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TMI Blog2011 (10) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure in question was incurred by the assessee on the ‘replacement’ of the moulds is not under challenge. - Decided in favor of assessee. - I T A 171/2010, I T A 197/2010, I T A 626/2010 - - - Dated:- 17-10-2011 - SANJIV KHANNA, R.V. EASWAR, JJ. O R D E R With the consent of the parties these appeals are heard and are being disposed of by this common order. 2. These appeals under Section 260A of the Income Tax Act, 1961 (Act, for short) are directed against the order dated 30th June, 2009 passed by the Income Tax Appellate Tribunal (for short, the tribunal) on the question whether the expenditure incurred on purchase of moulds is capital expenditure or revenue expenditure. The tribunal has accepted the stand of the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed mould as revenue expenses. 4. The Assessing Officer did not controvert or deny the aforesaid factual position projected by the assessee that the moulds in question were integral part of the injection moulding machines and had to be replaced by new moulds due to normal wear and tear. The assessee had purchased injection moulding machines which included the moulds and these were treated as capital assets, but once the moulds were replaced by new moulds, the expenditure incurred on new moulds was treated by the assessee as revenue expenditure. The stand taken by the Assessing Officer/Revenue was that moulds have been classified as a capital asset specifically in the depreciation schedule in the Income Tax Rules, 1962 and the rate of dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital asset in hands of another assessee. The schedule does not decide whether an asset purchased is a capital asset. Merely because moulds have been classified and mentioned in the schedule relating to depreciation in the Income Tax Rules, it does not mean that the purchase price of the moulds in all cases has to be treated as a capital expenditure. It would depend upon the facts and circumstances of each case whether the purchase price of moulds is to be capitalized or treated as revenue expenditure. Purchase price of moulds cannot be regarded as a capital expenditure if the replaced mould is an integral part of an existing injection moulding machine. In such cases a new asset does not come into existence but the expenditure incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Mysore Spun Concrete Pipe Pvt. Ltd. s case [1992] 194 ITR 159 (Kar), the Tribunal has reached a conclusion that the moulds in question do not enhance the capacity of the existing machines and are merely replacements for the moulds damaged during the process of manufacture of glass. It is also evident from the format of the question proposed by the Revenue, that finding of the Tribunal to the effect that the expenditure in question was incurred by the assessee on the replacement of the moulds is not under challenge. 7. In view of the findings recorded by the tribunal, we do not think that any question of law arises for consideration and the appeals are accordingly dismissed without any order as to costs. - - TaxTMI - TMITax - I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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