURT IN A PLETHORA OF CASES . F ROM A PERUSAL OF THE ASSESSMENT ORDER , WE CAN GATHER THAT THE DISCLOSURE IN NOT E NO. 9 OF SCHEDULE 15 FORM ING PART OF THE AUDITED BALANCE SHEET AND IT IS A MATTER O F RECORD THAT THE ASSESSEE HAS BEEN CONTINUOUSLY SINCE ASSESSMENT YEAR 1998 - 99 AMORTIZ ING THE COST OF RESEARCH EXPENSES OVER A PERIOD OF 10 YEARS AND CLAIMING THE PAGE NO. 7 SAME AS EXPENDITURE IN THE COMPUTATION OF INCOME. SINCE ALL THE EXPENSES INCURRED ARE OF REVENUE IN NATURE, THE SAID ACCOUNTING POLICY FOLLOWED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ACCOUNTING STANDARD 8 ISSUED BY THE ICAI. AS PER THE DECISION REFERRED IN THE CASE OF CIT VS. EICHER LTD 294 ITR 310. IT IS CLEAR THAT WHERE THERE WAS A FULL AND TRUE DISCLOSURE BY THE ASSESSEE , REASSESSMENT ON A MERE CHANGE OF OPINION WAS NOT PERMISSIBLE. IN THE PRESENT APPEAL , W E FIND THAT THERE WAS FULL AND TRUE DISCLOSURE BY THE ASSESSEE BRINGING OUT THE FACT THAT THE AMOUNT OF RS. 34.89 LACS PERTAINING TO RESEARCH EXPENSES WAS CAPITALIZED AS PER ITS ACCOUNTING POLICY AND SINCE THE NATURE OF EXPENDITURE WAS REVENUE, IT WAS CLAIMED IN THE COMPUTATION OF INCOME. THE ASSESSEE HAD MA DE DISCLOSURE ABOUT THE SAID EXPENSES AT TWO PLACES, ONE IN THE NOTES TO ACCOUNTS FORMING PART OF BALANCE SHEET AND SECOND IN THE ACCOMPANYING NOTES TO THE RETURN OF INCOME. ACCORDING TO THE ASSESSING OFFICER, THE ORIGINAL ASSESSMENT ORDER IS SILENT ON THIS ISSUE, THEREFORE HE FINDS THAT THIS ISSUE WAS NOT LOOKED INTO BY THE PREDECESSOR ASSESSING OFFICER AND THIS FACILITATED AN ESCAPEMENT OF INCOME, CANNOT BE COUNTENANCED BY US. WE FIND ON RECORD ASSESSEES REPLY TO ASSESSING OFFICERS NOTICE U/S 143(2) TO A SPECIFIC QUERY IN THIS RESPECT FOR THE ORIGINAL ASSESSMENT YEAR, I.E. LETTER DATED 14 TH SEPTEMBER, 2005, IN WHICH THE DETAILS OF EXPENSES UNDER THE HEAD OF DEVELOPMENT/ TECHNICAL KNOW - HOW IN RESPECT TO EXPENDITURE INCURRED TOWARDS RESEARCH AND DEVELOP MENT OF ITS PRODUCTS WERE EXPLAINED IN DETAIL. THEREFORE WE CAN SAFELY ASSUME THAT THE PREDE CESSOR ASSESSING OFFICER H AS APPLIED HIS MIND AND WAS SATISFIED WITH THE REPLY AND DOCUMENTS PRODUCED BEFORE HIM BY THE ASSESSE . SO HIS NON - MENTIONING OF THIS ISSUE CANNOT BE THE GROUND TO RE - OPEN. IN CIT VS. KELVINATOR OF INDIA LTD. 256 ITR 1, FULL BENCH OF HONBLE DELHI HIGH COURT HAS UNEQUIVOCALLY HELD THAT A MERE CHANGE OF OPINION WOULD NOT CONFER JU RISDICTION UPON THE ASSESSING OFFICER TO REOPEN PROCEEDINGS WITH OUT ANY MATERIAL OR INFORMATION AND IF THE ASSESSING OFFICER WAS ALLOWED TO DO SO, THE SAME WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI - JUDICIAL FUNCTION TO TAKE BENEFIT OF ITS WRONG. IT IS A WELL SETTLED LAW THAT THE ASSESSING OFFICER CANNOT REVIEW ITS OWN ORDERS. 