Case Law Details
Walvoil Fluid Power India Pvt. Ltd. Vs DCIT (ITAT Bangalore)
On perusal of the list of the tools treated as capital in nature and we find that the value per item in the entire list is not significant. The ratio laid down by the Hon’ble SC in Sarvana Spinning Mills Pvt. Ltd., (Supra) is that these tools need to have independent functions and also they need to have a benefit of enduring nature. In the given case as submitted by the Ld AR these tools are spares used in the operations of the assessee to facilitate the manufacture of finished products that have short working life needing frequent replacement and do not have any independent function. The test of enduring benefit is not the only criteria for concluding an item to be revenue or capital in nature. The value of each of the items, resale value etc also warrants consideration. Based on the materials on record and the facts we are of the considered view that the tools are to be treated as revenue in nature and eligible to be claimed as expenditure in the profit and loss account.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal of the assessee arises out of the final asst. order passed by the DCIT(A)-7(1)(2), Bengaluru u/s 143(3) r.w.s 144C of the Income-tax Act (the Act) dated 28/07/2017 passed in pursuant to the directions of the DRP dated 16/06/2017.
2. The assessee raised the following grounds:-
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