Sree Rengaraj Steels (Karaikal), Erode V. DCIT, Thanjavur

CO 82/CHNY/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8662 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-07-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation; Cost of acquisition; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 477/MDS/2013 & C.O. NO. 82/MDS/2013 ( IN ITA NO. 477/MDS/2013 ) ASSESSMENT YEAR 2009-10 THE DE PUTY COMMISSIONER OF INCOME TAX, CIRCLE I, THANJAVUR. VS M/S. SREE RENGARAJ STEELS, NO. 90, VANJOOR VILLAGE, T.R. PATTINAM, KARAIKKAL. [PAN: AALFS 7123 F] (APPELLANT) (RESPONDENT/CROSS OBJECTOR) REVENUE BY : SHRI N. MADHAVAN, JCIT ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE DATE OF HEARING : 04-07-2013 DATE OF PRONOUNCEMENT : 04-07-2013 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE APPEAL HAS BEEN FILED BY THE REVENUE IMPUGNIN G THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS), T IRUCHIRAPALLI I.T.A. NO. 477/MDS/2013 & C.O. NO. 82/MDS/2013 :- 2 -: DATED 31-12-2012 RELEVANT TO THE ASSESSMENT YEAR (A Y) 2009-10. THE ASSESSEE HAS FILED CROSS-OBJECTIONS TO THE APPE AL SUPPORTING THE ORDER OF THE CIT(APPEALS). 2. THE ASSESSEE IS A MANUFACTURER OF STEEL. THE AS SESSEE FILED ITS RETURN OF INCOME FOR THE AY. 2009-10 ON 2 8-09-2009 DECLARING ITS INCOME AS RS. 38,51,212/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSEE ON 25-08-2010. DURING THE C OURSE OF ASSESSMENT, THE ASSESSING OFFICER FOUND THAT THE AS SESSEE HAS CLAIMED CAST IRON INGOT MOULDS AS CONSUMABLES AND H AS CLAIMED THE COST OF SAME AS REVENUE EXPENDITURE. THE ASSES SING OFFICER REJECTED THE CLAIM OF THE ASSESSEE AND TREATED THE SAME AS CAPITAL EXPENDITURE VIDE ASSESSMENT ORDER DATED 30- 12-2011. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(APPEALS)-TIRUCHI RAPALLI. THE CIT(APPEALS), FOLLOWED THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. ADITYA FERRO ALLOYS P. LTD., ITA NO. 1437/MDS/2009 DECIDED ON 20-01-2011 AND ALLOWED THE APPEAL OF THE ASSESSE E. THE I.T.A. NO. 477/MDS/2013 & C.O. NO. 82/MDS/2013 :- 3 -: REVENUE HAS COME IN APPEAL BEFORE THE TRIBUNAL ASSA ILING THE ORDER OF THE CIT(APPEALS) ON THE GROUND THAT THE CO ST OF CAST IRON INGOT MOULDS IS CAPITAL EXPENDITURE. THE MOULDS AR E NOT CONSUMABLE ITEMS AND ARE CLASSIFIED AS FIXED ASSETS AS PER THE DEPRECIATION SCHEDULE. 3. SHRI N. MADHAVAN, APPEARING ON BEHALF OF THE RE VENUE SUBMITTED THAT THE ASSESSMENT ORDER IS WELL REASONE D AND PRAYED FOR SETTING ASIDE THE ORDER OF THE CIT(APPEALS). ON THE OTHER HAND, SHRI SRIDHAR, APPEARING ON BEHA LF OF THE ASSESSEE SUBMITTED THAT THE TRIBUNAL HAS TIME AND A GAIN HELD THAT THE COST OF CAST IRON INGOT MOULDS IS TO BE TREATED AS REVENUE IN NATURE. THE LD. COUNSEL FOR THE ASSESSEE PLACED ON RECORD A COPY OF THE ORDER OF THE TRIBUNAL IN ITA NO. 474/MDS/201 3 RELEVANT TO THE AY. 2005-06 IN THE CASE OF DCIT VS. M/S. ADITYA FERRO ALLOYS P. LTD. DECIDED ON 26-06-2013 WHEREIN THE TRIBUNAL OBSERVED AS UNDER: 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE ALSO PER USED THE I.T.A. NO. 477/MDS/2013 & C.O. NO. 82/MDS/2013 :- 4 -: ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE ORDE RS OF THE TRIBUNAL RELIED UPON BY THE LD. AR OF THE ASSESSEE. A PERUSAL OF THE ORDER OF THE TRIBUNAL IN ITA NO. 1437/MDS/20 09 FOR THE AY. 2004-05 DECIDED ON 20-01-2011 SHOWS THAT THE IS SUE IN HAND HAS ALREADY BEEN ADJUDICATED BY THE TRIBUNAL. THE TRIBUNAL HAS HELD AS UNDER: WHEN WE EXAMINE THE NATURE OF MANUFACTURING PROCES S CARRIED OUT BY THE ASSESSEE AND THE SHELL LIFE OF T HE MOULDS, WE FIND THAT ASSESSEE IS JUSTIFIED IN TREAT ING THE CONCERNED EXPENDITURE AS REVENUE IN NATURE, FOR THE REASON THAT THE MOULDS DO NOT HAVE ENDURING LIFE. IN VIEW OF THE FINDINGS OF THE CO-ORDINATING (CO-ORDINATE) BENCH OF THE TRIBUNAL WHICH HAVE BEEN SUBSEQUENTLY FOLLOW ED IN ASSESSEES OWN CASE IN ITA NO. 826/MDS/2011 FOR THE AY. 2007-08, WE HOLD THAT THE EXPENDITURE INCURRED ON P URCHASE OF CAST IRON INGOT MOULDS IS REVENUE IN NATURE. ACCOR DINGLY, WE UPHOLD THE FINDINGS OF THE CIT(APPEALS) AND DISMISS ALL THE FOUR APPEALS OF THE REVENUE. 4. IN VIEW OF THE ABOVE ORDER OF THE CO-ORDINATE BE NCH OF THE TRIBUNAL, THE PURCHASE COST OF CAST IRON INGOT MOUL DS IS TO BE TREATED AS REVENUE. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. I.T.A. NO. 477/MDS/2013 & C.O. NO. 82/MDS/2013 :- 5 -: 5. THE CROSS-OBJECTIONS FILED BY THE ASSESSEE ARE I N SUPPORT OF THE IMPUGNED ORDER, SINCE THE APPEAL OF THE REVENUE HAS BEEN DISMISSED, THE CROSS OBJECTIONS HAVE BECOME INFRUCT UOUS AND ARE AS SUCH DISMISSED AS HAVING BECOME INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, TH E 04 TH JULY, 2013, AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (VIKAS AWASTHY) JUDICIAL MEMBER DATED: 04 TH JULY, 2013 TNMM COPY TO: ASSESSEE/AO/CIT(A)/CIT/DR