13 . THE LD CIT(A) HAS CLEARLY MADE A FINDING THAT THE ISSUE OF DEFERRED REVENUE EXPENSES HAD CROPPED UP IN THE REGULAR ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE ASSESSEE COMPANY VIDE ITS LETTER DATED 14.09.2005 HAD SUBMITTED A DETAILED EXPLANATION AS PER PARA 6 OF THE SAID REPLY AND FROM THE PAGE NO. 8 PERUSAL OF THE SAID REPLY THE LD CIT(A) HAS NOTED THAT THIS ISSUE WAS NO T ONLY RAISED IN THE YEAR UNDER CONSIDERATION BUT ALSO IN THE ASSESSMENT YEAR 2001 - 02 ; THIS ISSUE WAS EXAMINED BY THE ASSESSING OFFICER AND THE CLAIM OF THE APPELLANT COMPANY WAS ALLOWED. IN THIS FACTUAL BACKGROUND , THE LD CIT(A) HELD THAT THE ASSESSING O FFICER COULD NOT HAVE HELD THAT THE ISSUE OF DEFERRED REVENUE EXPENDITURE WAS NOT EXAMINED BY THE ASSESSING OFFICER IN THE SCRUTINY PROCEEDING S U/S 143(3). WE DO NOT FIND FROM THE RECORD S TO SUGGEST THAT SUBSEQUENTLY AFTER ASSESSMENT YEAR 2001 - 02, ANY ACTION OTHER THAN THIS REASSESSMENT HAS BEEN TAKEN BY THE DEPARTMENT TO REOPEN THE ASSESSMENTS OF EARLIER YEARS WHERE DEFERRED REVENUE EXPENSES HAVE BEEN CLAIMED IN ITS ENTIRETY BY THE ASSESSEE COMPANY AND WHICH WERE ALLOWED BY THE ASSESSING OFFICER AN D WE FIND FORCE IN THE ARGUMENT OF THE LD AR THAT THERE WAS NO FRESH MATERIAL, LET ALONE ANY TANGIBLE MATERIAL IN THE POSSESSION OF THE ASSESSING OFFICER SO AS TO EMPOWER/ ENABLE HIM TO TAKE RECOURSE TO THE PROVISIONS OF SECTION 147 OF THE ACT. THEREFORE, THE CONCLUSION OF THE LD CIT(A) THAT THE REOPENING OF ASSESSMENT WAS BASED MERELY ON CHANGE OF OPINION IS CORRECT AND THEREFORE WE CONFIRM THE SAME AND TH IS GROUND OF APPEAL OF REVENUE FAIL S AND IS THEREFORE DISMISSED. 14. SINCE THE SECOND GROUND IN BOTH THE APPEALS ARE THE SAME THAT IS IN RESPECT TO MERITS OF THE ADDITION, WE ARE ADJUDICAT ING THE SAME TOGETHER. 15 . APROPOS THE DELETION OF ADDITION OF RS. 34,88,584/ - FOR ASSESSMENT YEAR 2004 - 05 AND RS. 43,85,584 FOR ASSESSMENT YEAR 2006 - 07, MADE BY THE A SSESSING OFFICER ON CAPITALIZING THE EXPENDITURE INCURRED FOR DEVELOPMENT OF NEW PRODUCTS. 