Expenditure on Dyes and Moulds is an Allowable Revenue Expense, Not Capital, Following Precedent.

By | November 11, 2025
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Expenditure on Dyes and Moulds is an Allowable Revenue Expense, Not Capital, Following Precedent.

Issue

Whether expenditure incurred by an automobile manufacturer on the purchase of dyes and moulds should be treated as a capital expenditure or an allowable revenue expenditure under Section 37(1).

Facts

  • The assessee-company, an automobile manufacturer, incurred expenditure on dyes and moulds and claimed it as a revenue expenditure.
  • The Assessing Officer (AO) disallowed this claim, treating the expenditure as capital in nature.
  • The Income Tax Appellate Tribunal, in the assessee’s own case for an earlier assessment year, had already decided this exact issue in favour of the assessee.
  • The Revenue was unable to provide any new material or distinguishing facts to deviate from the prior decision.

Decision

  • The court ruled in favour of the assessee.
  • Following the binding precedent set in the assessee’s own case for a prior year, the court held that the expenditure on dyes and moulds was to be allowed as a revenue expenditure.

Key Takeaways

  • Principle of Consistency: A legal issue that has been decided in an assessee’s own case by an appellate authority in a prior year must be followed in subsequent years, provided the facts remain identical.
  • Nature of Expenditure: In the automobile industry, dyes and moulds are often specific to certain models and have a short useful life, which strengthens the argument for treating them as revenue expenditure rather than an enduring capital asset.

 Expenditure on Jigs and Fixtures Held to be Revenue in Nature

Issue

Whether expenditure incurred on the purchase of jigs and fixtures in an automobile factory is a capital expenditure or an allowable revenue expenditure.

Facts

  • The assessee-company incurred expenditure on jigs and fixtures, claiming them as a revenue expenditure.
  • The Assessing Officer (AO) disallowed this, treating it as capital in nature.
  • The court noted that jigs and fixtures are “tooling aids” essential to the production process.
  • It was also noted that in a large automobile factory, the life of such items is “minimal” due to constant wear and tear, as well as changes in the design of parts.

Decision

  • The court ruled in favour of the assessee.
  • It held that given the minimal lifespan of these items due to their function, wear and tear, and frequent technological obsolescence (design changes), the expenditure was to be allowed as a revenue expenditure.

Key Takeaways

  • “Enduring Benefit” Test: The key test for capital expenditure is the “enduring benefit” it provides. Assets with a “minimal” or very short useful life, like specific tooling aids, often fail this test and are treated as revenue expenses.
  • Nature of the Industry: In industries like automobile manufacturing, which see rapid design changes, tooling aids are often considered part of the cost of production rather than a long-term capital asset.

Appellate Authority Can Entertain a Fresh Claim

Issue

Whether an appellate authority (like the Commissioner (Appeals)) has the power to entertain a fresh claim for a deduction made by the assessee for the first time during the appellate proceedings, even if such a claim was not made in the original or revised return of income.

Decision

  • The court held yes, the appellate authority can entertain such a fresh claim.

Key Takeaways

  • Plenary Powers of C(A): The powers of the Commissioner (Appeals) are “co-terminus” with those of the Assessing Officer. This means the C(A) has the power to do what the AO could have done.
  • Focus on Correct Income: The objective of an appeal is to determine the correct taxable income for the year, which includes allowing any new, legitimate claim for deduction that the assessee may have missed in their return.

Proportionate Premium on Leasehold Land is an Allowable Deduction

Issue

Whether the proportionate amount of premium paid on leasehold land, written off in the profit and loss account, is an allowable deduction, especially when the claim was not made in the original return but was raised for the first time before the Commissioner (Appeals).

Facts

  • The assessee-company made a new claim during appellate proceedings for a deduction on account of proportionate premium paid on leasehold land, which it had debited to its P&L account.
  • This claim was not made in the original return of income.
  • The Assessing Officer did not allow the claim.
  • The Commissioner (Appeals) allowed the deduction, following a co-ordinate bench decision in the assessee’s own case for a prior year.

Decision

  • The court ruled in favour of the assessee.
  • It found no infirmity in the C(A)’s order for two reasons:
    1. The C(A) had the power to entertain the fresh claim (as established in Case III).
    2. The claim itself was allowable, as established by a binding precedent in the assessee’s own case.

