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of <h1>Court affirms cast iron molds as revenue expenditure.</h1> <h3>The Commissioner of Income Tax Versus M/s. Aditya Ferro Alloys P. Ltd.</h3> The Commissioner of Income Tax Versus M/s. Aditya Ferro Alloys P. Ltd. - [2014] 366 ITR 490 (Mad) Issues:Whether expenditure on cast reusable cast iron molds should be treated as revenue expenditure or capital expenditure.Analysis:In this case, the respondent assessee, engaged in the business of manufacturing cast iron ingots, used cast iron molds which had a limited lifespan of about 30 to 40 uses. Initially, the assessee treated the molds as depreciable assets but later changed its stance, claiming the purchase expenditure as revenue in nature. The Assessing Officer disagreed, treating the molds as capital expenditure and allowing depreciation. The Commissioner of Income Tax (Appeals), relying on a decision of the Income Tax Appellate Tribunal, allowed the appeals, stating that the molds were akin to consumables due to their short lifespan in the manufacturing process. The Tribunal upheld this view, emphasizing that the molds did not have enduring life and were purchased regularly like stores and spares, justifying the treatment as revenue expenditure.Subsequently, the Revenue filed appeals before the Tribunal challenging the decision, but the Tribunal, based on previous rulings and factual findings, upheld the expenditure on cast iron molds as revenue in nature. The High Court, upon review, concurred with the Tribunal's decision, emphasizing the short shelf life of the molds and the regular need for replacement, concluding that the molds should be treated as revenue expenditure rather than capital assets. The Court found no legal basis to overturn the Tribunal's factual determination, leading to the dismissal of all appeals.Therefore, the High Court affirmed the Tribunal's decision, ruling that the expenditure on cast iron ingot molds should be considered as revenue expenditure due to their short lifespan and regular replacement necessity in the manufacturing process, aligning with previous rulings and factual assessments.
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