16 . BRIEF FACTS OF THE CASE IS THAT THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF MOULDS AND DIES, VISI COOLERS AND DEEP FREEZERS, HOT BEVERA GE VENDING MACHINES AND TRADING IN REFRIGERATION APPLIANCES AND STABILIZERS. IN THE ASSESSMENT PROCEEDING FOR THE ASSESSMENT YEAR 2004 - 05 AND THE RETURN OF INCOME IN THIS CASE WAS FILED U/S 139(1) OF THE ACT ON 29.10.2004 REFLECTING A LOSS OF RS. 1, 71,44,3 30 / - . THE SAME WAS ASSESSED AT A REDUCED LOSS OF RS. 1,73,05,130/ - VIDE ORDER U/S 134(3) DATED 20.09.2005. SUBSEQUENTLY, A NOTICE U/S 148 WAS ISSUED IN THIS CASE ON 31.01.2008. IN RESPONSE TO THE SAID NOTICE VIDE LETTER DATED 26.08.2008 THE ASSESSEE. THE ASSESSEE HAS FILED A RETURN DEPICTING LOSS OF RS. 1, 71,44,227/ - I.E. AT WHICH THE LOSS WAS ASSESSED VIDE ORDER U/S 143 ( 3). VIDE ORDER DATED 26.03.2008 THE ASSESSEE HAS RAISED OBJECTIONS REGARDING INITIATION OF REASSESSMENT PROCEEDINGS IN PAGE NO. 9 THIS CASE. THE S AID OBJECTION WERE REJECTED BY THE ASSESSING OFFICER VIDE ORDER DATED 10.10.2008 AND THE ASSESSING OFFICER PROCEEDED TO REASSESS THE ASSESSEE. THE REASON STATED WAS THAT SINCE THE ASSESSEE HAD WRONGLY CLAIMED DEDUCTION OF RS. 34,88,584/ - ON ACCOUNT OF DEVELOPING NEW PRODUCTS FOR ITS COMPUTATION OF INCOME. 17. FOR ASSESSMENT YEAR 2006 - 07, THE ASSESSEES CASE WAS PICKED UP FOR SCRUTINY AND DISALLOWED THE EXPENDITURE TO THE TUNE OF RS. 43,85,584/ - INCURR ED BY THE ASSESSEE FOR DEVELOPING NEW PRODUCTS. 18 . THE LD DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE IN HIS OWN ACCOUNTS HAS TREATED THE SAID EXPENSES INCURRED ON RESEARCH AND DEVELOPMENT COST AS CAPITAL EXPENSES, T HEREFORE, THE ASSESSEE COMPANY NOW CANNOT TURN AROUND AND CLAIM THAT THE SAID EXPENSES ARE REVENUE EXPENSES WHILE COMPUTING THE INCOME. THEREFORE, THE ASSESSING OFFICER DISALLOWED THE SAID EXPENSES AND ADD ED THE SAID CAPITAL EXPENSES TO THE TOTAL INCOME OF THE ASSESSEE. IT WAS ALSO POINTED OUT BY THE LD DR THAT THE SAID EXPENSES INCURRED ON RESEARCH AND DEVELOPMENT COULD NOT BE ALLOWED AS REVENUE EXPENSES AND IT REQUIRED TO BE CAPITALIZED WITHOUT ANY DOUBT , SINCE ENDURING BENEFITS ACCRUE TO THE ASSESSEE BY DEVELOPMENT OF NEW PRODUCTS. ON OTHER HAND THE LD AR DR EW OUR ATTENTION TO THE RETURN OF INCOME IN WHICH THOUGH THE SUM OF RS. 34,88,584/ - HAD BEEN STATED TO THE CAPITALIZED , BUT IT HAD BEEN ADDED TO THE LOSS CLAIMED SINCE THE ENTIRE EXPENDITURE WAS OF A REVENUE NATURE. NOTE 3 ATTACHED TO THE RETURN FILED IS PRODUCED BELOW: - THE ASSESSEE HAS INCURRED EXPENSES OF R. 3,88,584/ - WHICH ARE OF REVENUE NATURE BUT HAD BEEN CAPITALIZED IN THE BALANCE SHEET. SINCE ALL THESE EXPENSES ARE OF REVENUE NATURE AND ALLOW ABLE UNDER SECTION 37 OF THE INCOME TAX ACT, THE SAME HAVE BEEN CLAIMED ALLOWABLE AS PER LAW. ACTUAL WRITE - OFF OF THESE EXPENSES HAS, THEREFORE, BEEN ADDED BACK IN THE AFORESAID COMPUTATION. 