M/S GREEN PEARL ELECTRONICS P LTD, KANCHEEPURAM V. ACIT CORPORATE CIRCLE 2 (1), CHENNAI

ITA 890/CHNY/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7195 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 14-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Assessee Lawyers: N ARUN RAJ
• Keywords: Capital asset; Principle of natural justice; Question of law; Revenue expenditure; Capital expenditure
• Section: 264; 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . . , . , $ BEFORE SHRI JUSTICE P.P.BHATT, PRESIDENT AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER /I.T.A.NOS.890 & 891/CHNY/2018 ( / ASSESSMENT YEARS: 2013-14 & 2014-15) M/S.GREEN PEARL ELECTRONICS P.LTD. 211/1, EAST POTHERI VILLAGE STREET, KATTANKULATHUR, KANCHIPURAM-603 203. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2(1), CHENNAI-34. PAN: AANCS 0865M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.N.ARUN RAJ, C.A, /RESPONDENT BY : MR. G.JOHNSON, ADDL.CIT /DATE OF VIRTUAL HEARING : 09.12.2020 /DATE OF PRONOUNCEMENT : 20.01.2021 / O R D E R PER G.MANJUNATHA, AM: THESE TWO APPEALS FILED BY THE ASSESSEE ARE DI RECTED AGAINST THE COMMON ORDER OF THE LEARNED CIT(A)-6, C HENNAI, DATED 28.12.2017 AND PERTAIN TO ASSESSMENT YEARS 2013-14 & 2014-15 . SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMO N, FOR THE SAKE OF CONVENIENCE, THEY WERE HEARD TOGETHER AND ARE DISPO SED OF BY WAY OF THIS CONSOLIDATED ORDER. 2. THE ASSESSEE HAS MORE OR LESS RAISED COMMON GR OUNDS OF APPEAL FOR ALL THE ASSESSMENT YEARS, THEREFORE, FO R THE SAKE OF 2 ITA NOS.890 & 891/CHNY/2018 BREVITY, GROUNDS OF APPEAL FILED FOR THE ASSESSMENT YEAR 2013-14 IN ITA NO.890/CHNY/2018 ARE REPRODUCED AS UNDER:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) - 6, CHENNAI DATED 28.12.2017 IN L.T.A.NOS.343 & 566/ CIT(A)- 6/2016-L7 FOR THE ABOVE MENTIONED ASSESSMENT YEAR I S CONTRARY TO LAW, FACTS, AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN SUSTAINING THE DISALL OWANCE OF EXPENSES ON THE ANALYSIS OF THE BOOK TREATMENT AND THE TREATMENT GIVEN FOR SUCH EXPENSES IN THE INCOME TAX COMPUTATION WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE DISALLOWANCE OF EXPENSES ON THE PRESUMPTION OF SUCH EXPENSES INC URRED AT THE PRE-OPERATIVE STAGE WAS WHOLLY UNJUSTIFIED AND OUGHT TO HAVE APPRECIATED THAT THE SEQUENCE OF EVENTS AFTER SELLING UP OF THE BUSINESS IN FOCUSING DIFFERENT PRODUCTS AND INCURRING EXPENSES IN RELATION THERETO WAS COMPLETELY OVERLOO KED AND BRUSHED ASIDE, THEREBY VITIATING THE FINDINGS IN PA RA 4.3 OF THE IMPUGNED ORDER. 4. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE EXPENSES INCURRED WERE WRONGLY CONSIDERED AS CAPITAL IN NATU RE WHICH FORMED PART OF THE ANOTHER FACET OF THE FINDINGS TO SUSTAINING THE DISALLOWANCE OF SUCH EXPENSES AND OUGHT TO HAVE APPRECIATED THAT THE DETAILS FURNISHED IN THIS REGA RD WERE NOT EXAMINED PROPERLY, THEREBY VITIATING THE FINDINGS I N PARA 4.3 OF THE IMPUGNED ORDER. 5 THE CIT (APPEALS) TAILED TO APPRECIATE THAT THE D ISTINCTION BETWEEN THE BOOK ENTRIES/TREATMENT AND THE INCOME T AX COMPUTATION WAS COMPLETELY BRUSHED ASIDE AND OUGHT TO HAVE APPRECIATED THAT FLUE FINANCIAL STATEMENTS FOR THE ASSESSMENT YEARS UNDER CONSIDERATION AND INCOME TAX COMPUTATIO N WERE NOT GIVEN DUE CREDENCE AT THE CONCEPTUAL LEVEL, THE REBY VITIATING THE FINDINGS IN PARA 4.3 OF THE IMPUGNED ORDER. 6 THE CIT (APPEALS) FAILED LO APPRECIATE THAT THERE WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPU GNED ORDER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES NATURAL JUSTICE WOULD BE NULLITY IN LAW. 3 ITA NOS.890 & 891/CHNY/2018 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSE COMPAN Y IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF LED LIGHTS FILED I TS RETURN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 28.09.2013 DECLARIN G LOSS OF ` 1,75,37,588/-. DURING THE FINANCIAL YEAR RELEVANT T O THE ASSESSMENT YEAR 2013-14, THE ASSESSEE HAS INCURRED CERTAIN EXP ENSES LIKE CONSULTANCY CHARGES, RAW MATERIAL PURCHASES, SALAR Y ETC. AND THE SAME HAS BEEN TREATED AS DEFERRED REVENUE EXPENDI TURE IN THE FINANCIAL STATEMENTS . HOWEVER, IN THE STATEMENT OF TOTAL INCOME DEDUCTION HAS BEEN CLAIMED FOR TOTAL EXPENDITURE. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAS CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY DEDUCTION CLAIMED TOWARDS DEFE RRED REVENUE EXPENDITURE IN THE STATEMENT OF INCOME SHALL NOT BE TREATED AS CAPITAL EXPENDITURE AND ADDED BACK TO WORK IN PROG RESS BECAUSE NATURE OF EXPENDITURE INCURRED ARE IN THE NATURE OF CAPITAL EXPENDITURE WHICH GIVES ENDURING BENEFIT TO THE AS SESSEE . IN RESPONSE, THE ASSESSEE SUBMITTED THAT IT IS IN THE BUSINESS OF MANUFACTURE OF LED LIGHTS FOR WHICH TILL FINANCIAL YEAR 2009-10, IT HAS PURCHASED RAW MATERIALS BEING LED DRIVES, BUT FROM THE FINANCIAL YEAR 2011-12, THE ASSESSEE INTENDED TO MANUFACTURE RAW MATERIALS ON ITS OWN FOR WHICH IT HAS INCURRED CERTAIN EXPE NSES LIKE TECHNICAL 4 ITA NOS.890 & 891/CHNY/2018 CONSULTANCY CHARGES, PURCHASE OF RAW MATERIALS, ADV ERTISEMENT CHARGES ETC., WHICH ARE PURELY IN THE NATURE OF RE VENUE EXPENSES AND HENCE, ALTHOUGH THE SAME HAS BEEN TREATED AS DE FERRED REVENUE EXPENDITURE IN THE BOOKS OF ACCOUNT, BUT D EDUCTION HAS BEEN CLAIMED FOR THE PURPOSE OF INCOME TAX ON TOTAL EXPENDITURE, SINCE THE SAME IS IN THE NATURE OF REVENUE EXPENDIT URE AND WAS INCURRED FOR THE PURPOSE OF BUSINESS. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE AND ACCORDING TO HIM, EXPENDITURE INCURRED FOR DEVELOPMENT OF A N EW PRODUCT INCLUDING KNOWHOW IS IN THE NATURE OF INTANGIBLE ASSET, WHICH GIVES ENDURING BENEFIT TO THE ASSESSEE AND HENCE, EXPEN SES INCURRED TOWARDS DEVELOPMENT OF NEW PRODUCT SHALL BE REGARDE D AS CAPITAL WORK-IN-PROGRESS AND ACCORDINGLY, DISALLOWED DEDUCT ION CLAIMED TOWARDS PRE-OPERATIVE/PRELIMINARY EXPENSES OF ` 1,91,45,213/- AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE AS SESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A) . BEF ORE THE LEARNED CIT(A), THE ASSESSEE HAS REITERATED ITS ARGUMENTS TAKEN BEFORE THE ASSESSING OFFICER .THE ASSESSEE FURTHER SUBMITTED THAT EXPENDITURE INCURRED UNDER THE HEAD TECHNICAL CONSULTANCY CHARG ES, PURCHASE OF 5 ITA NOS.890 & 891/CHNY/2018 RAW MATERIALS AND ADVERTISEMENT EXPENSES ETC. ARE IN THE NATURE OF REVENUE EXPENDITURE, WHICH IS INCURRED FOR THE PUR POSE OF EXISTING BUSINESS AND HENCE, THE SAME CANNOT BE CONSIDERED AS CAPITAL IN NATURE, MERELY BECAUSE THE ASSESSEE HAS TREATED EXP ENDITURE UNDER THE HEAD DEFERRED REVENUE EXPENDITURE PENDING AMOR TIZATION OVER THE YEARS. 5. THE LEARNED CIT(A) AFTER CONSIDERING THE RELEVA NT SUBMISSIONS OF THE ASSESSEE OBSERVED THAT ON THE BASIS OF THE D ETAILS FILED BY THE ASSESSEE, WHICH CLEARLY INDICATES THAT TECHNICAL CO NSULTANCY CHARGES, ELECTRICITY CHARGES, PURCHASE OF RAW MATE RIALS AND PAYMENTS TO CERTAIN INDIVIDUALS WOULD CERTAINLY PAR TAKE THE CHARACTER OF CAPITAL IN NATURE AS PROJECT WORK INITIATED, IN SOFAR AS MANUFACTURING OF LED DRIVES / SOLAR LIGHTS HAS NO T BEEN COMPLETED DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMEN T YEAR . THE LEARNED CIT(A) FURTHER OBSERVED THAT ON THE BASIS OF DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER HAS COME TO THE FINDING OF FACT THAT EXPENDITURE IS CAPITAL IN NATU RE AND HENCE, THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE ASSESSI NG OFFICER THAT THE PRODUCTS INTEND TO MANUFACTURE ARE NOT READY FOR SA LE DURING THE IMPUGNED ASSESSMENT YEAR AND CONSEQUENTLY ANY EX PENDITURE 6 ITA NOS.890 & 891/CHNY/2018 INCURRED FOR DEVELOPMENT OF SAID PRODUCTS ARE DEFI NITELY IN THE NATURE OF CAPITAL EXPENDITURE WHICH GIVES ENDURING BENEFIT TO THE ASSESSEE, CONSEQUENTLY CANNOT BE ALLOWED U/S.37(1) OF THE ACT. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN A PPEAL BEFORE US. 6. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT T HE LEARNED CIT(A) HAS ERRED IN SUSTAINING DISALLOWANCE OF EX PENSES ON THE ANALYSIS OF BOOK TREATMENT AND THE TREATMENT GIVEN FOR SUCH EXPENSES IN THE INCOME TAX COMPUTATION WITHOUT APP RECIATING THE FACT THAT EXPENSES INCURRED ARE IN THE NATURE OF R EVENUE EXPENDITURE WHICH DOES NOT GIVE ENDURING BENEFIT TO THE ASS ESSEE. THE LEARNED AR FURTHER SUBMITTED THAT THE LEARNED CIT(A ) HAS ERRED IN HOLDING THAT ASSESSEE HAS DEVELOPED A NEW PRODUCT WHICH WAS NOT COMPETED DURING THE RELEVANT FINANCIAL YEAR WITHOUT CONSIDERING THE FACT THAT ASSESSEE HAS ALREADY STARTED MANUFACTURI NG THE PRODUCTS AND GENERATED REVENUE FROM SALES AND CONSEQUENTLY, ANY EXPENDITURE INCURRED FOR DEVELOPMENT OF SAID PROD UCT, WHICH ARE IN THE NATURE OF REVENUE EXPENSES NEEDS TO BE ALLOWED AS DEDUCTION IRRESPECTIVE OF THE ACCOUNTING TREATMENT GIVEN BY T HE ASSESSEE IN THE BOOKS OF ACCOUNTS. THE LEARNED AR FOR THE ASSES SEE FURTHER SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FA VOUR OF THE 7 ITA NOS.890 & 891/CHNY/2018 ASSESSEE BY THE DECISION OF HONBLE DELHI HIGH COUR T IN THE CASE OF CIT VS. DENSO INDIA LTD.