2011 (2) TMI 1572 - AT - Income Tax

Expenditure on plastic canes & crates upheld as revenue expense by ITAT. Revenue's appeal dismissed.

ACIT Circle-2 (1) Guntur Versus  Tirumala Milk Products Pvt. Ltd Narasaraopet

The Appellate Tribunal ITAT VISAKHAPATNAM upheld the decision of the CIT(A) to treat the expenditure on plastic canes and crates as revenue in nature, ... - Issues involved: The nature of expenditure on plastic canes and crates - whether revenue or capital expenditure.The appeal was filed by the revenue challenging the order of the CIT(A) on the grounds that the expenditure on Plastic Canes and Crates was wrongly treated as revenue in nature. The revenue contended that in earlier years, the assessee treated the same expenditure as capital expenditure, thus only entitled to depreciation. The Assessing Officer treated the expenditure as plant and machinery, allowing depreciation as per the relevant section of the Income Tax Act. The CIT(A) upheld the claim of the assessee without considering this aspect, leading to the appeal by the revenue. During the appeal hearing, reference was made to a previous Tribunal order in the assessee's case for other assessment years, where a similar issue was decided in favor of treating the expenditure as revenue in nature. The Tribunal relied on a previous case involving M/s. Palnadu Dairy Pvt. Ltd. to support this decision. The revenue did not dispute this factual aspect, and the CIT(A) based their decision on the Tribunal's previous ruling. Consequently, the Tribunal found no fault in the CIT(A)'s order and dismissed the revenue's appeal.Judgment: The Appellate Tribunal ITAT VISAKHAPATNAM, in the case concerning the nature of expenditure on plastic canes and crates, upheld the decision of the CIT(A) to treat the expenditure as revenue in nature based on a previous Tribunal order and dismissed the revenue's appeal.