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Varying treatments to an expenditure in the books/balance sheet and income tax return could sometime prove into a disastrous tax planning .
The assessee pharmaceutical company lost its claim for deduction of product development expenses in [2020] 427 ITR 325 (Kar) before the AO, the Commissioner (Appeals) and the Tribunal more particularly because the company itself in the books of account had shown it as capital expenditure.
The Revenue in their first and foremost mentioned to the Court that the assessee itself had capitalized the expenditure in developing new product in the books of account. This submission actually weighed much to the High Court which in their last conclusion also held such fact finding pertinent to the case

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