(2009) 318 ITR 140, WHERE ON IDENTICAL FACTS AND CIRCUMSTANCES, THE HONBLE HIGH COURT HELD THAT WHERE ASSESSEE MANUFACTURING AUTO ELECTRICAL PARTS INCURR ED EXPENDITURE FOR SETTING UP SEPARATE CELL FOR DEVELOPING IMPORT SUBSTITUTE PARTS, THE EXPENDITURE IN QUESTION WAS ALLOWABLE AS REVENU E EXPENDITURE. 7. THE LEARNED DR, ON THE OTHER HAND, SUPPORTING TH E ORDER OF THE LEARNED CIT(A) SUBMITTED THAT AS CLAIMED BY THE ASS ESSEE EXPENDITURE HAS BEEN TREATED AS DEFERRED REVENUE EXPENDITURE IN THE BOOKS OF ACCOUNT, WHICH ITSELF IS SUFFICIENT T O COME TO THE CONCLUSION THAT EXPENDITURE GIVES ENDURING BENEFIT TO THE ASSESSEE AND HENCE, THE ASSESSING OFFICER AS WELL AS LEARNE D CIT(A) HAVE RECORDED CORRECT FINDING TO DISALLOW EXPENDITURE CLAIMED IN THE STATEMENT OF TOTAL INCOME AND HENCE, THEIR ORDERS SHOULD BE UPHELD. 8. WE HAVE HEARD BOTH PARTIES, PERUSED THE MATERIAL S AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW ALONG WITH THE CASE LAWS CITED BY THE LEARNED COUNSEL FO R THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACT URING LED LIGHTS WAS PURCHASING RAW MATERIALS BEING LED DRI VES TILL 8 ITA NOS.890 & 891/CHNY/2018 ASSESSMENT YEAR 2010-11. THE ASSESSEE STARTED MAN UFACTURING THESE LED DRIVES IN SUBSTITUTE OF PURCHASE FROM THE ASSESSMENT YEAR 2012-13 ON THE BASIS OF GOVERNMENT POLICY FO R ENCOURAGEMENT OF MANUFACTURING SOLAR BASED LIGHTS IN RELATION TO THE MANUFACTURE OF THE ABOVE MENTIONED LED DRIVES A ND SOLAR BASED LIGHTS. THE ASSESSEE HAS INCURRED CERTAIN REV ENUE EXPENDITURE NAMELY TECHNICAL CONSULTANCY CHARGES, P URCHASE OF RAW MATERIALS, ADVERTISEMENT EXPENSES ETC., WHICH WERE TREATED AS DEFERRED REVENUE EXPENDITURE, PENDING AMORTIZATION IN THE BOOKS OF ACCOUNT UNDER THE HEAD PRE-OPERATIVE EXPENSES, BUT DEDUCTION HAS BEEN CLAIMED TOWARDS TOTAL EXPENDITURE INCURRED IN THE STATEMENT OF TOTAL INCOME FOR INCOME-TAX PURPOSES ON THE GROUND THAT SAID EXPENDITURE IS IN THE NATURE OF REVENUE EXPENDITU RE, WHICH WERE INCURRED DURING THE RELEVANT FINANCIAL YEARS FOR T HE PURPOSE OF BUSINESS. IN THE LIGHT OF ABOVE FACTS, IF YOU EXAM INED THE CLAIM OF THE ASSESSEE, THE SAID CLAIM NEEDS TO BE EXAMINED I NDEPENDENT OF TREATMENT GIVEN IN THE BOOKS OF ACCOUNT. ALTHOUGH , THE ASSESSEE HAS TREATED SAID EXPENDITURE AS DEFERRED REVENUE EX PENDITURE PENDING AMORTIZATION OVER A PERIOD, BUT THE NATURE OF EXPENDITURE INCURRED BY THE ASSESSEE ARE SUCH THAT THEY ARE PU RELY IN THE NATURE 9 ITA NOS.890 & 891/CHNY/2018 OF REVENUE EXPENDITURE INCURRED WHOLLY AND