19 . LD AR POINTED OUT THAT FROM ASSESSMENT YEAR 1998 - 99 , SIMILAR EXPENDITURE HAD BEEN CAPITALIZED IN THE BOOKS AND IT WAS CLAIMED AS A REVENUE EXPENSES AND ALLOWED IN FULL BY THE ASSESSING OFFICER. THEREFORE, LD AR SUBMITTED THAT SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE EARLIER YEARS ARE SIMILAR AND SINCE THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES , THE ASSESSING OFFICER ERRED IN REOPENING AND DISALLOWING THE EXPENDITURE AND THEREFORE NEED TO SET - ASIDE ON THE GROUND OF CONSISTENCY ALONE AS HELD BY THE HON BLE SUPREME COURT IN THE CASES RADHASOAM I SATSANG VS. CIT (1992) 193 ITR 321 (SC), CIT VS. RAJEEV GRINDING MILLS (2005) 279 ITR 86 (DELHI), COMMISSIONER OF INCOME - TAX VS. NEO POLY PACK (P) LTD (2000) 245 ITR 492 PAGE NO. 10 (DEL), CWT VS. RKKR INTERNATIONAL (P) LTD (2005) 145 TAXMAN 322 (DELHI), APEX COURT IN UNION OF INDIA VS. SATISH PANNALAL SHAH (2001) 249 ITR 221 (SC), BERGER PAINTS INDIA LTD. VS. CIT (2004) 266 ITR 99 (SC). 20. THE LD AR TOOK OUR ATTENTION TO THE DETAILS OF THE RESEARCH AND DEVELOPMENT EXPENSES OF RS. 34,88,584/ - WHICH HAS BEEN REPRODU CED BY THE LD CIT(A) IN PAGE 7,8, 9 , 10,11 & 12 OF THE IMPUGNED ORDER FROM WHICH WE CAN SEE THAT THE LD CIT(A) HAS MADE A FINDING THAT OUT OF THE TOTAL EXPENSES OF RS. 34,88,584/ - THE EXPENSES TO THE TUNE OF RS. 29,82,115/ - INCURRED BY THE APPELLANT COMPANY FOR FOLLOWING ITEMS LIKE ELECTRICITY CHARGES, CANTEEN SUBSIDY, ELECTRICITY GAS AND WATER CHARGES, HOUSE MAINTENANCE ALLOWANCE, MEDICAL REIMBURSEMENT, PRINTING & STATIONERY, PROFESSIONAL SERVICE CHARGES, RENT, SECURITY CHARGES, SERVANT EXPENSES, STA FF WELFARE, TELEPHONE REIMBURSEMENT, UNIFORM EXPENSES, BANK CHARGES, BOOK & PERIODICALS, RATES AND TAXES, ADDITIONAL REPAIR REWARD, AUTO EXPENSES, BONUS, CAR EXPENSES, CONVEYANCE ALLOWANCE, DEARNESS ALLOWANCE, EPF CONTRIBUTION, ESI CONTRIBUTION, EXGRATIA, GOOD WORK REWARD, HRA, LEAVE TRAVEL SUBSIDY, OFFICE EXPENSES, POSTAGE & TELEGRAM EXPENSES, PRODUCTION INCENTIVE, PRODUCTION REPAIR REWARD, REPAIR & MAINTENANCE , SALARY, SKILL