ACIT, Coimbatore V. M/s. Lakshmi Electrical Controls Systems Pvt.Ltd., Coimbatore

ITA 1261/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1112 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-03-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 07-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V JAGADISAN
• Keywords: Depreciation; Revenue expenditure
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] I.T.A.NOS.1260 & 1261/MDS/2012 ASSESSMENT YEARS : 1997-98 AND 1998-99 THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE IV(1) COIMBATORE VS M/S LAKSHMI ELECTRICAL CONTROLS SYSTEMS PVT. LTD 695, AVANASHI ROAD COIMBATORE 641 018 [PAN AAACL 3737 E] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI V. JAGADISAN, CA DATE OF HEARING : 07-03-2013 DATE OF PRONOUNCEMENT : 15-03-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER OF THE CIT(A)-I, COIMBATORE, DAT ED 22.3.2012. 2. AT THE OUTSET, IT WAS OBSERVED THAT THERE WAS A DEL AY OF FOUR DAYS IN FILING THE APPEALS BY THE REVENUE, FOR WHIC H CONDONATION PETITION WAS FILED EXPLAINING THE REASONS FOR THE D ELAY IN FILING THE APPEALS. THE AR HAD NO OBJECTION TO CONDONING THE DELAY AND HEARING THE APPEALS ON MERITS. HENCE, THE DELAY WAS CONDON ED AND THE I.T.A.NO. 1260 & 1261/12 :- 2 -: APPEALS WERE ADMITTED FOR HEARING AND THE PARTIES W ERE ALLOWED TO MAKE THEIR SUBMISSIONS THEREON. 3. THE SOLE ISSUE INVOLVED IN BOTH THE APPEALS UNDER CONSIDERATION IS THAT THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIM OF ASSESSEE REGARDING REPLACEME NT OF MOULDS AND PRESS TOOLS AS REVENUE EXPENDITURE. 4. THE BRIEF FACTS OF THE CASE ARE THAT IN THE RETURNS OF INCOME FILED THE ASSESSEE CLAIMED DEDUCTION OF ` 18,05,645/- IN ASSESSMENT YEAR 1997-98 AND ` 56,73,535/- IN ASSESSMENT YEAR 1998-99 ON ACCOUNT OF REPLACEMENT OF MOULDS AND PRESS TOOLS. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON NEW MOULDS AND PRESS T OOLS WAS CAPITAL IN NATURE AND THAT AS PER THE PROVISIONS OF THE INC OME-TAX ACT, 1961 THEY ARE TO BE TREATED AS PART OF PLANT AND MACHINE RY ND GRANTED DEPRECIATION U/S 32 OF THE ACT. HE ACCORDINGLY, A LLOWED DEPRECIATION ON ` 18,05,645/- AMOUNTING TO ` 5,04,749/- IN ASSESSMENT YEAR 1997- 98 AND ALLOWED DEPRECIATION ON THE EXPENDITURE OF ` 56,73,535/- AMOUNTING TO ` 9,66,675/- IN ASSESSMENT YEAR 1998-99. 5. ON APPEAL FILED BY THE ASSESSEE, THE CIT(A) ALLOWE D THE ENTIRE EXPENDITURE ON REPLACEMENT OF MOULDS AND PRE SS TOOLS AS I.T.A.NO. 1260 & 1261/12 :- 3 -: REVENUE EXPENDITURE TO THE ASSESSEE BY FOLLOWING T HE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF TVS MO TOR COMPANY LTD. VS ACIT, BY OBSERVING AS UNDER: 5. ON A EXAMINATION OF THE DETAILS, IT IS FOUND THA T TOTAL ADDITIONS TO THE DIES AND MOULDS AND PRESS TOOLS AS PER SCHED ULE-V OF THE ANNUAL REPORT FOR THE ASSESSMENT YEAR 1997-98 S TANDS AT RS.49,13,131/- OUT OF WHICH THE REPLACEMENT EXPENDI TURE CLAIMED FOR IN THE PROFIT & LOSS A/C IS RS.18,05,64 5/-. SIMILARLY FOR THE ASSESSMENT YEAR 1998-99. THE TOTAL ADDITION ARE ` 98,51,387/- OUT OF WHICH THE REPLACEMENT EXPENDITUR E CLAIMED IN THE PROFIT & LOSS A/CAPITAL IS ` 56,73,535/-. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT INITIALLY THE DIES AND MOULDS INCLUDING THE PRESS TOOLS WERE CAPITALIZED A ND ONLY ON THE SUBSEQUENT REPLACEMENT DUE TO WEAR AND TEAR THE Y WERE CLAIMED AS REVENUE EXPENDITURE. THE HON'BLE KARNATA KA HIGH COURT IN THE CASE OF CIT VS MYSORE SPUN CONCRETE PI PE PVT LTD REPORTED IN 194 ITR 159 HAS ALLOWED THE REPLACEMENT OF MOULDS AND PRESS TOOLS AS REVENUE EXPENDITURE, SINCE THE R EPLACEMENT DOES NOT BRING ABOUT ANY ADDITIONAL ADVANTAGE TO TH E APPELLANT. THE HON'BLE ITAT 'C' BENCH, CHENNAI IN THE CASE OF TVS MOTOR COMPANY LTD. VS. ACIT HELD THAT DIES AND MOULDS CAN NOT BE CLASSIFIED AS PLANT AND MACHINERY BECAUSE THEY THEM SELVES CANNOT BE EMPLOYED INDEPENDENTLY IN A MANUFACTURING PROCESS. SINCE DIES AND MOULDS ARE NORMALLY ATTACHED TO MACH INES TO SUIT THE INDIVIDUAL REQUIREMENT OF A PARTICULAR PRODUCT, THE TRIBUNAL CONFIRMED THE CIT{A} ORDER TO ALLOW THE REPLACEMENT OF DIES AND MOULDS AS DEDUCTION IN THE NATURE OF REVENUE EXPEND ITURE. THE HON'BLE ITAT RELIED ON THE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MYSORE SPUN CONCR ETE PIPE PVT LTD - 194 ITR 159. 6. TAKING INTO CONSIDERATION THE JUDGMENTS REFERRED TO BY THE APPELLANT AND THE FACTS OF THE CASE, I DIRECT THE A SSESSING OFFICER TO TREAT THE EXPENDITURE ON REPLACEMENT OF MOULDS,D IES AND PRESS TOOLS AS REVENUE EXPENDITURE FOR BOTH THE ASS ESSMENT YEARS 1997-98 AND 1998-99. I.T.A.NO. 1260 & 1261/12 :- 4 -: 6. THE DR RELIED ON THE GROUNDS OF APPEAL RAISED BY T HE REVENUE IN THE PRESENT APPEALS. HE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE CIT(A). HE ALSO COULD NO T BRING ANY MATERIAL ON RECORD TO SHOW THAT THE ORDER OF THE TRIBUNAL FO LLOWED BY THE CIT(A) WHILE GRANTING RELIEF TO THE ASSESSEE WAS V ARIED IN APPEAL BY ANY HIGHER FORUM. IN THESE CIRCUMSTANCES, WE DO NO T FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). IT IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION ARE DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVEN UE ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 15 TH OF MARCH, 2013, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 15 TH MARCH, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR