2008 (7) TMI 3 - HC - Income Tax

Expenditure on Glow Sign Boards - assessee is a limited company engaged in manufacturing of leather as well as non-leather shoes - Tribunal was correct in law in confirming the order of the CIT (A) that expenses incurred on glow signs were of revenue nature not of capital nature - substantial question of law has already been answered by this Court against the Revenue, therefore, the substantial question of law raised by the Revenue is answered against the Revenue and in favour of the assessee

Summary

Issues involved: Appeal against treatment of expenditure on Glow Sign Boards as capital nature, Substantial question of law regarding the nature of expenses incurred on glow signs.

Analysis:
The High Court of Punjab and Haryana heard an appeal filed by the Revenue against the order of the Income Tax Appellate Tribunal regarding the treatment of an expenditure on Glow Sign Boards as capital nature for the assessment year 2002-03. The assessee, a limited company engaged in manufacturing leather and non-leather shoes, had initially declared an income of Rs.3,63,96,676/-, but the Assessing Officer added the expenditure of Rs.3,71,030/- on Glow Sign Boards as capital expenditure, resulting in a higher assessed income of Rs.4,52,35,040/-. The Commissioner of Income Tax (Appeals) had allowed the deduction as claimed by the assessee, leading the Revenue to appeal before the Tribunal. The Tribunal, based on its earlier decisions, dismissed the appeal, prompting the Revenue to approach the High Court with the substantial question of law whether the expenses on glow signs were of revenue nature.

The Counsel for the Revenue acknowledged that similar appeals concerning the sister concern of the assessee had been dismissed by the Court previously. Given the precedent set by the Court's earlier decisions against the Revenue and in favor of the assessee, the High Court answered the substantial question of law in the affirmative, ruling against the Revenue and in favor of the assessee. Consequently, the appeal by the Revenue was dismissed by the High Court. The judgment reinforces the principle that expenses incurred on glow signs were of revenue nature, as determined by the Court's previous rulings in similar cases involving the assessee's sister concern.