CAN THE EXPENDITURE INCURRED BY THE ASSESSEE ON TECHNO ECONOMIC FEASIBILITY REPORT FOR THE MANUFACTURE OF NEW PRODUCT BE ELIGIBLE FOR DEDUCTION UNDER SECTION 35 D ?

CIT V/S TAMILNADU ROAD DEVELOPMENT CO. LTD. (2009)

RESPECTIVE SECTION --- 35D

THE ASSESSE COMPONY ENGAGED IN THE BUISENESS OF IMPLEMENTATION OF THE INDUSTRIAL POLICY AND CREATIO
N OF INFRASTRUCTURE FACILITIES IN THE STATE OF TAMILNADU ON COMMERCIAL FRAMEWORK CLAIMED DEDUCTION IN RESPECT OF THE EXPENDITURE INCURRED ON ACCOUNT OF TECHNO ECONOMIC FEASIBILITY REPORT FOR THE MANUFACTURE OF NEW PRODUCT . THE ASSESSING OFICER DISALLOWED THE DEDUCTION TREATING IT AS A CAPITAL EXPENDITURE . THE COMMISSIONER ( APPEAL) ALLOWED THE ASSESSEE'S CLAIM ON THE FINDING THAT EXPENSES INCURRED WERE COVERED UNDER SECTION 35 D OF THE INCOME TAX ACT , 1961, AS THE EXPENSES INCURRED TO FIND OUT NEW IDEAS BY CONDUCTING TEST STUDIES AND PILOT STUDIES FOR IMPROVING THE EXISTING BUISENESS AND , THEREFORE COULD NOT BE TREATED AS A CAPITAL EXPENDITURE . THIS WAS CONFIRMED BY TRIBUNAL AND THE HIGH COURT.

BY ATUL WALDE....