DCIT, CHENNAI V. M/s Needle Industries (India) P Ltd., CHENNAI

ITA 785/CHNY/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6977 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I V IJAYAKUMAR IRS
• Assessee Lawyers: R MEENAKSHISUNDARAM
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A.NOS. 785 & 1036/MDS/2011 (ASSESSMENT YEARS : 2006-07 & 2007-08) THE DEPUTY COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-IV(4), CHENNAI. VS. M/S. NEEDLE INDUSTRIES (INDIA) P. LTD., NO.10, DBS PAXINA BISHOP WALLERS AVENUE SOUTH, MYLAPORE, CHENNAI 600 004. PAN AAACN 2044 E (APPELLANT) (RESPONDENT) APPELLANT BY : DR. I. VIJAYAKUMAR, IRS, CI T-DR RESPONDENT BY : SHRI R. MEENAKSHISUNDARAM, ADVOCATE DATE OF HEARING : 21 ST SEPTEMBER, 2011 DATE OF PRONOUNCEMENT : 21 ST SEPTEMBER, 2011 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THESE TWO APPEALS ARE FILED BY THE REVENUE. THE RE LEVANT ASSESSMENT YEARS ARE 2006-07 AND 2007-08. THE APPE ALS ARE DIRECTED AGAINST THE ORDERS PASSED BY THE COMMISSIO NER OF INCOME-TAX (APPEALS)-V AT CHENNAI ON 17.1.2011 AND 24.3.2011. ITA 785 & 1036/11 :- 2 -: THE APPEALS ARISE OUT OF THE ASSESSMENTS COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961. 2. IN BOTH THE APPEALS, THE REVENUE HAS RAISED COMM ON GROUNDS THAT THE COMMISSIONER OF INCOME-TAX (APPEAL S) HAS ERRED IN ALLOWING THE EXPENDITURE INCURRED BY THE A SSESSEE ON MOULDS, MAINTENANCE OF MACHINES AND MAINTENANCE OF BUILDING. THE DISPUTED ITEMS OF EXPENDITURE HAVE BEEN TREATED BY THE ASSESSING OFFICER AS CAPITAL IN NATURE WHEREAS THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THOSE ITEMS ARE REVENUE IN NATURE. 3. WE HEARD BOTH SIDES IN DETAIL. REGULAR MAINTEN ANCE OF MACHINERY AND BUILDING CANNOT BE TREATED AS EXPENSE S CAPITAL IN NATURE. THOSE EXPENSES ARE INCURRED ONLY TO KEEP THE STATUS QUO OF THE ASSETS. THEY NEITHER CHANGE THE CHARACTER N OR ADD ANYTHING THEREON. AS FAR AS THE BUSINESS OF THE AS SESSEE IS CONCERNED, IT IS ENGAGED IN THE MANUFACTURE OF SEWI NG NEEDLES, KNITTING PINS, SAFETY PINS ETC. FOR WHICH FREQUENT REPLACEMENT OF MOULDS ARE NECESSARY. THOSE MOULDS CANNOT BE HELD TO BE ENDURABLE ASSETS. THEY HAVE TO BE REPLACED OFF AND ON. THEREFORE, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS RIGHTLY ITA 785 & 1036/11 :- 3 -: HELD THAT THE EXPENDITURE INCURRED IN RESPECT OF MO ULDS ARE ALSO REVENUE IN NATURE. 4. IN SHORT, WE DO NOT FIND MUCH FORCE IN THE CONTE NTION ADVANCED BY THE REVENUE. THESE APPEALS ARE ACCORD INGLY DISMISSED. ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING, ON WEDNESDAY, THE 21 ST OF SEPTEMBER, 2011 AT CHENNAI. SD/- SD/- (GEORGE MATHAN) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 21 ST SEPTEMBER, 2011 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR