2013 (8) TMI 1105

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....ssment Year 2007-08. The Tribunal dismissed the appeal preferred by the Revenue against the order passed by CIT(Appeals) directing the deletion of Rs. 34,29,000/- added by the Assessing Officer on account of disallowance of capital expenditure debited to Profit & Loss account against the head "Purchase of Tools and Instruments". 2.1 Tax Appeal No.505 of 2013 relates to Assessment Year 2008-09 whereby the appeal preferred by the assessee has been allowed quashing and setting aside the order of CIT(Appeals), which confirmed the action of the Assessing Officer in making addition of Rs. 27,35,460/- by disallowing the revenue expenses claimed in Profit & Loss account for the purchase of tools and instruments. 2.2 Tax Appeal No.....

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....erring ITA No.2457 of 2010 the Tribunal confirmed the order of the CIT(Appeals) by considering the decision of Coordinate Bench as also by giving cogent reasons for treating such expenditure as revenue in nature. 6. This decision came to be followed in subsequent years by the Tribunal. Aggrieved by this approach of the Tribunal, the Revenue has challenged the same in these Tax Appeals proposing the following substantial questions of law for our consideration: "Whether, on the facts and in the circumstances of the case, the tribunal was right in not following its own decision in assessee's own case for A.Y. 1998-99 and deleting the addition made on account of expenditure incurred for the purchase of tools and instruments and also....

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....dered the same as part of closing stock of inventory and had written it off to the Profit & Loss Account. 9. Again, the Tribunal also had noted that none of these items of consumables had a life of more than a very few days. The total quantity consumed also had fortified the fact that each item had a very short span. Thus, from the very nature of item and from the very process of consumption in the ordinary course of manufacturing business, they were treated as revenue expenditures. Thus, reliance of the Assessing Officer on Assessment Year 1998-99 was wrong since the assessee had changed the method and calculated the consumption of tools and equipments on the basis of closing stock of items and the accounting method valued by the assess....