ALLOWANCE, SPECIAL ALLOWANCE, VAN EXPENSES, WAGES, CAR EXPENSES, CONSUMABLE STORE , ADDITIONAL DEMAND EXCISE AUDIT, INSURANCE PAID, JOB WORK, CONVEYANCE EXPENSE TELEPHONE EXPENSES, GRATUITY PAID, POWER & FUEL, COMPONENT COFFEE MACHINE, FIRST AID ALLOWANCE ETC. THUS A PERUSAL OF THE EXPENSES SHOWS THAT A SUBSTANTIAL PART OF THE EXPENSES HAS BEEN INCURRED BY THE APPELLANT COMPANY ON DAY TO DAY EXPENSES RELATING TO SALARY AND WAGES, TELEPHONE, STAFF WELFARE, SECURITY, PRINTING AND STATIONARY, PAYMENT OF ESI & PF, POWER AND FUEL AND OTHER ROUTINE EXPENSES. FURTHER, THE REMAINING EXPENSES ARE ALSO RELATING TO THE PURCHASE OF RAW MATERIAL AND SMALL ITEMS OF SPARE PARTS AND TOOLS ETC. THEREFORE, IN THE ABSENCE OF ANY SPECIFIC INSTANCES OF ITEMS OF CAPITAL NATURE, THE ACTION OF THE ASSESSING OFFICER IN TREATING THE DEFERRED REVENUE EXPENSES AS CA PITAL EXPENDITURE CANNOT BE SUSTAINED MERELY BECAUSE THE ASSESSEE HAS IN ITS BOOKS OF ACCOUNT CATEGORIZED THE SAME AS CAPITAL EXPENSES. IT IS SETTLED POSITION OF LAW THAT THE ENTRIES MADE IN THE BOOKS OF ACCOUNT ALONE CAN NOT BE A DETERMINING FACTOR AS TO THE CAPITAL OR REVENUE NATURE OF THE EXPENSE . THE HONBLE SUPREME COURT IN STATE BANK OF INDIA VS. CIT (1986) 157 ITR 67, AFFIRMED THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. MOGUL LINE LTD. (1962) 46 ITR 590 , WHEREIN, THE HONBLE HIGH COURT OBSER VED THAT PAGE NO. 11 THE MATTER OF TAXABILITY COULD NOT BE DECIDED ON THE BASIS OF THE ENTRIES WHICH THE ASSESSEE MIGHT CHOOSE TO MAKE IN HIS ACCOUNT, BUT HAD TO BE DECIDED IN ACCORDANCE WITH PROVISIONS OF LAW. HONBLE SUPREME COURT IN THE CASE OF THE STATE BANK OF IN DIA (SUPRA) HELD THAT THE IMPORTANT QUESTION TO BE CONSIDERED IS THE TRUE NATURE OF THE TRANSACTION AND WHETHER IN FACT IT HAS RESULTED IN PROFIT AND LOSS TO THE ASSESSEE. IN THAT CONTEXT, IT IS WELL SETTLED THAT THE WAY IN WHICH ENTRIES ARE MADE BY THE ASSESSEE IN THE BOOKS OF ACCOUNT IS NOT DETERMINATIVE OF THE QUESTION WHETHER THE ASSESSEE HAS EARNED ANY PROFIT OR SUFFERED ANY LOSS. THE ASSESSEE MIGHT, BY MAKING ENTRIES WHICH WERE NOT IN CONFORMITY WITH THE PROPER PRINCIPLES OF ACCOUNTANCY, HAVE CONCEA LED PROFIT OR SHOWED LOSS AND THE ENTRIES MADE BY HIM COULD NOT, THEREFORE, BE REGARDED AS CONCLUSIVE ONE WAY OR THE OTHER. 