TMI Blog2012 (11) TMI 1268X X X X Extracts X X X X X X X X Extracts X X X X ..... is in appeal in ITA No.959/Ahd/2012 and ITA No.1751/Ahd/2012 for the assessment years 2008-09 and 2009-10 against the orders of the learned CIT(A)-I, Baroda (i) in appeal No. CAB-I/124/10-11 dated 16-02-2012 and (ii) in appeal No. CAB-I/217/11-12 dated 05-05-2012 respectively. All the above orders of the learned CIT(A) are passed u/s 250 read with section 143(3) of the IT Act and the issue is identical viz. disallowance of purchase and consumption of tools and instruments as revenue expenditure treating it to be as capital expenditure . Since the issue is identical in all the appeals they were heard together and are being disposed off by this consolidated order for the sake of convenience. ITA No.2457/Ahd/2010 (Revenue s appeal f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instruments. After considering the submission of the assessee the learned AO arrived at the following conclusion. In view of the above discussion, the tools and instruments are treated as part of plant and machinery. Consequently, expenditure on purchase of tools, etc. of ₹ 37,07,660/- [ ₹ 39,32,660/- less ₹ 2,50,000/-] is disallowed as capital expenditure and added to the income of the assessee. Since, the assessee has not submitted as to when these assets were put to use depreciation at half of the eligible rate is allowed. Accordingly, after allowing depreciation a net disallowance of ₹ 34,29,585/- [₹ 37,07,660 less depreciation of 7.5% ₹ 2,78,075 ] is made and the same is added back to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned AO and submitted that his order may be sustained. The learned AR on the other hand submitted that this issue is covered by various decisions of the ITAT Ahmedabad Benches and the order of the Hon ble Jurisdictional High Court of Gujarat in the case of the assessee and in support of his contention he referred to paper book pages 7 to 46. 5. We have heard the rival submissions and carefully perused the materials on record along with paper book submitted by the assessee containing pages 1 to 46. On perusal of records, it is apparent that this issue has been decided by our Co-ordinate Benches against the revenue and in favour of the assessee for the assessment year 2006-07 in the departmental appeal in ITA No.728/Ahd/2010 vide ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the item in the profit and loss account. In the year under appeal the factual position is that the assessee has not valued the stock of consumables and considered it as part of closing stock of inventory but has written it off to the profit and loss account. Further CIT(A)has given a finding that none of the items of consumables have a life of more than a few days. The quantity consumed itself indicates that the life of each item was very short. No item of purchase has been identified which could qualify as a capital item. From the nature of items it is quite apparent that the purchased related to items to items of day to day consumption in the ordinary course of manufacturing business. The accounting method followed by the assessee has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein grounds No.2 and 3 of the appeal are general in nature and do not survive for adjudication. The only ground No.1 surviving for adjudication is reproduced herein below for reference: 1. Ld. CIT(A) erred in law and on facts in confirming action of AO in making addition of ₹ 27,35,460/- by disallowing revenue expenses claimed in Profit Loss a/c on account of consumption of tools and instruments. Both the lower authorities failed to appreciate the fact that the appellant claimed expenses in respect of tools/instruments consumed in the manufacturing process that were duly written off in the books of account. Ld. CIT(A) ought to have held the expenses to be revenue in nature for the consumables as certified by the Chart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure incurred on purchase of tools and instruments to be in the nature of revenue expenditure by following the order of our Co-ordinate Bench for the AY 2006-07 cited supra. Since the facts and issue for the relevant assessment years 2008-09 and 2009-2010 are exactly identical to the facts and the issue of the case for the AY 2007-08, following our decision for the assessment year 2007-08 cited above, we hereby hold that the learned CIT(A) was not justified in confirming the additions in both the assessment years 2008- 09 and 2009-10 amounting to ₹ 27,35,460/- and ₹ 27,45,873/- respectively. Therefore, we hereby delete the additions made by the learned AO for the AY 2008-09 and 2009-2010 for ₹ 27,35,460/- and ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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