Expenditure Made On Ice Boxes Are Capital Expenditure: ITAT Upholds Disallowance Against Hindustan Coca-Cola Beverages

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the expenditure made on ice chests or ice boxes was made for acquiring or bringing into existence an asset for the enduring benefit of the business and was of the nature of capital expenditure.The two-member bench of Anubhav Sharma (Judicial Member) and N.K. Billaiya (Accountant Member) has observed that if the expenditure is made for acquiring or bringing into existence an asset or advertisement for the enduring benefit of the business, It is properly attributable to capital and is in the nature of capital expenditure.The appellant/assessee is a manufacturer and trader of non-alcoholic beverages and filed returns that were processed under Section 143(2) of the Income Tax Act.The assessee challenged the disallowance of expenses incurred on ice boxes. The assessee had made expenditures on sign boards, ice boxes, etc. provided to vendors, which were accounted for under the heading ‘Marketing Expenses’. The CIT(A) has allowed the claim of the sign board as revenue expenditure, but has treated the ice boxes as part of plant and machinery and allowed depreciation in the assessee’s own case for A.Y. 2002-03.The Tribunal has disallowed expenses, holding them to be capital in nature.The assessee contended that there was no enduring benefit to the assessee and the purpose of expenditure is to increase sales at the outlets or vendors. Therefore, the expenditures were incurred for the purpose of business promotion and advertisement. The ice boxes do not have life and will be scrapped soon.The tribunal upheld the conclusion of the CIT (A) in the order.Case Title: M/s. Hindustan Coca-Cola Beverages Pvt. Ltd. Versus DCITCitation: ITA No. 6605/Del/2014, A.Y. 2004-05Date: 12.04.2023Counsel For Appellant: Neeraj JainCounsel For Respondent: Mohd. Gayasuddin AnsariClick Here To Read/Download Order

Expenditure Made On Ice Boxes Are Capital Expenditure: ITAT Upholds Disallowance Against Hindustan Coca-Cola Beverages

Mariya Paliwala

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