The ACIT, Trivandrum V. M/s. Southshore Icecreams P. Ltd, Cochin

ITA 345/COCH/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7653 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 11-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: A S NARAYANAMOORTHY
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

ITA NO .345/C/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH (SMC) KOCHI BEFORE SHRI GEORGE GEORGE K , JUDICIAL MEMBER ITA NO 3 4 5/COCH/2016 (A SST YEAR 2011 - 12 ) T H E ASST COMMR OF INCOME TAX RANGE 1 THIRUVANANTHAPU RAM VS M/S SOUTHSHORE ICE CREAMS P LTD 28/3080 CHERUPARAMBATH ROAD ELAMAKULAM KADAVANTHARA KOCHI 682 020 ( APPELLANT) (RESPONDENT) PAN NO. AAGCS6807A ASSESSEE BY SH A S NARAYANAMOORTHY REVENUE BY SH A DHANARAJ SR DR DATE OF HEARING 14 TH OCT 2016 DATE OF PRONOUNCEMENT 17 TH , OCT 2016 ORDER PER GEORGE GEORGE K,J M : THIS APPEAL , AT T HE INSTAN CE OF THE REVENUE, IS DIRECTED AGAINST THE CIT(A) S ORDER DATED 25.2.2016. THE RELEVANT ASSESSMENT YEAR IS 2011 - 12. 2 THE EFFECTIVE GROUNDS RAISED READ AS FOLLOWS: 1 ) THE LD CIT(A) ER RED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER TOWARDS LAPSED LIABILITY OF FREEZER CHARGES, RELYING ON THE DECISION OF THE HON BLE ITAT COCHIN BENCH IN THE ASESSEE S OWN CASE WHEREIN IT WAS HELD TH AT THE DEPOSITS COLLECTED BY THE ASSESSEE FOR FREEZER CANNOT BE CONSIDERED AS INCOME OF THE ASS ESSEE. 2 ) THE CIT(A) OUGHT TO HAVE FOUND THAT THE ISSUE OF ADDITION IN RESPECT OF FREEZER CHARGES HAS NOT REACHED FINALITY AND IT BEING CONTESTED BY THE ITA NO .345/C/2016 2 DEPARTMENT BEFORE H O N BLE HIGH COURT OF KERALA IN THE CASE OF THE SAME ASSESSEE. 3 ) THE C IT(A) ERRED IN ALLOWING DEPRECIATION ON EXPENDITURE WRITTEN OF IN RESPECT OF MOULDS, TOOLS AND UTENSILS. 3 GROUND NOS. 1&2: THE SE GROUNDS RELATE TO THE TAXABILITY OF FREEZER DEPOSITS RECEIVED BY THE ASSESSEE FROM ITS VENDORS . 3.1 BRIE F FACTS IN RELATION TO THE ABOVE GROUNDS ARE AS FOLLOWS: THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AND MARKETING OF ICE CREAMS AND OTHER FROZEN FOODS . FOR THE RELEVANT ASSESSMENT YEAR, THE RETURN OF INCOME WAS FILED ON 1.12.201 1, DECLARING THE TOTAL INCOME OF RS. 10,96,9 24/ - . THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED VIDE ORDER DATED 6.3.2014. IN THE ASSESSMENT COMPLETED THE ASSESSING OFFICER HAD BROUGHT TO TAX THE DEPOSITS RECEIVED FROM ITS DISTRIBUTORS FOR SUPPLY OF FREEZER BY S TATING AS FOLLOWS: 1 INCOME ON ACCOUNT OF LAPSE D LIABILITY IN RESPECT OF FREEZER DEPOSITS: THE ASSESSEE IS A MANUFACTURER AND SELLER OF ICE CREAMS. THE ASSESSEE , AS PART OF A TRADE PROMOTION STRATEGY, ISSUES FREEZERS TO ITS DISTRIBUTORS SO THAT THE PRODUCTS OF THE COMPANY CAN BE PROMINENTLY DISPLAYED AND SAFELY STORED. THE ASSESSEE COLLECTS THE COST OF THE FREEZERS FROM THE DISTRIBUTORS, THE VALUE OF THE FREEZER FALLS BY 25% EVERY YEAR (PART OF A YEAR IS TREATED AS A FULL YEAR). THAT IS TO SAY, IF THE DISTRIBUTOR TERMINATES HIS AGREEMENT WITH THE ASSESSEE COMPANY AT THE END OF THE 1ST YEAR, THEN HE (I.E. DISTRIBUTOR) CAN HOPE TO RECOVER ONLY 3/4TH OF THE PAYMENT (DEPOSIT) THAT HE MADE TO THE ASSESSEE TOWARDS THE FREEZER. AT THE END OF THE 4TH YEAR, THE AMOUNT DEPOSITED FOR THE FREEZER BECOMES WHOLLY NON - REFUNDABLE, EVEN IF THE A GREEMENT IS TERMINATED. 1.1 THE ASSESSEE TREATS THE DEPOSIT RECEIVED FROM THE DISTRIBUTORS FOR THE FREEZERS AS A LI ABILITY AND CALLS IT 'DEPOSITS 8: ADVANCE FROM CUSTOMERS' AND APPEARS IN THE BALANCE SHEET. IN THE PREVIOUS YEAR THE LIABILITY SHOWN IS R S.3,33,49,200/ - WHICH WAS AN INCREASE O F RS.38,14,977/ - AS COMPARED TO THE BALANCE OF RS.2,95,34,223/ - AS AT THE END OF THE PRECEDING ASSESSMENT YEAR. ITA NO .345/C/2016 3 1.2 THE RELEVANT CAUSE IN THE AGREEMENT BETWEEN THE ASSESSEE AND THE DISTRIBUTOR IS REPRODUCED BELOW: 'ON TERMINATION OF THIS AGREEMENT, THE DISTRIBUTOR HAS TO DELIVER BACK THE FREEZER TOGETHER WITH AC CESSORIES TO THE PRINCIPAL AT THE PRINCIPAL'S PREMISE AND COLLECT THEREAFTER FROM THE PRINCIPAL THE SECURITY DEPOSIT AMOUNT AFTER DEDUCTING AN AMOUNT CALCULATED AT THE RATE OF 25% ON THE VALUE OF THE FREEZER FOR EACH YEAR OF USE TOWARDS COMPENSATION FOR WEAR AND TEAR. FOR THIS PURPOSE FRACTION OF A YEAR SHALL BE COUNTED AS A COMPLETE YEAR. ON NON RETURN OF THE FREEZER, THE DIFFERENCE BETWEEN THE VALUE OF THE FREEZER AND THE DEPOSIT AMOUNT SHALL BE MADE GOOD TO THE PRINCIPAL.' 1.3 AS PER SECTION 41 (1) OF THE INCOME TAX ACT, TRADING LIABILITY, WHICH HAS CEASED, CAN BE REGARDED AS INCOME OF THE ASSESSEE. IN THIS CASE, THE LIABILITY THAT HAS CEASED IS NOT A TRADING LIABILITY AND THEREFORE SECTION 41 (1) MAY NOT APPLY. HOWEVER, BY VIRTUE OF THE SUPREME COURT'S DECISION IN CIT VS. T.V. SUNDERAM IYENGAR AND SONS (1 996) 222 ITR 344(SC), THE AMOUNT BECOMES TAXABLE. THE RELEVANT PORTION OF THE JUDGMENT OF THE APEX COURT IS REPRODUCED HERE. . 'IF AN AMOUNT IS RECEIVED IN THE COURSE OF A TRADING TRANSACTION, EVEN THOUGH IT IS NOT TAXABLE IN THE YEAR OF RECEIPT AS B EING OF REVENUE CHARACTER, THE AMOUNT CHANGES ITS CHARACTER WHEN THE AMOUNT BECOMES ASSESSEE'S OWN MONEY BECAUSE OF LIMITATION OR BY ANY STATUTORY OR CONTRACTUAL RIGHT. WHEN SUCH A THING HAPPENS COMMON SENSE DEMANDS THAT THE AMOUNT SHOULD BE TREATED AS THE INCOME OF THE ASSESSEE. ' THE SAME PRINCIPLE WAS REITERATED BY THE HON'BLE HIGH COURT OF BOMBAY IN SLID CONTAINERS LTD VS. CIT (2009) 308 ITR 417(BOM). THE RATIO OF THESE DECISIONS APPLIES PERFECTLY TO THE INSTANT CASE. 1.4 IN THIS CONNECTION IT HAS TO BE MENTIONED THAT 'INCOME' HAS BEEN GIVEN AN INCLUSIVE DEFINITION IN SECTION 2(24). THE SUPREME COURT IN CIT VS. KARTHIKEYAN (1993) 201 ITR 866 (SC) HAS HELD THAT THE PURPOSE OF THE INCLUSIVE DEFINITION IS NOT TO LIMIT THE MEANING BUT TO WIDEN IT S NET AND SEVERAL CLAUSES THEREIN ARE NOT EXHAUSTIVE OF THE MEANING OF INCOME; EVEN IF A RECEIPT DID NOT FALL WITHIN THE AMBIT OF ANY OF THE CLAUSES, IT MIGHT STILL BE INCOME IF IT PARTAKES THE CHARACTER OF INCOME. THE ISSUE AT HAND HAS TO BE SEEN IN TH E LIGHT OF THE NUMEROUS APEX COURT DECISIONS HOLDING THAT THE WORD 'INCOME' HAS TO BE INTERPRETED WITH THE WIDEST AMPLITUDE. 