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IN THE HIGH COURT OF PUNJAB AND HARYANA

AT CHANDIGARH

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204 ITA-271-2009 (O&M)

Date of Decision: 05.02.2026

COMMISSIONER OF INCOME TAX ...Appellant

Vs.

M/S GLAXO SMITHKLINE CONSUMER HELATHCARE LTD.

…Respondent

CORAM:- HON'BLE MR. JUSTICE JAGMOHAN BANSAL

HON'BLE MR. JUSTICE AMARINDER SINGH GREWAL

Present:- Ms. Urvashi Dhugga, Sr. Standing Counsel with

Mr. Vaibhav Gupta, Jr. Standing Counsel and

Ms. Kavita, Advocate

for Income Tax

Mr. Rohit Jain, Advocate (through V.C.) and

Mr. Abhishek Sharma, Advocate

for the assessee

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JAGMOHAN BANSAL, J. (ORAL)

1. The appellant through instant appeal under Section 260A of the

Income Tax Act, 1961 (for short ‘1961 Act’) is seeking setting aside of order

dated 21.03.2007 passed by Income Tax Appellate Tribunal, Chandigarh (for

short ‘ITAT’).

2. The appellant has raised following questions for adjudication by

this Court:-

i. Whether on facts and in the circumstances of the case, the

ITAT is right in law in treating the expenditure incurred on

product development as revenue expenditure, when the

purpose of the expenditure & its intended reality is to obtain

benefit of enduring nature?

ii. Whether on the facts and in the circumstances of the case, the

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ITAT was right in holding that Excise Duty will not form part

of "total turnover" while computing deduction u/s 80HHC?

iii. Whether on the facts and in the circumstances of the case the

ITAT was right in law in allowing the deduction u/s 80-I of the

1961 Act, in as much as the machinery had been installed in the

same existing factory premises, which is an expansion of the

existing factory?

iv. Whether on the facts and in the circumstances of the case, the

ITAT is correct in law in holding that interest on capital

borrowed for acquisition of new machinery and overhead

expenses incurred during trial run period in expansion of its

existing business are expenses of revenue nature?

v. Whether on the facts and in the circumstances of the case, the

ITAT is correct in law in holding that expenditure incurred on

implementation of the new ERP package, an input to take

business decisions and which results into carrying on business

more efficiently and smoothly, cannot be said to be an

advantage accruing in the capital field?

vi. Whether on the facts and in the circumstances of the case, the

ITAT was right in law in upholding the order of the CIT (A) in

deleting the addition made on account of change in the method

of valuation of closing stock in respect of excise duty?'

3. Learned counsel for the parties are ad idem that questions No.1,

2, 4 and 6 stand answered by this Court vide order dated 04.02.2026 passed

in ITA-267-2009, order dated 27.01.2026 passed in ITA-645-2008, order

dated 19.01.2026 passed in ITA-269-2009 and order dated 27.11.2025 passed

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in ITR No.62 to 65 of 1995, respectively. Ordered accordingly.

4. Question No.3:- Whether on the facts and in the circumstances

of the case the ITAT was right in law in allowing the deduction u/s 80-I of the

1961 Act, in as much as the machinery had been installed in the same

existing factory premises, which is an expansion of the existing factory?

4.1 Learned counsel for appellant submits that respondent-assessee

did not carry out expansion during Assessment Year 2000-01, thus, it was not

entitled to deduction from profit as provided under Section 80-I of 1961 Act.

From the perusal of impugned orders, it is evident that the respondent had not

carried out expansion during aforesaid Assessment Year, thus, was not

entitled to deduction.

4.2 From the perusal of order of Assessing Officer, it is evident that

deduction under Section 80-I was denied on the ground that it was denied in

previous years and matter was pending before ITAT. Deduction under

Section 80-I is not granted on the basis of expansion carried out in each year.

Deduction is granted for 10 years. It was irrelevant whether assessee carried

out expansion during A