21 . IN THE CASE OF JCIT VS. MODI OLIVETI LTD THE HONBLE DELHI HIGH COURT HAS DEFINED THE REAL IMPORT AND MEANING OF DEFERRED REVEN UE EXPENSES IN THE FOLLOWING TERMS - THE REASON FOR MAKING THE ADDITION BY THE REVENUE AUTHORITIES BELOW AS CAPITAL EXPENDITURE WAS MAINLY THAT THE ASSESSEE HAD TREATED THE SAME AS DEFERRED REVENUE EXPENDITURE IN ITS BOOKS OF ACCOUNT AND ACCORDING TO THE R EVENUE AUTHORITIES, THE SAID EXPENDITURE INCURRED ON ADVERTISEMENT WOULD RESULTS IN BENEFITS WHICH WOULD ACCRUE TO THE ASSESSEE OVER A PERIOD OF TIME BEYOND THE PREVIOUS YEAR. THE ICAI IN ITS GUIDANCE NOTE ISSUED ON THE TERMS USED IN FINANCIAL STATEMENTS HAS DEFINED THE TERM DEFERRED REVENUE EXPENDITURE AS THE EXPENDITURE FOR WHICH PAYMENT HAS BEEN MADE OR LIABILITY HAS BEEN INCURRED IN A PARTICULAR YEAR, BUT WHICH IS CARRIED FORWARD ON THE PRESUMPTION THAT IT WILL GIVE BENEFIT OVER A SUBSEQUENT PERIOD OR PERIODS. THE ICMA HAS DEFINED THE SAID TERM IN ITS PUBLICATION AS AN EXPENDITURE INCURRED DURING AN ACCOUNTING PERIOD BUT NOT FULLY CHARGED AGAINST INCOME IN THAT PERIOD, THE BALANCE PERIOD BEING CARRIED FORWARD AND CHARGED IN THE NEXT OR A SUBSEQUENT P ERIOD. THUS, THERE IS NOTING TO INDICATE THAT THE CONCERNED EXPENDITURE HAS TO BE OF CAPITAL NATURE FOR THE PURPOSE OF TREATING THE SAME AS DEFERRED REVENUE EXPENDITURE. ON THE CONTRARY, ALTHOUGH THE SAID EXPENDITURE RESULTS INTO A BENEFIT WHICH ACCRUES TO THE ASSESSEE OVER A PERIOD EXCEEDING THE ACCOUNTING YEAR, SUCH BENEFIT DOES NOT ACCRUE TO THE ASSESSEE IN THE CAPITAL FIELD BUT THE SAME ACCRUES ONLY IN THE REVENUE FIELD. WHEN ANY EXPENDITURE IS TREATED AS DEFERRED REVENUE EXPENDITURE IT PRESUPPOSES TH AT THE CONCERNED EXPENDITURE, CREATING BENEFIT IN THE REVENUE FILED, IS A REVENUE EXPENDITURE BUT CONSIDERING ITS ENDURING BENEFIT AS WELL AS THE FACT THAT IT DOES NOT RESULT IN THE CREATION OF ANY NEW ASSET OR ADVANTAGE OF ENDURING IN THE CAPITAL FIELD, T HE SAME IS REQUIRED TO BE DISTINCTLY FROM CAPITAL EXPENDITURE. IT WAS, THUS, CLEAR THAT THE AUTHORITIES BELOW MISCONSTRUED THE TERM DEFERRED REVENUE EXPENDITURE AS CAPITAL EXPENDITURE ON THE BASIS OF ACCOUNTING TREATMENT GIVEN BY THE ASSESSEE IN ITS BOOK S OF ACCOUNT AND PROCEEDED TO DRAW AN ADVERSE INTERFERENCE WITHOUT CONSIDERING THE NATURE OF PAGE NO. 12 THE IMPUGNED EXPENDITURE AS REGARDS ALLOWABILITY OF THE SAME UNDER THE PROVISIONS OF THE ACT. (PARA 10) THE TEST ENDURING BENEFIT ALONE IS NOT CONCLUSIVE FOR TREA TING ANY EXPENDITURE AS CAPITAL EXPENDITURE AND IT IS RELEVANT TO FIND OUT OR ASCERTAIN AS TO WHETHER SUCH EXPENDITURE RESULTS