The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that expenditure incurred on ice-boxes, accounted under the head of marketing expenses, are capital expenditure. Therfore the bench confirmed the disallowance made by the assessing officer
Neeraj Jain, Aditya Vohra advocates, and ArpitGoyal chartered accountant appeared for the assessee and Mohd. Gayasuddin Ansari appeared for revenue.
Assessee Hindustan coca-cola is a manufacturer and trader of non-alcoholic beverages and filed returns for respective years. The return were processed under section 143(2) of the income tax act
While processing the return the assessing officer disallowed expenses incurred on Ice Boxes. Against the disallowance, the assessee filed appeal before the CIT(A). The CIT(A) confirmed the decision of AO. Further, the assessee filed a second appeal before the Tribunal.
Assessee had made expenditures on sign board, Ice-boxes etc. provided to vendors which were accounted under the head ‘Marketing Expenses’ and CIT(A) has allowed the claim of Signboard as revenue expenditure. But the Ice-Boxes as part of the plant and machinery and found under capital expenditure while considering the assessee’s own case for A.Y. 2002-03.
Counsel for the assessee submitted that the purpose of expenditure is to increase the sales at the outlets / vendors therefore, the expenditures were incurred for the purpose of business promotion and advertisement moreover the Ice-boxes did not have as life and scrapped soon.
Thereafter the division bench of N.K.Billaiya, (Accountant Member) and Anubhav Sharma, (Judicial Member) decided the ground against the assessee and observed that expenditure made by assessee for the enduring benefit of the business of the assessee which is properly attributable to a capital and certainly it was of the nature of capital expenditure.
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