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TMI Blog2007 (8) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal was correct in law in holding that the payment of Rs. 23, 21,865 made by the assessee as an advance to the suppliers for manufacturing tools and dies was a revenue expenditure ? (b) Whether the Income-tax Appellate Tribunal was correct in law in allowing deduction of Rs. 41.30 lakhs being provision made by the assessee estimating the expenditure on foreign trips by its dealers under the holiday incentive scheme and negativing the contention of the revenue that this was contingent liability?" 4. Printing of paper books is dispensed with. With the consent of learned counsel for the parties, the appeal is finally heard. 5. The facts relevant to question (a) are that the assessee-company manufactures portable generator sets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed the order by it in I. T. No. 2852 (Delhi) of 1999 for the assessment year 1995-96 in which it was held that the tooling advance was for facilitating the trading operations of the assessee and further that the tools and dies continued to, remain the property of the manufacturer. The Tribunal held this to be expenditure and allowed the assessee's appeal. It directed the Assessing Officer to allow the claim of the assessee as a deduction. 8. Appearing for the Revenue, Ms. Prem Lata Bansal, learned senior standing counsel submits that the expenditure on tools and dies have always been treated as a capital expenditure. The nature and character of such expenditure cannot be changed merely because the tools and dies are not owned by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually in the ownership of the assessee. 11. In Saw Pipes Ltd. 's case [2008] 300 ITR 35 (Delhi) this court noticed that service line in question had been laid in the assessee's premises to enable it to carry out business more efficiently. It was held that the service line belonged to the Maharashtra State Electricity Board and the ownership of the service line was not with the assessee. In those circumstances it was held that the money paid by the assessee in that case for laying the service line was to be treated as a revenue expenditure. Likewise in CIT v. Excel Industries Ltd. [1980] 122 ITR 995 (Bom) it was held that the service lines laid for the benefit of the assessee, which although owned by the Gujarat Electricity Board, did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining the nature of the expenditure. The tooling advance paid to the vendors is also non-refundable. Not only is there an assurance of continued supply of components but as a result of this arrangement there is a price advantage. Earlier these components were imported and now there would be an indigenised source of supply. In these circumstances, the finding of the Tribunal was that the enduring advantage obtained by the assessee is only in the revenue field and not in the capital field cannot be faulted. 14. Question (a) herein is answered in the affirmative, in favour of the assessee and against the Revenue. 15. As regards question (b) the facts are that the assessee has a holiday incentive scheme for which, in the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... robable liability towards the scheme for the previous year 1991-92 would be in the range of Rs. 41,30,000. The Tribunal accepted the explanation offered by the assessee that the holiday incentive scheme was in-built in the sales effected by the dealers and cannot be said to be contingent. It also found that the difference between the provision that is Rs. 41,30,000 and the actual liability of Rs. 16,67,929 incurred in the next assessment year, which worked out Rs. 24,62,071, was offered for tax by the assessee in the Assessment year 1993-94. In that view of the matter, the Tribunal directed that for the assessment year 1993-94 the deduction of Rs. 16, 67,929 lowed in the assessment year 1993-94 should be withdrawn. Since in the Rent years 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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