Ice Box Expenditure Accounted under Marketing Expenses’ are Capital Expenditure: ITAT uphold Disallowance

Ice Box Expenditure Accounted under Marketing Expenses’ are Capital Expenditure: ITAT uphold Disallowance

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.Therefore 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 returns were processed under section 1432() of the income tax act

While processing the return the assessing officer disallowed expenses incurred on Ice Boxes. Against the disallowance assessee filed appeal before the CIT(A). The CIT(A) confirmed the decision of AO. Further assessee filed second appeal before the Tribunal.

Assessee had made expenditure 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 Sign board as revenue expenditure.But the Ice-Boxes as part of plant and machinery and found under capital expenditure while considering assessee’s own case for AY 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 NKBillaiya, (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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Hindustan Coca-Cola Beverages Pvt. Ltd vs Dy. Commissioner of Income Tax



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