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2012 (11) TMI 1268

Soparkar, AR ORDER Per A. Mohan Alankamony These are three appeals - one preferred by the revenue and the other two by the assessee. The revenue is in appeal in ITA No.2457/Ahd/2010 which is directed against the order of the learned CIT(A)-I, Baroda in appeal No. CAB-I/204/09-10 dated 20-04-2010 for the assessment year 2007-08, while as the assessee 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 id .....

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ring the course of assessment proceedings the learned AO noticed that the assessee had claimed revenue expenditure towards purchase of tools and instruments amounting to ₹ 39,32,660/- being drills, tools and mills etc. The assessee was asked to show the details of its claim of consumption of stores and 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 ha .....

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ear itself. Accordingly, the net disallowance (after depreciation) amounting to ₹ 34,29,585/- is directed to be deleted. The revenue is now in appeal before us against the order of the learned CIT(A). 4. The learned DR relied on the order of the learned 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 .....

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was disallowed as revenue expenses only for the reason that if the items are consumed during the manufacturing operation, the assessee should not have valued it by adopting the estimated useful life method but should have written off 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 c .....

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, the appeal filed by the revenue is dismissed. ITA No.959/Ahd/2012 (Assessee s appeal in AY 2008-09) 7. In this appeal the assessee has raised 3 grounds wherein 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 wr .....

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07-08 we have decided the issue against the revenue and in favour of the assessee by treating the expenditure 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 ad .....

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