1.5 THE ARGUMENTS OF THE ASSESSEE IN BRIEF ARE AS UNDER: * THE ASSESSEE ARGUED THAT IT RECOGNIZES INCOME ON ACCOUNT OF FREEZERS WHEN THE AGENCY IS TERMINATED, THAT IT IS WRONG TO TAX THE INCOME BEFORE THE TERMINATION OF THE AGREEMENT. ITA NO .345/C/2016 4 * THE DECISION OF THE SUPREME COURT IN (IT VS. T.V. SUNDERAM IYENGAR AND SONS IS DISTINGUISHABLE. ACCORDING TO THE ASSESSE THE CASE LAW PERTAINS TO A SITUATION WHERE THE ASS ESSEE HAS UNILATERALLY CREDITED INCOME IN THE P&L ACCOUNT ON ACCOUNT OF DEPOSITS RECEIVED FROM CUSTOMERS BUT DID NOT OFFER THE SAME FOR TAX. THE SYSTEM OF A CCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE SHOULD NOT BE UPSET AND THAT THE DEPARTMENT DID NOT REJECT BOOKS. 1.6 THESE ARGUMENTS ARE WITHOUT MERIT FOR THE FOLLOWING REASONS: * I T IS NOT CORRECT TO SAY THAT INCOME ACCRUES ONLY WHEN THE AGREEMENT IS TERMINATED. THE AGREEMENT ITSELF SAYS THAT AFTER 4 YEARS THERE IS NO LIABILITY ON THE PART OF THE ASSESSEE TOWARDS THE FRANCHISEES/ RETAILERS BECAUSE OF THE FREEZER DEPOSITS. * THE ASSESSEE IS NEEDLESSLY PROLONGING THE RECOGNITION OF REVENUE BY RECOGNIZ ING IT ONLY AT THE TERMINATION OF AGENCY. * AGAIN, IF A DEALERSHIP IS NOT TERMINATED, NO INCOME IS RECOGNIZED FROM THE LAPSING OF LIABILITY BECAUSE OF FREEZER DEPOSITS. * IN ADDITION, IT IS WRONG IN SAYING THAT THE SUPREME COURT DECISION IN TVS SUNDERAM IYENGAR & SONS DOES NOT APPLY. THE RATIO OF THE DECISION CLEARLY APPLIES EVEN IF THE FACTS ARE DIFFERENT. IN FACT, FACTS OF TWO CASES WILL NEVER COMPLETELY AGREE. 1.7 IN THE LIGHT OF THE FOREGOING DISCUSSION, IT IS EVIDENT THAT DEALER DEPOSITS BECOME TAXABLE WITH THE EFFLUX OF TIME. THE AMOUNT THAT IS TAXABLE WORKED OUT AS RS.31 ,59,354/ - . 3.2 AGGRIEVED BY THE ADDITION MADE BY THE ASSESSING OFFICER , THE ASSESSEE PREFERRED APPEAL T O THE FIRST APPELLAT E AUTHORITY. THE CIT(A), FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE A Y 2010 - 11 , DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE ( T HE TRIBUNAL WAS CONSIDERING A BATCH OF CASES IN ITA N OS . 73 TO 79/COCH /2014 FOR A Y 2008 - 09 AND 2010 - 11) IN WHICH THE ASSESSEE WAS ALSO A PARTY. 3.3 AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUN AL. THE LD DR RELIED ON THE GROUNDS RAISED IN THE APPEAL MEMO. ON THE ITA NO .345/C/2016 5 OTHER HAND, THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE I N QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN C ASE , CITED SUPRA. THE LD CO U NSEL ALSO SUB MITTE D THAT THE SAID ISSUE IS PENDING FOR ADJUDICATION BEFORE THE HON BLE KERALA HIGH COURT AND NO DECISION HAS BEEN TAKEN BY THE HON BLE COURT. 