Consumable Tools are ‘Revenue’ in Nature: ITAT allows Deduction to Walvoil Fluid Power India

Consumable Tools are ‘Revenue’ in Nature: ITAT allows Deduction to Walvoil Fluid Power India

Nilisha | Mar 24, 2022 |

Consumable Tools are ‘Revenue’ in Nature: ITAT allows Deduction to Walvoil Fluid Power India

Consumable Tools are ‘Revenue’ in Nature: ITAT allows Deduction to Walvoil Fluid Power India

M/s Walvoil Fluid Power India Pvt Ltd was granted relief by the ITAT Bangalore, which held that consumable tools are revenue in nature and so acceptable as expense in the profit and loss account.

Walvoil S.p.A., an Italian company, is the assessee. The assessee makes hydraulic valves for autos and industrial machinery. In Whitefield, Bangalore, the assessee has a manufacture and assembly factory with the requisite infrastructure. The assessee was harmed by the Assessing Officer’s ruling, which added Rs.1,68,36,376/- to the assessee’s revenue expenditure claim for consumable tools.

The two-member bench, comprised of Shri George George K, Judicial Member, and Ms. Padmavathy S, Accountant Member, cited the Supreme Court’s decision in Sarvana Spinning Mills Pvt. Ltd., which said that these tools must have distinct purposes and an enduring advantage.

“In the situation presented by the Ld AR, these tools are spares employed in the assessee’s activities to facilitate the creation of completed items with a short working life that requires frequent replacement and no independent function.” The test of enduring advantage isn’t the only criterion for determining whether an item is revenue or capital. The value of each object, as well as its resale value, should be taken into account. We are of the considered opinion that the tools should be recognised as revenue in nature and eligible to be claimed as expenditure in the profit and loss account based on the materials on record and the facts. As a result, we approve the ground in assessee’s favour,” the Tribunal ruled.

To Read Judgment Download PDF Given Below:

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