EXCLUS IVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. ONCE THE EXPE NDITURE INCURRED ARE IN THE NATURE OF REVENUE EXPENDITURE, WHICH DOES NOT GIVE ENDURING BENEFIT OR BROUGHT ANY NEW ASSET, TH EN MERELY FOR THE REASON THAT THE ASSESSEE HAS GIVEN DIFFERENT TREATM ENT IN THE BOOKS OF ACCOUNT FOR THE SAID EXPENDITURE, THE SAME CANNO T BE CONSIDERED AS CAPITAL IN NATURE WHICH GIVES ENDURING BENEFIT T O THE ASSESSEE. IT IS WELL SETTLED PRINCIPLE OF LAW THAT ENTRIES IN B OOKS OF ACCOUNT IS NOT DETRIMENTAL TO CLAIM OF DEDUCTION TOWARDS ANY EXPE NDITURE, IF SUCH EXPENDITURE IS DEDUCTIBLE IN ACCORDANCE WITH INCOM E TAX LAWS. IN THIS CASE, THE ASSESSING OFFICER HAVING NOT DISP UTED THE NATURE OF EXPENDITURE INCURRED BEING REVENUE HAS ERRED IN HI MSELF IN DISALLOWING CLAIM OF DEDUCTION SLOWLY ON THE BASIS OF TREATMENT GIVEN IN THE BOOKS OF ACCOUNT, EVEN THOUGH ENTRIES IN BOO KS OF ACCOUNT ARE NOT RELEVANT CRITERIA TO DECIDE NATURE OF EXPENDITU RE AND ITS DEDUCTIBILITY FOR THE PURPOSE OF TAXATION. THE SAI D FINDING IS FORTIFIED BY THE JUDGEMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DENSO INDIA LTD. (SUPRA), WHERE UNDER IDENTICAL SET OF FACTS THE HONBLE HIGH COURT HELD THAT WHERE ASSESSEE MANUFAC TURING AUTO ELECTRICAL PARTS INCURRED EXPENSES FOR SETTING UP SEPARATE CELL FOR 10 ITA NOS.890 & 891/CHNY/2018 DEVELOPING IMPORT SUBSTITUTE PARTS, THE EXPENDITUR E IN QUESTION WAS ALLOWABLE AS REVENUE EXPENDITURE. THE HONBLE HIGH COURT WHILE ALLOWING THE CLAIM HAS LAID DOWN CERTAIN PARAMETERS AND ACCORDING TO THE OBSERVATIONS OF THE HONBLE HIGH COURT IT IS NATURE OF EXPENDITURE THAT IS RELEVANT , BUT NOT TREATMENT OF THE EXPENDITURE IN THE BOOKS OF ACCOUNT / FINANCIAL STATEMENTS FOR DE TERMINING WHETHER OR NOT THE EXPENDITURE IS OF CAPITAL OR REVENUE. TH E RELEVANT FINDINGS OF THE HONBLE HIGH COURT ARE AS UNDER:- 3. BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) THE ASSESSEE- COMPANY CONTENDED THAT DESPITE THE TREATMENT GIVEN IN THE BACKS OF ACCOUNT BY THE ASSESSEE-COMPANY AS DEFERRED REVENUE EXPENDITURE, THE FACT REMAINS THAT THE SAID EXPENDITURE WAS OF R EVENUE NATURE- THE COMMISSIONER OF INCOME- TAX (APPEALS) ACCEPTED THE STAND OF THE ASSESSEE-COMPANY. INTER AIIA, FOR THE FOLLOWING REASONS (I) PRIMA FACIE. THE EXPENDITURE WAS OF REVENUE NA TURE. (II) NO CAPITAL ASSET WAS ACQUIRED OR BROUGHT INTO EXISTENCE BY INCURRING THE EXPENDITURE. (III) EXPENDITURE INCURRED FOR THE PURPOSE OF RUNNI NG A BUSINESS EFFICIENTLY CANNOT FOR THAT REASON BE LABELLED AS C APITAL EXPENDITURE. (IV) THE TREATMENT OF THE EXPENDITURE IN THE BOOKS ACCOUNT/FINANCIAL STATEMENTS IS NOT RELEVANT FOR DETERMINING WHETHER OR NOT THE EXPENDITURE IS OF CAPITAL OR REVENUE NATURE (V) HEAVY REVENUE EXPENDITURE INCURRED IN ONE YEAR CANNOT HAVE THE EFFECT OF CONVERTING IT INTO CAPITAL EXPENDITURE. F OR EXAMPLE, EXPENDITURE INCURRED ON