3.4 I HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL ON RECORD. IN ASSESS EE S OWN CASE , THE DIVISION BENCH OF THE TRIBUNAL HAVE DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE , BY FOLLOWING THE EARLIER ORDE RS OF T HE TRIBUNAL. THE RELEVANT FINDINGS OF THE TRIBUNAL IN ASSESSEE S OWN CASE READ AS FOLLOWS : 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND RELEVANT MATERIAL ON RECORD. THE ISSUE ARISES IS WHETHER THE DEPOSITS IN RESPECT OF THE FREEZER HAS TO BE CONSIDERED AS INCOME OF THE ASSESSEE OR NOT. AS RIGHTLY SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THIS ISSUE WAS CONSIDERED BY THE TRIBUNAL IN ONE OF THE ASSESSEES FOR THE EARLIER ASSESSMENT YEAR AND FOUND THAT SUCH DEPOSITS CANNOT BE CONSIDERED AS INCOME OF THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE ORDER DATED 08.08 .2012 PASSED BY THE TRIBUNAL IN THE CASE OF M/S. KREEM FOODS (P) LTD. IN ITA NO. 597/COCH/2010 RELATING TO ASSESSMENT YEAR 2007 - 08: - 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED A COPY OF THE ORDER DATED 25 - 05 - 2012 PASSED BY THIS BENCH IN THE CASE OF JOJO FROZEN FOOD (P) LTD. AND CREAM PACKS (P) LTD. IN I.T.A. NOS. 655 & 654/COCH/2010 WHEREIN THE TRIBUNAL HAS CONSIDERED AN IDENTICAL ISSUE AND DECIDED THE SAME IN FAVOUR OF THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OPERATIVE PORTION OF THE SAID ORDER IN RESPECT OF THE ABOVE SAID ISSUE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE RECORD. WE HAVE ALSO GONE THROUGH THE COPY OF THE ORDER PASSED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN TH E CASE OF HIGH RANGE FOODS (P) LTD, REFERRED SUPRA. IN RESPECT OF THE FIRST ISSUE, I.E., WHETHER THE DEPOSITS RECEIVED FROM THE DEALERS CAN BE ITA NO .345/C/2016 6 CONSIDERED AS INCOME OF THE ASSESSEE, THE TRIBUNAL HAS OBSERVED AS UNDER. THE ASSE SSEE RECEIVED DEPOSIT FOR THE SUPPLY OF FREEZER FROM THE CONCERNED VENDORS. THE FREEZERS ARE REQUIRED TO SAFE KEEP THE EDIBLE ICE - CREAMS. THEY ARE REQUIRED FOR THE PURPOSE OF BUSINESS. THE SMALL VENDORS MAY NOT BE INCLINED TO PURCHASE THE FREEZERS AS THEY ARE NOT AFFORDABLE TO THEM CONSIDERING THEIR STATUS. THIS MADE THE ASSESSEE COMPANY TO SUPPLY FREEZER ON THE RECEIPT OF FIXED DEPOSIT AND THE COMPENSATION OF THE SPREAD - OVER PERIOD. THEY ARE ATTACHED WITH A LIABILITY. THE ACCRUAL COMES ONLY ON TERMINATION OF AGREEMENT. THE BUSINESS NECESSITY REQUIRES CORDIAL RELATIONSHIP WITH VENDORS. THE ASSESSEE CANNOT TREAT THESE TWO AMOUNTS AS RECEIPTS IN THE NATURE OF INCOME UNLESS THE SO - CALLED AGREEMENT TERMINATED. IN OTHER WORDS IT IS NOT A DEBT OWNED BY THE ASSESSE E. HENCE, UNDER THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THIS ISSUE TO BE DECIDED IN FAVOUR OF THE ASSESSEE BY SETTING ASIDE THE ORDERS OF THE AUTHORITIES. BESIDES THE ASSESSEE NEVER TREATED THIS AS INCOME IN THE BOOKS. THE ASSESSEE CONSISTENTLY HOLD ING IT SO AS THE AMOUNT ATTACHED WITH A LIABILITY TO REFUND. THE ASSESSEE NEVER ADMITTED THIS AMOUNT AS INCOME IN THE BOOKS. ONLY ACCRUED INCOME AROSE TO THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR ALSO CAN BE BROUGHT TO TAX UNDER THE INCOME - TAX PROVISI ONS WHICH IS A SETTLED LAW. IN OTHER WORDS, THERE MUST BE A DEBT OWNED TO THE ASSESSEE AND UNTIL THIS IS CREATED IN FAVOUR OF THE ASSESSEE AS A DEBT DUE TO THE ASSESSEE, IT CANNOT BE SAID AS INCOME ACCRUED. HENCE, THE DECISION RELIED BY THE JR. D.R. IN THE CASE OF CIT VS. T.V. SUNDARAM IYENGAR AND SONS CITED SUPRA, IS CLEARLY DISTINGUISHABLE ON FACTS. IN THAT CASE, ASSESSEE ITSELF ADMITTED THIS AS INCOME AS PER THE BOOK ENTRIES. HENCE, IT IS DISTINGUISHABLE. THE DECISION RELIED BY THE LD. COUNSEL FOR THE AS SESSEE IN THE CASE OF CIT VS. REALEST BUILDERS AND SERVICES LTD. 307 ITR 202 (SC) IN ADDITION TO THE FOLLOWING CASES (A) SIDDHESWAR SAHAKARI SAKHAR KARKHANA LTD. VS. CIT & OTHERS 270 ITR 1 (SC); (B) BHARAT PETROLEUM CORPORATION LTD. VS. CIT 202 ITR 492 (CAL). (C) SUGAULI SUGAR WORKS (IMPUGNED) LTD. 236 ITR 518 (SC); 5 I.T.A. NOS. 73 - 79/COCH/2014 (D) STAR INDIA P. LTD. VS. ADDL. CIT 311 ITR (ST) 235 (MUMBAI). (E) GOVIND PRASAD PRABHU NATH 171 ITR 417 (ALL.); ITA NO .345/C/2016 7 (F) HINDUSTAN HOUSING AND LAND DEVEL OPMENT TRUST LTD. 161 ITR 524 (SC); (G) ACE BUILDERS PVT. LTD. VS. CIT 225 ITR 746 (SC); (H) MANTRA TANTA YANTRA VIGYAN VS. CIT 300 ITR 140 (RAJ.); AND (I) GUARDIAN INDUSTRIES CORPN. VS. ASSISTANT DIRECTOR OF INCOME - TAX 7 DTR 594 (DEL.). ARE ALSO S UPPORTS THE PLEA OF THE ASSESSEE. THE ACCRUAL HAS BEEN DEALT WITH IN THE RELIED JUDGMENTS . HENCE, UNDER THE GIVEN SET OF FACTS AND CIRCUMSTANCES, WE BY RELYING ON THE ABOVE DECISIONS SET ASIDE THE ORDERS OF THE AUTHORITIES AND ALLOW THIS GROUND OF THE ASS ESSEE AS IT CANNOT BE TREATED AS INCOME FOR THE YEAR RELEVANT UNDER APPEAL. 7. SINCE THE CO - ORDINATE BENCH HAS ALREADY TAKEN A VIEW ON IDENTICAL ISSUE, BY FOLLOWING THE SAID DECISION, WE HOLD THAT THE DEPOSITS COLLECTED FROM VENDORS CANNOT BE CONSIDERED A S THE INCOME OF THE ASSESSEE SO LONG AS THE AGENCY AGREEMENT CONTINUES. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE IN THE HANDS OF BOTH THE ASSESSEES AND DIRECT THE AO TO DELETE THE ADDITION MADE ON THIS ISSUE IN THE HANDS OF BOTH THE A SSESSEES HEREIN. 5. THE ONLY OBJECTION OF THE LD. DR IS THAT THE APPEAL WAS FILED AGAINST THE ORDER OF THE TRIBUNAL AND THE SAME IS PENDING BEFORE THE HIGH COURT. BUT ON A QUERY FROM THE BENCH, THE LD. DR SUBMITTED THAT HE DOES NOT HAVE KNOWLEDGE OF ANY S TAY GRANTED BY THE HONBLE HIGH COURT ON THE OPERATION OF THE EARLIER ORDER OF THE TRIBUNAL. SINCE THE LD. CIT(A) HAS FOLLOWED THE ORDER OF THE TRIBUNAL, WE 6 I.T.A. NOS. 73 - 79/COCH/2014 ARE OF THE CONSIDERED OPINION THAT MERE PENDING OF THE APPEAL BEFORE THE HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL CANNOT BE A REASON TO TAKE A DIFFERENT VIEW. THEREFORE, BY FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE EARLIER ASSESSMENT YEAR, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE DEPOSITS COLLECTED BY THE A SSESSEE FOR FREEZER CANNOT BE CONSIDERED AS INCOME OF THE ASSESSEE. 6. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE ORDER OF THE TRIBUNAL, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY, THE SAME IS CONFIRMED. 7. IN THE RESULT, ALL THE APPEALS FILED BY THE REVENUE STAND DISMISSED. 3.5 ADMITTEDLY, THE ISSUE IN QUESTION IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE D IVISION B ENCH OF THE TRIBUNAL , CITED SUPRA . BOTH THE PARTIES HAVE ITA NO .345/C/2016 8 S UBMITTED THA T THE ISSUE IS PENDING FOR ADJUDICATION BEFORE THE HON BLE JURISDICTIONAL HIGH COURT . N O CONTRARY HIGH COURT JUDGMENT HAS BEEN CITED. HENCE, RESPECTFULLY FOLLOWING THE ORDER OF THE DIVISION BENCH OF THE TRIBUNAL, IN ASSESSEE S OWN CASE ( SUPRA) , I UPHOLD T HE ORDER OF THE FIRST APPELLATE AUTHORITY AS C ORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. IT IS ORDERED ACCORDINGLY. 4 GROUND NO.3: THE ASSESSING OFFICER , WHILE COMPLETING THE ASSESSMENT HAD DISALLOWED AN EXPENDITURE OF RS. 2,46,223/ - BY OBSERVING AS UNDER: MOULDS , TOOLS AND UTENSILS WRITTEN OFF : THE ASSESSEE HAS CLAIMED AN AMOU NT OF RS. 2,46,223/ - BY WAY OF MOULDS, TOOLS AND UTENSILS WRITTEN OFF AS EXPENSES. AS THIS TREATMENT IS NOT AS PER THE INCOME TAX ACT, THE CLAIM IS DISALLOWS . 4.1 ON FURTHER APPEAL, THE CIT(A) HELD THAT THE SAID EXPENSES ARE CAPITAL EXPENDI TURE AND DIRECTED THE ASSESSING OFFICER TO GRANT DEPRECIATION ON THE SAME. THE C IT ( A) , IN TAKING THE ABOVE V IEW , HAD FOLLOWED HIS PREDE CESSOR S ORDER IN ASSESSEE S OWN CASE FOR THE EARLIER ASSESSMENT YEAR . 4.2 AGGRIEVED BY THE ABOVE DIRECTION , THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD DR SUPPORTED THE ORDER OF THE ASSESSING OFFIC ER . THE LD COUNSEL FOR THE ASSESSEE , ON THE OTHER HAND , HAS SUBMITTED THAT THE ORDER OF THE CIT(A) FOR THE EARLIER ASSESSMENT YEAR IN ASSESSEE S OWN CASE HAS BEEN ACCEPTE D BY THE DEPARTMENT AND NO FURTHER APPEAL HAS BEEN FILED. ITA NO .345/C/2016 9 4.3 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAD TREATED THE MOULDS AND UTENSILS , WHICH ARE USED FOR MAKING CHOC - BAR AND SIMIL AR TYPES OF ICE CREAMS , HAD TREATED THE SAME AS CURRENT ASSET S . THESE MOULDS AND UTENSILS WERE VALUED AT COST OR REALIZABLE VALUE WHICHEVER IS LOWER. THE CIT(A) HAD CATEGORICALLY FOUND THAT THESE ITEMS DID NOT LAST VERY LONG AND ARE EASILY BREAKABLE. T HE CIT(A) HAD ONLY HELD THAT THESE ITEMS ARE CURRENT ASSETS AND DEPRECIATION ON THE SAME IS TO BE ALLOWED . I FIND THAT THE REASONING OF THE CIT ( A) IS CORRECT AND NO INTERFERENCE IS CALLED FOR. IT IS ORDERED ACCORDINGLY. 4 . 4 HENCE, T HE GROUND NO . 3 , RAISED BY THE REVENUE IS ALSO REJECTED . 5 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF OCT 2016 . ( GEORGE GEORGE K) JUDICIAL MEMBER COCHIN: DATED 17 TH OCT 2016 RAJ* ITA NO .345/C/2016 10 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORD ER ASSISTANT REGISTRAR ITAT, COCHIN