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TMI Blog2011 (1) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 60% on UPS shall be allowed. - ITA No.65 of 2011 with ITA No.66/2011 - - - Dated:- 20-1-2011 - MR. JUSTICE A.K. SIKRI, MR. JUSTICE M.L. MEHTA, JJ. For Appelent:- Mr. Anupam Tripathi, Sr. Standing Cousnel. For Respondent through: Mr. Salil Aggarwal, Advocate with Mr. Anil Makhija, Advocate. A.K. SIKRI, J. ( ORAL ) 1. CM No.643 of 2011 in ITA No.66 of 2011 Exemption is allowed, subject to just exceptions. CM stands disposed of. 2. In both these appeals, which pertain to the same assessee and relate to two different Assessment Years, three additions of identical nature were made by the Assessing Officer, which were deleted by the CIT (A) and the order of the CIT (A) has been confirmed by the Income Tax Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer (AO) disallowed the depreciation on the aforesaid addition. 4. The question, in these circumstances, arose as to whether the assessee who had made the payment in the meantime would be entitled to add the same to the cost of plant and machinery and claim depreciation thereon. 5. The CIT (A) as well as the Tribunal while accepting the course of action taken by the assessee in claiming depreciation on the said amount as well relied upon the judgments, i.e., Commissioner Of Income-tax, Bombay City I Vs. Messrs. Shoorji Vallabhdas And Co. 46, ITR 144 (SC); Tuticorin Alkali Chemicals Fertilizers Ltd. Vs. Commissioner of Income Tax 227 ITR 172 (SC); Kedarnath Jute Manufacturing Co. Ltd. Vs. Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Department, the payment of customs duty has been made though the same has been shown as advance or a note has been appended in the accounts for contingent liability. Therefore, in our view the Assessee has made the payment of customs duty only when the liability has accrued on it. Since the customs duty has been paid to acquire the plant and machinery and therefore, it has to be capitalised, moreover, there is no dispute to the fact that such expenditure cannot be capitalised as observed by the assessing officer in his order in paragraph 2.3. The obligation to pay the excise duty arose during the impugned year and therefore, the liability to pay the amount had accrued to the Assessee during the year itself and the said liability can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epairs. Considering the useful life of the boards, Assessee Company was rightly treating the expenditure as capital expenditure in the earlier years i.e. prior to A Yr 05-06. There is no change in circumstances for changing the treatment of expenditure from capital to revenue. During the A Yr 2005-06 the Assessing Officer had concluded that the assessee company cannot be allowed to change the accounting treatment of particular item without any basis." 8. Thus, only on the ground that the frames of these glow sing boards are made of steal/aluminum, the AO came to the conclusion that the expenditure incurred thereupon was capital in nature. He was also influenced by the fact that till the previous year, the assessee had itself capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal has also recorded a finding that the assessee has to incur expenditure on glow sign boards regularly in almost each year. This fact itself shows that the advantage accrued from the use of the glow sign boards is not of enduring nature. Thus, the expenditure by the assessee on these glow sign boards did not bring into existence any asset or advantage for the enduring benefit of the business. The assessee has spent the expenditure on the glow sign boards with an object to facilitate the business operation and not with an object to acquire asset of enduring nature. Therefore, the said expenditure was of revenue nature and the Tribunal has rightly treated the same as of revenue nature." 12. Agreeing with the aforesaid view taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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