ADVERTISEMENT. (VI) THE ASSESSING OFFICER DID NOT DISPUTE THE FACT THAT THE EXPENDITURE WAS INCURRED OR QUESTION THE QUANTUM. H IS MAIN PROBLEM 11 ITA NOS.890 & 891/CHNY/2018 WAS THAT THE COMPANY HAD, IN ITS FINANCIAL STATEMEN T, CHOSEN TO TREAT THE EXPENDITURE AS DEFERRED REVENUE EXPENDITURE. (VII) THE INCOME-TAX ACT, 1961, DOES NOT CATER FOR DEFERRED REVENUE EXPENDITURE NO MATTER WHAT THE PRINCIPLES OF ACCOUN TANCY PRESCRIBE. (VII,) EVEN, ACCORDING TO THE APPELLANT, THE EXPEND ITURE WAS TREATED AS DEFERRED REVENUE EXPENDITURE- IN OTHER WORDS, IRRES PECTIVE OF HOW THE APPELLANT CHOSE TO WRITE OFF THE EXPENDITURE, IT ST ILL REMAINED REVENUE EXPENDITURE. 4. IN APPEAL THE INCOMETAX APPELLATE TRIBUNAL HAD OPINED THAT THOUGH THE TREATMENT GIVEN BY THE ASSESSEE COMPANY CONSIDERING THE LONG-TERM BENEFITS OF THE SAID EXPENDITURE AS D EFERRED REVENUE EXPENDITURE, SUCH TREATMENT ALONE WAS NOT SUFFICIEN T TO CONCLUDE THAT THE SAID EXPENDITURE WAS OF CAPITAL NATURE, THE INC OME- TAX APPELLATE TRIBUNAL ACCORDINGLY HELD THAT THE SAID EXPENDITURE WAS CLEARLY OF A REVENUE NATURE HAVING REGARD TO ITS VERY NATURE AS WELL AS PURPOSE FOR THE SAME WAS BEING INCURRED, VIZ, BEING TO SUBS TITUTE THE COMPONENTS OF RAW MATERIAL AND AS SUCH, THE ADVANTA GE ACCRUED TO THE ASSESSEE IS ONLY IN THE REVENUE FIELD AND NOT I N THE CAPITAL FIELD. 5. BEFORE US IT IS NOT DISPUTED BY THE APPELLANT TH AT THE EXPENDITURE INCURRED TOWARDS SALARIES, WAGES, TRAVELLING EXPENS ES, ETC -, ARE REVENUE IN NATURE, HOWEVER, THE COUNSEL FOR THE APP ELLANT HAS CONTENDED THAT SINCE THERE WAS ENDURING BENEFIT FRO M THE EXPENDITURE. BE SAID EXPENDITURE IS CAPITAL IN NATU RE. RELIANCE WAS PLACED UPON ASSAM BENGAL CEMENT V- CIT[1955)27 ITR 34 (SC) ON THE MEANING OF CAPITAL EXPENDITURE AND ON TAPARIA T OOTS LTD V. JOINT CIT [2003] 260 ITR 102 (BOM ) AND CIT V. KANYAKUMAR I DIST.CO- OP.SPG.MILLS LTD.(2003) 264 ITR 684 FOR THE SAME P URPOSE. 6. THE COUNSEL FOR THE RESPONDENT-ASSESSEE HAS HOWE VER PLACED RELIANCE UPON MADRAS INDUSTRIAL INVESTMENT CORPORAT ION LTD V. CIT (1997) 225 ITR 802 (SC), CT V. PRINTPACK MACHINERY 248 ITR 684 (DELHI), EMPIRE JUTE COMPANY V. CIT 124 ITR 1 (SC) CIT VS .J,JK,SYNTHETICS LTD. 309 ITR 371 (DELHI) AND CIT VS USHA IRON FERRO METAL CORPORATION LTD 296 ITR 140 (DEL) TO C ONTEND THAT THE EXPENDITURE IS OF REVENUE NATURE ONLY- THE COUNSEL FOR THE RESPONDENT HAS FURTHER CONTENDED THAT THE CONCURREN T FINDINGS OF FACTS OF THE COMMISSIONER (APPEALS) AND THE INCOME- TAX APPELLATE 12 ITA NOS.890 & 891/CHNY/2018 TRIBUNAL SHOULD NOT BE DISTURBED BY THE COURT AS NO SUBSTANTIAL QUESTION OR LAW ARISES. 