Loading judgment…
Facts
The revenue is aggrieved by the deletion of an addition of Rs. 2,19,15,602/- made by the AO for product registration expenses, which the AO treated as capital expenditure. The assessee had claimed these expenses as revenue in nature.
Held
The Tribunal noted that in the assessee's own case for subsequent assessment years, the ITAT had allowed similar expenditure as revenue expenditure. Following this precedent and in the absence of any distinguishing facts, the Tribunal upheld the CIT(A)'s order.
Key Issues
Whether product registration expenses are revenue or capital in nature.
Sections Cited
37
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER WASEEM AHMED, ACCOUNTANT MEMBER:
These appeals are filed by the revenue against the order passed by the NFAC, Delhi both dated 25/09/2020 in DIN No. ITBA/NFAC/S/250/2024-25/1067372701(1) for the assessment year 2011-12 and 2017-18.
The only issue raised by the revenue is that the ld. CIT(A) erred in deleting the addition made by the AO for Rs.2,19,15,602/- representing the product registration expenses treating the same as revenue in nature.
The AO during the assessment proceedings found that the assessee has incurred expenses amounting to Rs.2,19,15,602/- representing the product registration expenses. According to the AO, such expenses represents licence fee i.e to obtain prospective licence for sale of products, which is capital in nature, therefore, the AO disallowed the same and added to the total income of the assessee.
Aggrieved, assessee preferred an appeal to the ld. CIT(A), who deleted eth same by observing as under:-
“3.3. In the next material Ground of appeal, the assessee raised the issue of disallowance of product registration expenses paid by the company to the tune of Rs.2,19,15,602/-, which the AO held as a capital expenditure and thus, denied the benefit of deduction from the total income disclosed by the assessee in the Return. I have perused the issue and I find that in the immediate subsequent AYs of AY 2012-13 and AY 2013-14, after dealing with the issue at length, the Hon’ble ITAT, C-Bench, Bangalore in an order dated 30.12.2021, in assessee’s own case had allowed such expenditure as Revenue Expenditure, allowable u/s. 37 of the Act. Respectfully following such decision, I direct the AO to delete the disallowance of Rs.2,19,15,602/-, in respect of product registration charges and the Grounds taken by the assessee in this issue are allowed.”
Being aggrieved by the order of the ld. CIT(A), the revenue is in appeal before us.
The ld. DR before us contended that the quantum involved in the assessment years 2012-13 and 2013-14 were below the threshold limits and, therefore, the order of the ITAT in these assessment years were not contested before the higher forum.
We have heard the ld. DR and perused the materials available on record. At the outset, we note that ITAT in the own case of the assessee in the later assessment year have decided the issue in favour of the assessee and against the revenue. Before us, no contrary material has been brought on record by the revenue suggesting any distinguishable facts in the case on hand vis-à-vis in the case cited above. Therefore, respectfully following the order of the ITAT, we do not find any infirmity in the order of ld. CIT(A) and accordingly we uphold the same. Hence, the ground of appeal of the revenue is hereby dismissed.
In the result, the appeal of the revenue is dismissed Coming to 2017-18 9. The facts of the case on hand is identical to the facts of the case discussed above, therefore, respectfully following the order of the ITAT, we do not find any infirmity in the order of ld. CIT(A) and accordingly we uphold the same. Hence, the ground of appeal of the revenue is hereby dismissed.