2009 (9) TMI 633 - DELHI HIGH COURT

Scrutiny - Revision - Revenue or capital expenditure - Solitary objection of the Commissioner related to the expenditure on tools and dies aggregating to Rs. 10,56,69,367, which was claimed as revenue expenditure and was allowed as such - The Commissioner of Income-tax opined that die costing over Rs. 2 crores was not a small item and its life span was not a few days, but still a year, but could even be more - the tools and dies had a very short span of life and it could produce up to maximum one lakh permissible shorts and have to be replaced thereafter to retain accuracy, as explained by the assessee before the Commissioner of Income-tax duly noted by the Commissioner of Income-tax in his order

whether the expenditure incurred by the assessee in the replacement of dies and tools is to be treated as revenue expenditure or not - The assessee had also explained that since these parts are manufactured for the automobile industry, which have to work on complete accuracy at high speed for a longer period, replacement of these parts at short intervals becomes imperative to retain accuracy - Decided in the favour of the assessee