Key Takeaways

  • Amortization of Lease Premium: Premium paid for leasehold land is considered a capital expenditure for acquiring a right. However, the proportionate write-off (amortization) of this premium over the lease period can be claimed as a revenue expenditure.
  • Consistency and Precedent: The combination of the C(A)’s power to admit new claims and the binding nature of a prior-year precedent in the assessee’s own case made the claim allowable.

Provision for Bad Debts Allowed, Following Prior Year’s Precedent

Issue

Whether a deduction for a provision for bad and doubtful debts and advances, as debited to the profit and loss account, is an allowable deduction for a manufacturing company.

Facts

  • The assessee, an automobile manufacturer, claimed a deduction for a provision for bad and doubtful debts of ₹16.15 crores, which was debited to its P&L account.
  • The Assessing Officer (AO) did not allow this deduction.
  • The Commissioner (Appeals) directed the AO to allow the deduction, relying on a decision of the co-ordinate bench of the Tribunal in the assessee’s own case for a prior year.
  • The Revenue could not provide any material to deviate from the findings of the prior-year precedent.

Decision

  • The court ruled in favour of the assessee.
  • It found no infirmity in the C(A)’s order, as it was based on a binding precedent in the assessee’s own case that the Revenue could not controvert.

Key Takeaways

  • Principle of Consistency: This is another strong affirmation of the principle of consistency. Once an issue (even a debatable one like the allowability of a provision for bad debts for a non-banking company) is decided in an assessee’s favor, it must be followed in subsequent years unless the facts change.
  • Binding Precedent: The C(A) and the court are bound by the decisions of the co-ordinate or higher benches on the same issue for the same assessee.

Claim for Foreign Taxes Paid Remanded for Verification and Decision

Issue

What is the correct appellate procedure when an assessee makes a fresh claim for a deduction (for income tax paid in Chile) for the first time before the Commissioner (Appeals) [C(A)]?

Facts

  • During the assessment, the assessee made a new submission (not in the original return) claiming a deduction for income tax paid in Chile, which had been debited to its P&L account.
  • The AO did not allow this new claim.
  • The C(A) directed the AO to verify the details and allow the same if found correct.

Decision

  • The court modified the C(A)’s order and remanded the matter.
  • It held that while the C(A) was correct to admit the fresh claim for examination, it was not correct to give a binding direction to allow it.
  • The proper course was to remand the issue to the Assessing Officer (AO) to verify the details and then decide the allowability of the claim in accordance with the law.

Key Takeaways

  • Remand for Factual Verification: When a new claim that requires factual verification (like proof of foreign tax payment) is admitted at the appellate stage, the C(A) should not decide the claim itself. It must be remanded to the AO for verification.
  • C(A) Cannot Direct Allowance: The C(A)’s direction should be to “verify and decide as per law,” not to “verify and allow.” The legal allowability of the claim (e.g., whether foreign tax is a deductible expense under Section 37 or is governed by DTAA credit) must still be determined by the AO.

Expenditure on Software Purchase and Upgradation Held to be Revenue in Nature

Issue

Whether expenditure incurred by a company for the purchase and upgradation of application software, used in its business and R&D units, is an allowable revenue expenditure or a capital expenditure.

Decision

  • The court held yes, the expenditure incurred for the purchase and upgradation of software was to be allowed as a revenue expenditure.

Key Takeaways

  • Nature of Software Expenditure: This ruling treats software purchase and, in particular, software upgradation as a revenue expense.
  • Rationale: This is often justified on the grounds that software has a very short useful life, requires constant updates, and does not create an enduring capital asset, making it more akin to a tool of business or a running expense.
IN THE ITAT MUMBAI BENCH ‘B’
Deputy Commissioner of Income-tax
v.
Bajaj Auto Ltd.*
SANDEEP SINGH KARHAIL, Judicial Member
and Narendra Kumar Billaiya, Accountant Member
IT Appeal No. 3623 (Mum.) of 2025
[Assessment year 2021-22]
OCTOBER  16, 2025
Satyaprakash R. Singh, CIT-DR for the Appellant. Ms. Vasanti Patel for the Respondent.
ORDER
Sandeep Singh Karhail, Judicial Member. – The Revenue has filed the present appeal against the impugned order dated 13/03/2025, passed under section 250 of the Income-tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment year 2021-22.
2. In this appeal, the Revenue has raised the following grounds: –
“(i) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that expenditures on dies and moulds are revenue expenditure and not capital expenditure, ignoring the fact that dies & moulds deliver benefits of enduring nature and therefore is in the nature of capital expenditure.
(ii) “Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that expenditure on Jigs & Fixtures is revenue expenditure and not capital expenditure, ignoring the fact that Jigs & Fixtures deliver benefits of enduring nature and therefore is in the nature of capital expenditure.
(iii) “Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in directing the Assessing Officer to verify and allow an additional claim of 1,04,79,969/- towards stamp duty as part of the cost of acquisition for computing short-term capital gains, when such claim was not made in the original return of income nor through a revised return, in contravention of the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. v. CIT (2006] 284 ITR 323 (SC)?”
(iv) “Whether, on the facts and in the circumstances of the case and in law, the CIT(A) erred in allowing the claim of deduction in respect of proportionate premium paid on leasehold land without appreciating the fact that the same constitutes capital expenditure and the claim has not been made in original return filed?
(v) Whether, on the facts and in the circumstances of the case and in law, the La. CIT(A) was erred in in allowing the deduction of Rs. 16,15,24,570/- claimed by the assessee during the course of assessment proceedings as “Provision for Bad and Doubtful Debts and Advances”, despite the same not having been claimed in the original return of income and in the absence of actual write-off of individual debtor balances as mandated under Section 36(4)(vii) of the Income-tax Act, 1961?
(vi) Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was erred in directing the Assessing Officer to verify and allow the claim of deduction of Rs. 1,35,717/- towards income tax paid in Chile, despite the fact that the said claim was not made by the assessee in the original return of income or by way of a revised return, and was raised only during the course of assessment proceedings.
(vii) Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was erred in deleting the deduction in respect of software expenses without appreciating the fact that the same constitutes capital in nature?”
3. The issue arising in Ground No.1, raised in Revenue’s Appeal, pertains to the nature of expenditure incurred by the assessee on dyes and moulds.
4. The brief facts of the case pertaining to this issue as emanating from the record are: The assessee is engaged in the business of development, manufacturing and distribution of automobiles such as motorcycles, commercial vehicles, etc., and parts thereof. For the year under consideration, the assessee filed its revised return of income on 31.03.2022, declaring a total income of Rs.52,68,44,94,030/-. The return filed by the assessee was selected for compulsory scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, it was noticed that the assessee incurred an amount of Rs.98,30,15,264/- for the purchase of dyes and moulds during the year under consideration and claimed the expenditure as revenue expenditure. Accordingly, the assessee was asked to justify with documentary evidence why the expenditure incurred on dyes and moulds should not be treated as capital expenditure following the approach adopted in the assessment orders passed in preceding years. In response, the assessee submitted that the sum of Rs.98,30,15,264/- incurred by the assessee for purchase/manufacture of dyes and moulds and the same is used for production of parts used in manufacture of company’s products. The assessee further submitted that cost of new dyes and moulds claimed as deduction, during the year under consideration, represents only replacements either on account of wear and tear of the dyes or change in the design of the parts. The assessee further submitted that dyes and moulds purchased during the year does not result in creation of any new capital asset, it does not provide any benefit of enduring nature to the company, and therefore, cannot be held to be capital expenditure and hence the expenditure incurred by the assessee on purchase of dyes and moulds should be allowed as deduction. In this regard, the assessee also placed reliance upon decisions of Co-ordinate Bench of the Tribunal rendered in its own case in preceding years.
5. The Assessing Officer (“AO”), vide order dated 30.12.2022 passed under section 143(3) r.w.s. 144B of the Act, disagreed with the submissions of the assessee and following the approach adopted by the Revenue in the preceding years held the expenditure incurred on dyes and moulds by the assessee to be capital in nature. Since the expenditure was treated as capital in nature, the AO allowed depreciation on the same to an extent of Rs.32,31,52,993/-.
6. The learned CIT(A), following the decision of a Tribunal in assessee’s own case for the assessment year 2001-02 deleted the addition made by the AO. Being aggrieved, the Revenue is in appeal before us.
7. During the hearing, the learned Authorized Representative (“learned AR“) submitted that this issue has been consistently held in favour of the assessee by various decisions of the Co-ordinate Bench of the Tribunal.
8. On the other hand, the learned Departmental Representative (“learned DR“) vehemently relied upon the assessment order.
9. We have considered the submissions of both sides and perused the material available on record. We find that similar issue came up for consideration in assessee’s own case before the Co-ordinate Bench of the Tribunal in DCIT v. Bajaj Auto Limited [ITA ppeal No.4372(Mum)2005, dated 23-2-2024], for the assessment year 2001-02. Following the decisions rendered in preceding years the Co-ordinate Bench decided this issue in favour of the assessee, by observing as follows:
“14. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1997-98. While deciding the issue, the Coordinate Bench of the Tribunal in ITA. No. 5030/Mum/2001 dated 13.04.2023 held as under:-
“4. At the outset, with regard to Ground No. (a), which is in respect of allowing the expenditure on dies & moulds of 2.7,16,16,415/- as a revenue expenditure, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee’s own case and decided the issue in favour of the assesse and against the department.
5. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR.
6. Considered the rival submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee in the A.Y. 199596. While deciding the issue, the Coordinate Bench of the Tribunal in ITA. No. 3493/Mum/1999 dated 20.01.2021 held as under: –

“55. Considered the rival submission and material placed on record. We notice from the records that the identical issue has already been decided by the Coordinate Bench of ITAT in assessee’s own case for Assessment Year: 1990-91 to 1994-95 (ITA No. 6324 & 6325/Mum/2010 and 6963 & 6964/Mum/2014) on merits. For the sake of clarity, relevant portion of the said decision is reproduced below:-

5.1. We find that for the Assessment Year 1991, 1993-94 & 1994-95, the only ground raised by the revenue is with regard to the direction of the Ld. CIT(A) in allowing the revenue expenditure in respect of replacement of figs and fixtures and dies and moulds. The decision restored by us in ground no. 1 for Assessment Year 1990-91 would hold good for the same. Accordingly, the grounds raised by the revenue are dismissed.

56. Therefore, respectfully following the above decisions of Coordinate bench of ITAT in assessee’s own case which is applicable mutatis mutandis in the present case, we are inclined to accept the submission of Ld. AR. Accordingly, this ground raised by the revenue is dismissed.”

7. We further observe that in assessee’s own case for the immediately preceding Assessment Year i.e. A.Y. 1996-97, the Tribunal decided the above issue in favour of the assessee following the decision for the A.Y.1995-96. Respectfully following the above decisions and following the principle of consistency, the view taken by the Tribunal in A. Y. 1995-96 is respectfully followed, ground raised by the revenue is accordingly dismissed.”
10. We find that recently the Co-ordinate Bench of the Tribunal in assessee’s sister concern case in ACIT v. Bajaj Holdings and Investments Ltd. [ITAppeal No.5510 (Mum) of 2012, dated 26-08-2025], for the assessment year 2007-08 also rendered the similar findings. The Revenue could not bring any material to deviate from the decisions so rendered by the Tribunal on this issue. Accordingly, respectfully following the decision cited supra, which is also followed by the learned CIT(A), we do not find any infirmity in the findings of the learned CIT(A) on this issue. Accordingly, the same are upheld and ground no.1 raised in Revenue’s appeal is dismissed.
11. The issue arising in ground no.2, raised in Revenue’s Appeal, pertains to the nature of expenditure incurred on jigs and fixtures.
12. The brief facts of the case pertaining to this issue are that during the year under consideration, the assessee incurred an expenditure amounting to Rs.29,70,22,551/- for the purchase of jigs and fixtures. During the assessment proceedings, the assessee was asked why the expenditure incurred on jigs and fixtures should not be disallowed following the approach adopted by the Revenue in preceding years. In response, the assessee submitted that jigs and fixtures are basically tooling aids required in the production process. The assessee further submitted that jigs and fixtures are part of the machinery in a large automobile factory of the assessee, and their wear and tear, as well as changes in the design of parts, make their life minimal. Accordingly, the assessee submitted that the expenditure incurred on replacements made after the end of initial life of jigs and fixtures is treated as revenue expenditure. The assessee also submitted that the jigs and fixtures purchased during the year does not result any creation of new capital asset and does not provide any benefit of enduring nature to the company. Therefore, the assessee submitted that such an expenditure should be allowed as revenue expenditure. In this regard, the assessee placed reliance upon the decision of the Co-ordinate Bench of the Tribunal in its own case wherein such expenditure was treated as revenue expenditure.
13. The AO, vide assessment order, disagreed with the submissions of the assessee and following the approach adopted by the Revenue in preceding years treated the expenditure incurred on purchase of jigs and fixtures as capital expenditure. Further, the AO also allowed the depreciation to an extent of Rs.17,31,91,734/- on the same. The learned CIT(A), vide impugned order, allowed the ground raised by the assessee on this issue following the decision of the Tribunal rendered in assessee’s own case for the assessment year 200203 cited supra. Being aggrieved, the Revenue is in appeal before us.
14. We have considered the submissions of both sides and perused the material available on record. We find that the Co-ordinate Bench of Tribunal in assessee’s own case for the assessment year 2001-02 cited supra, vide order dated 23.02.2024 by following the decisions rendered in preceding years held that the expenditure incurred on jigs and fixtures is revenue in nature. The relevant findings of the Co-ordinate Bench of the Tribunal, in the aforesaid decisions are reproduced as follows:
“22. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1997-98. While deciding the issue, the Coordinate Bench in ITA. No. 5030/Mum/2001 dated 13.04.2023held as under:-