7. A REFERENCE TO THE JUDGMENTS CITED BY THE RESPON DENTS SHOW THAT EXPENSES SUCH AS SALARIES. ETC., INCURRED BY THE AS SESSEE IN THIS CASE IS CLEARLY REVENUE IN NATURE. THE JUDGMENTS CI TED BY THE COUNSEL DO NOT APPLIES NONE OF THEM DEALT WITH FACTS AS FOU ND IN THE PRESENT CASE. I.E., OF EXPENDITURE FOR SALARIES, WAGES. TRA VELLING EXPENSES. ETC. MERELY BECAUSE THE BENEFIT OF THE TYPE OF EXPE NDITURE INVOLVED IN THIS CASE IS SUCH THE BENEFIT CAN ALSO BE AVAILABLE LATER IS NOT A GOOD ENOUGH REASON TO TREAT THE EXPENDITURE, WHICH IS OT HERWISE OF REVENUE NATURE, AS A CAPITAL EXPENDITURE. THERE ARE CONCURRENT FINDINGS OF BOTH THE AUTHORITIES BELOW WITH WHICH W E AGREE AND WHICH ARE NOT PERVERSE, NO SUBSTANTIAL QUESTION OF LAW AR ISES. DISMISSED. 9. IN THIS CASE, THE FACTS ARE IDENTICAL TO THE FAC TS CONSIDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS DENSO INDIA LTD (SUPRA), WHERE THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF MANUFACTURING LED LIGHTS, WAS PURCHASING CERTAIN RAW MATERIALS TILL ASSESSMENT YEAR 2010-11, BUT FROM THE ASSESSMENT Y EAR 2013-14, IT STARTED MANUFACTURING SUBSTITUTE OF PURCHASES FOR WHICH CERTAIN EXPENDITURE HAVE BEEN INCURRED FOR DEVELOPMENT OF T HE PRODUCT WHICH ARE PURELY REVENUE IN NATURE. ALTHOUGH, THE A SSESSEE HAS CONSIDERED SAID EXPENDITURE AS DEFERRED REVENUE E XPENDITURE, PENDING AMORTIZATION IN THE FINANCIAL STATEMENT, BU T BECAUSE OF NATURE OF EXPENDITURE THE SAME HAS BEEN CLAIMED AS DEDUCTION U/S.37(1) IN THE STATEMENT OF TOTAL INCOME. WE, THE REFORE, 13 ITA NOS.890 & 891/CHNY/2018 CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND BY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS.DENSO INDIA LTD. (SUPRA) ARE OF THE CONSIDERED VIEW THAT EXPENDITURE INCURRED BY THE ASSESSEE BEING TECHNICA L CONSULTANCY CHARGES, PURCHASE OF RAW MATERIALS, ADVERTISEMENT C HARGES AND ELECTRICITY CHARGES ARE IN THE NATURE OF REVENUE EXPENDITURE, WHICH DOES NOT GIVE ANY ENDURING BENEFIT TO THE ASSESSEE AND HENCE, SAME CANNOT BE TREATED AS CAPITAL EXPENDITURE. HENCE WE, DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION TOWARDS EXPENDITURE AS CLAIMED BY THE ASSESSEE IN THE STATEMENT OF TOTAL I NCOME. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO. 891/CHNY /2018 (A.Y.2014-15):- 11. THE FACTS AND ISSUES INVOLVED IN ITA NO. 891/CH NY/2018 ARE IDENTICAL TO THE FACTS AND ISSUES WHICH WE HAVE A LREADY CONSIDERED IN ITA NO.890/CHNY/2018 FOR THE ASSESSMENT YEAR 2 013-14. THE REASONS GIVEN BY US IN THE PRECEDING PARAGRAPHS OF ITA NO.890/CHNY/2018 SHALL MUTATIS MUTANDIS APPLY TO THIS APPEAL AS WELL. THEREFORE, FOR THE SIMILAR REASONS, WE, DI RECT THE ASSESSING 14 ITA NOS.890 & 891/CHNY/2018 OFFICER TO ALLOW DEDUCTION TOWARDS EXPENDITURE AS CLAIMED BY THE ASSESSEE IN THE STATEMENT OF TOTAL INCOME. 12. IN THE RESULT, BOTH THE APPEALS FILED BY THE A SSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2021 SD/- SD/- ( . . ) ( . ) (JUSTICE P.P.BHATT ) (G. MANJUNATHA ) / PRESIDENT $ / ACCOUNTANT MEMBER & /CHENNAI, ' /DATED 20 TH JANUARY, 2021 DS )* +* /COPY TO: 1. APPELLANT 2. RESPONDENT 3. , () /CIT(A) 4. , /CIT 5. * 1 /DR 6. /GF .