ACIT, CHENNAI V. Best Cast IT Ltd., CHENNAI

ITA 1807/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8189 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 04-01-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 23-06-2014
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Keywords: Capital asset; Question of law; Revenue expenditure; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , ! ' . #$ , % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ ITA NO. 1807/MDS/2014 / ASSESSMENT YEAR : 2001-02 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-I(2), CHENNAI 34. APPELLANT) V. M/S. BEST CAST IT LTD., NO.16, POONAMALLEE HIGH ROAD, VELAPPANCHAVADI, CHENNAI 600 077. PAN AAACD1235B RESPONDENT) / APPELLANT BY : SHRI A.V.SREEKANTH, JCIT / RESPONDENT BY : NONE ! / DATE OF HEARING : 04.01.2016 '# ! / DATE OF PRONOUNCEMENT: 20.01.2016 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 25 .3.2014 FOR THE ASSESSMENT YEAR 2001-02. - - ITA 1807/14 2 2. THE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN TR EATING THE COST OF TOOLS AND DIE CASTINGS AS REVENUE EXPENDITU RE. 3. WHEN THE MATTER WAS CALLED ON FOR HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF ISSUE OF NOTICE. THEREFORE, WE HAVE NO OTHER ALTERNATIVE, EXCEPT TO DISPOSE OF THE APPEAL EX PARTE, QUA THE ASSESSEE. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD CLAIMED ` 72,34,462/- AS DEDUCTION IN THE STATEMENT OF TOTAL INCOME BEING EXPENDITURE TOWARDS TOOLS AND DIES TO MANUFACTURE A LUMINIUM GRAVITY DIE CASTINGS OF AUTOMOBILE COMPONENTS. THE ASSESSE VIDE LETTER DATED 5.9.2006 ADMITTED BEFORE THE AO T HAT WITH ONE DIE CASTING THEY CAN MANUFACTURE ABOUT 10,000 CASTI NGS. THE AO HELD THAT THOUGH THE ASSESSEE HAD CLAIMED THAT T HE LIFE OF THE TOOLS AND DIES ARE OF ONLY 3 MONTHS TO 18 MONTHS D URATION, BUT WITHIN THIS PERIOD, THE MAXIMUM DIES CASTINGS WOULD HAVE BEEN MANUFACTURED AND THUS ENDURING BENEFIT WOULD HAVE B EEN DERIVED OUT OF THE DIE CASTINGS. HENCE, THE AO TRE ATED THE EXPENDITURE CLAIMED TOWARDS TOOLS AND DIES AS CAPIT AL IN NATURE. AGAINST THIS, THE ASSESSEE WENT IN APPEAL BEFORE TH E - - ITA 1807/14 3 CIT(APPEALS), WHO DIRECTED THE AO TO ALLOW THE EXPE NDITURE AS REVENUE IN NATURE. 5. WE HAVE HEARD THE LD. DR. IN OUR OPINION, THIS ISSUE IS SQUARELY COVERED BY THE JUDGMENT OF THE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT V. M/S. ADITYA FERRO ALLOY S P. LTD. IN TC(A) NOS. 978 TO 981 OF 2013 AND M.P.NO. 1 OF 2014 DATED 14.7.2014, WHEREIN IT WAS OBSERVED AS UNDER: 6. THE QUESTION THAT IS POSED BEFORE THIS COURT I S AS TO WHETHER IN THE NATURE OF MANUFACTURING PROCESS CARRIED OUT BY THE ASSESSEE, WHERE THE SHELL LIFE O F CAST IRON INGOT MOULDS , WHICH IS USED FOR ABOUT 30 TO 40 TIMES AND, THEREAFTER, SCRAPPED, COULD BE TAKEN AS CAPITAL ASSET OR A REVENUE ASSET. 7. CONSIDERING THE NATURE OF MANUFACTURING PROCESS , THE USER OF GOODS, THE PERIOD OF ITS SHELL LIFE AND THE NATURE OF ITS USE, WHICH IS HAVING SHORT SHELF LIFE , THE APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL HAVE HE LD THAT THE GOODS IN QUESTION, VIZ., CAST IRON INGOT MOULDS ARE TO BE TREATED AS REVENUE EXPENDITURE AND NOT AS CAPITAL EXPENDITURE, HOLD CLEARLY THAT MOULD S DO NOT HAVE ENDURING LIFE, WHICH WILL BE A PARAMETER F OR CONSIDERING THE SAME AS CAPITAL EXPENDITURE. THE SHORT SHELF LIFE OF THE CAST IRON INGOT MOULDS, WHICH IS TO BE PURCHASED ON REGULAR BASIS AS IF IT IS A PART OF THE STORES OF SPARES WAS TREATED BY THE TRIBUNAL AS REVENUE EXPENDITURE AND NOT CAPITAL EXPENDITURE. W E FIND NO GROUND TO TAKE A DIFFERENT VIEW FROM THE ON E TAKEN BY THE TRIBUNAL, NOR COUNSEL FOR THE REVENUE IS ABLE TO POINT OUT ANY PROPOSITION OF LAW CONTRARY T O THE ABOVE FINDING OF THE TRIBUNAL. SINCE THE ISSUE REV OLVES AROUND PURE QUESTION OF FACT, THERE IS NO QUESTION OF LAW, MUCH LESS SUBSTANTIAL QUESTION OF LAW ARISING FOR - - ITA 1807/14 4 CONSIDERATION IN THESE APPEALS. RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENT OF TH E JURISDICTIONAL HIGH COURT, WE HAVE NO HESITATION TO CONFIRM THE ORDER OF THE CIT(APPEALS) IN HOLDING THAT THE EXPEN DITURE ON TOOLS AND DIE CASTING IS REVENUE IN NATURE. ACCORDINGLY, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 20 TH OF JAN., 2016 AT CHENNAI. SD/- SD/- ( $ % . & '( ) ( ) * + , ) DUVVURU RL REDDY - ./012304556037- 8 9: /JUDICIAL MEMBER ! 9:;<<5=1>01>?@AB@3 )8 /CHENNAI, C9 /DATED, THE 20 TH JAN., 2016. MPO* 9D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H- /CIT(A) 4. H /CIT 5. FIJ K /DR 6. J(L /GF.