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Learn MoreIn the previous year relevant to A. Y. 1998-99, the assessee had developed four machines at a cost of Rs. 46,26,552/. However, after the machines were developed, the assessee found that the technology used had already become obsolete. Therefore, the machines were not put to use for manufacturing purposes. The assessee claimed the expenditure as revenue expenditure. The Assessing Officer rejected the claim. CIT(A) held that the expenditure is allowable u/s. 37. The Tribunal upheld the allowance.
On appeal by the Revenue, the Calcutta High Court upheld the decision of the Tribunal and held as under:
“The question whether the expenses incurred on account of development of machines was revenue expenditure or not basically is a question of fact and when the Tribunal had concurred with the views expressed by the Commissioner (Appeals) and the view taken by them was a plausible view, no interference in the order of the Tribunal was warranted.”