Dismissing the appeal the Court held that the assessee had started a new unit at Hosur in the financial year 2004-05 by taking over machinery and properties of V. on lease. The work of development of the new product was started in the financial year 2005-06 in the Hosur unit. The product was developed in the financial year 2006-07. Thus, the assessee had produced a new product from which enduring benefit was derived. Therefore, it had to be treated as capital expenditure. The assessee itself in the books of account had shown it as capital expenditure. Therefore, the Assessing Officer, the Commissioner (Appeals) and the Tribunal had rightly treated the expenditure incurred by the assessee for development of a new asset as capital expenditure. Followed  Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 (SC)  ( AY.2006-07, 2007-08)