INTO AN ADVANTAGE OF ENDURING NATURE TO THE ASSESSEE IN THE CAPITAL FIELD OR REVENUE FIELD AS TO DECIDE THE EXACT NATURE OF THE S AID EXPENDITURE AND ALLOWABILITY OF THE SAME UNDER THE ACT. (PARA 12) HENCE, THE TREATMENT GIVEN BY THE ASSESSEE TO THE IMPUGNED EXPENDITURE AS DEFERRED REVENUE EXPENDITURE COULD NOT BE CONSIDERED AS DIFFERENT FROM THE ONE THE ONE FOLLOWED FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME UNDER THE ACT . (PARA 13) THE EXPENDITURE IN QUESTION WAS INCURRED TOWARDS ADVERTISEMENT FOR LAUNCHING OF A NEW PRODUCT AND WAS REVENUE IN NATURE. THE ACTION OF THE REVENUE AUTHORITIES IN TREATING THE SAME AS CAPITAL EXPENDITURE AND DISALLOWING THE CLAIM FOR DEDUCTION WAS NOT PROPER. 22 . IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER THE LAW LAID DOWN BY THE APEX COURT AND THE JURISDICTIONAL HIGH COURT, IT IS CLEAR THAT THE TREATMENT GIVEN TO A PARTICULAR ITEM OF THE EXP ENDITURE IN BOOKS OF ACCOUNT SHOULD NOT BY ITSELF BE TAKEN AS CONCLUSIVE EVIDENCE FOR TREATING THE EXPENDITURE AS CAPITAL OR REVENUE EXPENDITURE. THE LAW EMPOWERS THE ASSESSING OFFICER TO ASSESS THE INCOME OF THE ASSESSEE ACCORDING TO LAW AND DETERMINE THE TAX PAYABLE THEREON. IN DOING SO, HE CANNOT ASSESS AN ASSESSEE ON AN AMOUNT, WHICH IS NOT TAXABLE IN LAW, EVEN IF THE SAME WAS SHOWN BY AN ASSESSEE. THERE NEITHER ARE ANY ESTOPPELS BY CONDUCT AGAINST LAW NOR IS THERE ANY WAIVER OF THE LEGAL RIGHT AS MUCH AS THE LEGAL LIABILITY TO THE ASSESSED OTHERWISE THAN ACCORDING TO THE MANDATE OF THE LAW. WE FIND THAT T HE LD CIT(A) HAS CORRECTLY CONCLUDED THAT THE EXPENSES GIVEN IN PAGES 7,8,9,10,11, AND 12 OF THE IMPUGNED ORDER WOULD REVEAL THAT THE EXPENSES INCURRED BY THE ASSESSEE IN BOTH THE YEARS IS SUCH , WHICH WILL NOT CREAT E ANY CAPITAL ASSET IN THE HAND OF THE ASSESSEE, THEREFORE, THE SAID EXPENSES CANNOT GIVE ANY ADVANTAGE OF ENDURING NATURE IN THE CAPITAL FIELD. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER O F THE LD CIT(A) AND WE UPH O LD THE ORDER OF THE LD CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENUE. 23 . IN THE RESULT THE APPEAL PREFERRED BY THE REVENUE IS DISMISSED AND ORDER OF THE LD CIT(A) IS CONFIRMED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 9 . 03 .2014. - S D / - - S D / - ( G. D. AGARWAL) (A. T. VARKEY) HONBLE VICE PRESIDENT JUDICIAL MEMBER DATED : 0 9 / 03 /2014 PAGE NO. 13 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI