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2013 (8) TMI 1105

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..... directing the deletion of ₹ 34,29,000/- added by the Assessing Officer on account of disallowance of capital expenditure debited to Profit & Loss account against the head Purchase of Tools and Instruments . 2.1 Tax Appeal No.505 of 2013 relates to Assessment Year 2008-09 whereby the appeal preferred by the assessee has been allowed quashing and setting aside the order of CIT(Appeals), which confirmed the action of the Assessing Officer in making addition of ₹ 27,35,460/- by disallowing the revenue expenses claimed in Profit & Loss account for the purchase of tools and instruments. 2.2 Tax Appeal No.507 of 2013 relates to Assessment year 2009-2010 by which the Tribunal has upheld the version of the assessee respondent by .....

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..... nch as also by giving cogent reasons for treating such expenditure as revenue in nature. 6. This decision came to be followed in subsequent years by the Tribunal. Aggrieved by this approach of the Tribunal, the Revenue has challenged the same in these Tax Appeals proposing the following substantial questions of law for our consideration: Whether, on the facts and in the circumstances of the case, the tribunal was right in not following its own decision in assessee s own case for A.Y. 1998-99 and deleting the addition made on account of expenditure incurred for the purchase of tools and instruments and also ignoring the ratio laid down in the Hon ble Supreme Court decision in the case of CIT vs. Coal Shipmen Pvt. Ltd. reported in 82 ITR 902 .....

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..... d noted that none of these items of consumables had a life of more than a very few days. The total quantity consumed also had fortified the fact that each item had a very short span. Thus, from the very nature of item and from the very process of consumption in the ordinary course of manufacturing business, they were treated as revenue expenditures. Thus, reliance of the Assessing Officer on Assessment Year 1998-99 was wrong since the assessee had changed the method and calculated the consumption of tools and equipments on the basis of closing stock of items and the accounting method valued by the assessee also had not been disputed by the Department by bringing any material to the contrary. Moreover, reliance was also placed on judgment of .....

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