“13. With regard to Ground No. (c) which is in respect of directing the Assessing Officer to allow deduction of 8.2,36,37,738/- towards expenditure relating to purchase of jigs and fixtures, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee’s own case and decided the issue in favour of the assesse and against the department.

14. On the other hand, Ld. DR has fairly accepted the submissions of the Ld. AR.

15. M/s. Bajaj Auto Limited Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A. Y. 1995-96. While deciding the issue, the Coordinate Bench of the Tribunal in ITA. No. 3493/Mum/1999 dated 20.01.2021 held as under: –

“57. With regard to this ground, Ld. AR brought to our notice para 8-8.5 of assessment order and para 33 of CIT(A)’s order and submitted that the similar issue has already been decided by the Coordinate Bench of ITAT in assessee’s own case for Assessment Year: 1990-91 to 1994-95 (ITA No. 6324 & 6325/Mum/2010 and 6963 & 6964/Mum/2014) on merits in favour of the assessee.

58. On the other hand, Ld. DR relied on the orders passed by revenue authorities, however he conceded that this ground is covered by the decision of ITAT.

59. Considered the rival submission and material placed on record. We notice from the records that the identical issue has already been decided by the Coordinate Bench of ITAT in assessee’s own case for Assessment Year : 1990-91 to 1994-95 (ITA No. 6324 & 6325/Mum/2010 and 6963 & 6964/Mum/2014) on merits. For the sake of clarity, relevant portion of the said decision is reproduced below:-

3.1. We have heard rival submissions and perused the materials available on record. We find ‘that the assessee company had incurred expenditure on jigs and fixtures amounting to Rs. 1,06,11,0647- including capital work in progress amounting to Rs.11, 18,955/-during the Financial Year 1989-90 relevant to A. Y. 1990-91. Assessee submitted that these are nothing but replacement of jigs and fixtures in the main plant and machinery and would be eligible for deduction as revenue expenditure. During the course of assessment proceedings, the assessee requested the Id. AO to allow the sum of Rs.94,92,103/- as deduction in A.Y. 1990-91 and the balance sum of Rs.11,18,955/- in A.Y. 1991-92 since the said amount was lying in capital work in progress and the same was not put to use during the A. Y. 1990-91. We find that the Id. AO observed that the expenditure incurred on replacement of jigs and fixtures would be capital expenditure and accordingly, granted depreciation thereon. It is not in dispute that assessee had indeed capitalised the replacement cost of jigs and fixtures in its books and had claimed depreciation as per Companies Act in its books. However, for the purpose of Income Tax, the assessee had claimed the said expenditure as the revenue expenditure on the ground that the said expenditure would fall under the category of “current repairs”. We find that the present state of appellate proceedings is the second round of proceedings, since in the first round, this Tribunal had restored this issue to the file of the Id. CIT(A) for adjudication in the light of various judicial decisions relied upon by the assessee. We find that the expenditure incurred on replacement of jigs and fixtures are basically toolling aids required in the production process and these items are part of the machinery in automobile industry. We find that these jigs and fixtures need to be constantly replaced due to constant wear and tear and also due to changes in the design of the part. It is not in dispute that the ‘expenditure incurred on jigs and fixtures at the time of first purchase together with the main plant and machinery was duly capitalised by the assessee at the time of first purchase for the purpose of Income Tax Act and depreciation claimed accordingly for the purpose of Income Tax Act. Later, whenever the said jigs and fixtures were replaced for the reasons stated supra, the assessee has been claiming the same as revenue expenditure for the purpose of Income Tax Act. We find that this argument was duly ‘appreciated by the Id. CIT(A) and the Id. CIT(A) duly granted relief to the assessee in this regard by following the decision of his predecessor in assessee’s own case for the A.Yrs 2002-03, 2005-06 and 200607.

60. Therefore, respectfully following the above decisions of Coordinate bench of ITAT in assessee’s own case which is applicable mutatis mutandis in the present case, we are inclined to accept the submission of Ld. AR. Accordingly, this ground raised by the revenue is dismissed.”

16. Further, in assessee’s own case for the A.Y. 1996-97 the Coordinate Bench in ITA.No. 2230/Mum/2000 dated 20.06.2022, held as under: –

“16. The assessee has purchased Jigs and Fixtures to the tune of Rs. 1,83,34,475/- to be used in production process. The assessee revenue. claimed the said expenditure as against the claim of assessee the Assessing Officer treated the expenditure as capital in nature and allowed depreciation on the same. In the first appellate proceedings, the CIT(A) reversed the findings of Assessing Officer and held the expenditure to be on revenue account. We find that in immediate preceding assessment year, the Tribunal following its earlier order in assessee’s own case for assessment years 1990-91 to 1994 revenue. held the expenditure on Jigs and Fixtures as We find no infirmity in the findings of the CIT(A) on this issue. Ergo, ground No 3 raised in the appeal by Revenue is dismissed.”

17. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 1996-97 is respectfully followed, accordingly, ground raised by the revenue is dismissed.”

23. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 1997-98 is respectfully followed, accordingly, ground raised by the revenue is dismissed.”
15. We find that similar findings were also rendered by the Co-ordinate Bench of the Tribunal in Bajaj Holding and Investment Ltd.v. Addl. CIT [ITAppeal No.2899(Mum) of 2010] for the assessment year 2002-03 vide order dated 24.06.2024.
16. The Revenue could not bring any material on record to deviate from the findings so rendered by the Co-ordinate Bench of the Tribunal in preceding years. Therefore, respectfully following the decision of the Tribunal cited supra, which has also been followed by the learned CIT(A), we do not find any infirmity in the findings of the learned CIT(A) on this issue. Accordingly, the same are upheld and ground no.2 raised in Revenue’s appeal is dismissed.
17. The issue arising in ground no.3, raised in Revenue’s appeal, pertains to the allowability of stamp duty paid by the assessee.
18. The brief facts of the case pertaining to this issue are that during the assessment proceedings, the assessee made an additional claim that the stamp duty paid on purchase of shares is to be reduced from the sale consideration for the purpose of computing short term capital gains. The AO, vide assessment order, rejected such an additional claim by the assessee on the basis that such claim was not made through tax return by placing reliance upon the decision of the Hon’ble Supreme Court in Goetze (India) Ltd. v. CIT [2006]  (SC). The learned CIT(A) vide impugned order, directed the AO to verify the claim properly before allowing the same. Being aggrieved the Revenue is in appeal before us.
19. We have considered the submissions of both sides and perused the material available on record. At the outset, we find that the Hon’ble Supreme Court in Goetze (India) Ltd. (supra) and Hon’ble Jurisdictional High Court in CIT v. Pruthvi Brokers and Shareholders Pvt. Ltd.  (Bombay)/[2012] 349 ITR 336 (Bombay), have held that the appellate authority can entertain a fresh claim made by the assessee, even if such a claim is not made in the return of income or by way of revised return of income. Therefore, respectfully following the aforesaid decisions, we do not find any infirmity in the findings of the learned CIT(A) in admitting the claim of the assessee and directing the AO to verify the same. Accordingly, the findings of the learned CIT(A) on this issue are upheld and ground no.3 raised in Revenue’s appeal is dismissed.
20. The issue arising in ground no.4, raised in Revenue’s appeal, pertains to deletion of disallowance of deduction in respect of proportionate premium of leasehold land.
21. The brief facts of the case pertaining to this issue are that during the assessment proceedings, the assessee vide its submission claimed for deduction of proportionate premium paid on leasehold land amounting to Rs.65,41,798/-, which was debited to the profits and loss account but no deduction claimed in the return of income filed by the assessee. The AO vide impugned order did not allow the claim of the assessee.
22. The learned CIT(A), vide impugned order following the decision of the Co-ordinate Bench of the Tribunal in assessee’s own case held that amount written off in respect of premium on leasehold land is allowable as deduction. Being aggrieved, the Revenue is in appeal before us.
23. We have considered the submissions of both sides and perused the material available on record. We find that while deciding the similar issue, the Co-ordinate Bench of the Tribunal in Bajaj Holdings and Investment Ltd. (Erstwhile Bajaj Auto Ltd.) (supra), for the assessment year 2002-03, vide order dated 24.06.2024 following the decisions of the Tribunal on similar issue observed as follows:
“13. Heard both the sides and perused the material on record. With the assistance of id. representative we have perused the decision of ITAT Mumbai in the case of the assessee itself vide ITA No. 3055/Mum/2005 dated 28.11.2023. The relevant extract of the decision is reproduced as under:

“40. The assessee claim annual rent payable as per the lease agreement as deduction which was not allowed by the AO. However, the Ld. CIT(A) allowed the claim of the assessee. We find that similar issue on identical fact has been decided by the co-ordinate bench of ITAT in the case of assessee itself vide ITA No. 3493/ Mum/ 1999 (A.Y. 1995-96), 1781/Mum/2000 (1996-97), 5030/ Mum/2001 (A.Y. 1997-98), 8952/Mum/2004 (1998- 99).

41. Following the decision, we do not find any merit in the appeal of the revenue. Therefore, this ground of appeal of the revenue stand dismissed.

Following the decision of the ITAT as referred supra we allow this ground of appeal of the assessee.”
24. The Revenue could not bring any material on record to deviate from the findings so rendered by the Co-ordinate Bench in the aforesaid decision. Therefore, respectfully following the decision of the Co-ordinate Bench cited supra, we do not find any infirmity in the findings of the learned CIT(A) on this issue, and the same are upheld. As a result, ground no.4 raised in Revenue’s appeal is dismissed.
25. The issue arising in ground no.5 raised in Revenue’s Appeal pertains to the deletion of disallowance of deduction in respect of provision for bad and doubtful debts and advances.
26. The brief facts of the case pertaining to this issue are that the assessee during the assessment proceedings vide its submissions claimed for deduction of “provision for bad and doubtful debts and advances” which are debited in the profit and loss account but no deduction was claimed in the return of income. As per the assessee, a sum of Rs.16,15,24,570/- was debited to the profit and loss account under the head “provisions for bad and doubtful debts and advances“. Further, the said provision was reduced from the respective assets for which it was created, however, no deduction was claimed in respect of said provision. The learned CIT(A), following the decision of the Hon’ble Supreme Court in Vijaya Bank v. CIT  (SC)/[2010] 323 ITR 166 (SC) and the decision of the Tribunal rendered in assessee’s own case directed the AO to allow the deduction in respect of provision for bad and doubtful debts and advances made by the assessee during the year under consideration. Being aggrieved, the Revenue is in appeal before us.
27. We have considered the submissions of both sides and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in ACIT v. Bajaj Holdings Investment Ltd. [ITA No.5030(Mum) of 2001, dated 13-04-2023], for the assessment year 1997-98, while deciding this issue, observed as follows:
“102. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1996-97. While deciding the issue, the Coordinate Bench of the Tribunal in the immediately preceding assessment year in ITA. No. 1781/Mum/2000 dated 20.06.2022 following the decision in assessee’s own case for the A.Y. 1995-96, held as under: –

“19. A perusal of the assessment order shows that in computation of total income the Assessing Officer has added provision for bad and doubtful debts Rs.2,85,47,483/-. However, the Assessing Officer has not given any reasoning for adding provision for doubtful debts. In the first appellate proceedings the CIT(A) has directed the Assessing Officer to allow deduction of the aforesaid amount. Against this the Revenue is in appeal before the Tribunal. We find that in assessment year 1995-96 the Assessing Officer in identical manner had added provision for doubtful debts. The CIT(A) directed the Assessing Officer to delete the addition. The Revenue carried the issue in appeal before the Tribunal. The Tribunal following the decision rendered in the case of Vijaya Bank v. CIT, 323 ITR 166 (SC) upheld the findings of CIT(A) and dismissed the ground raised by the Revenue. In the impugned assessment year there is no change in the facts. Consequently, the ground No.6 raised in the appeal by the Revenue is dismissed:-

103. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 1996-97 is respectfully followed, accordingly, ground raised by the assessee is allowed.”
28. We find that similar findings were rendered in assessee’s own case by the Co-ordinate Bench of the Tribunal in Bajaj Auto Ltd. v. DCIT [ IT Appeal No. 2125(Mum) of 2025] for the assessment year 2000-01.
29. The Revenue could not bring any material on record to deviate from the findings so rendered by the Co-ordinate Bench of the Tribunal in decisions cited supra. Therefore, respectfully following the same, we do not find any infirmity in the findings of the learned CIT(A) on this issue, and therefore, the same are upheld. As a result, ground no.5 raised in revenue’s appeal is dismissed.
30. The issue arsing in ground no.6 raised in Revenue’s appeal, pertains to deduction claimed in respect of income tax paid in Chile.
31. The brief facts of the case pertaining to this issue as emanating from the record are that the assessee during the assessment proceedings, vide its submission claimed for deduction in respect of income tax paid in Chile, which was debited to the profit and loss account but no deduction was claimed in the return of income filed by the assessee. The AO, vide assessment order, did not allow the deduction claimed by the assessee. The learned CIT(A) vide impugned order, directed the AO to verify the income tax details paid in Chile and allow the same if found correct. Being aggrieved, the Revenue is in appeal before us.
32. During the hearing, the learned DR vehemently objected to the direction of the learned CIT(A) to allow the claim of the assessee and placed reliance upon the decision of the Co-ordinate Bench of the Tribunal in Bank of India v. ACIT  (Mumbai – Trib.)/ ITA No.869/Mum/2018, order dated 04.03.2021.
33. Having considered the submission of both sides and perused the material available on record, it is evident that the assessee made the claim for deduction for the first time before the AO and no such deduction was claimed in the return of income filed by the assessee. As noted in the foregoing paragraphs, the appellate authority can entertain such fresh claim made by the assessee, even if such a claim was not made in the return of income or by way of revised return of income. Therefore, we do not find any infirmity in the findings of the learned CIT(A) to the extent that such fresh claim of the assessee was admitted. However, since such a claim was made for the first time, we are of the considered view that it needs to be examined in the light of the law on the subject. Therefore, we deem it appropriate to amend the directions of the learned CIT(A) and accordingly direct the AO to verify the claim and decide on the allowability of the deduction of income tax paid by the assessee in Chile as per law. Accordingly, the directions issued by the learned CIT(A) vide impugned order are accordingly modified. As a result, ground no.6 raised in Revenue’s Appeal is partly allowed for statistical purposes.
34. The issue arising in ground no.7, raised in Revenue’s Appeal, pertains to the allowability of deduction of software expenditure.
35. The brief facts of the case are that during the appellate proceedings before the learned CIT(A), the assessee raised an additional ground of appeal in respect of allowability of software expenses amounting to Rs.2,67,32,045/. The learned CIT(A), vide impugned order, following the decisions of the Coordinate Bench of the Tribunal on this issue held that such software expenses are Revenue in nature. Being aggrieved, the Revenue is in appeal before us.
36. We have considered the submission of both sides and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in Bajaj Holdings and Investment Ltd. (supra) for the assessment year 2002-03 vide order dated 24.06.2024 held that the expenditure incurred on software maintenance charges is an allowable expenditure. In the present case, it is an undisputed fact that this expenditure was incurred by the assessee for purchase of application software, which was used in business units and inhouse research and development unit. Therefore, it is a plea of the assessee that the expenditure incurred for purchase and upgradation of software amounts to revenue expenditure. The Revenue could not bring any material to controvert the submission of the assessee. Accordingly, respectfully following the decision of the Co-ordinate Bench cited supra, we do not find any infirmity in the findings of the learned CIT(A) on this issue, and therefore, the same are upheld. As a result, ground no.7 raised in Revenue’s Appeal is dismissed.
37. In the result, the appeal by the Revenue is partly allowed for statistical purposes.