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2023 (8) TMI 373 - ITAT DELHIDisallowance of foreign exchange fluctuation loss on External Commercial Borrowing (ECB) - whether assessee had not discharged its primary onus u/s 37(1)? - HELD THAT:- CIT(A) has followed the Hon’ble Delhi High Court’s in regard to assessee’s own case where considering the ECB loan as an old one the treatment of the foreign exchange fluctuation as revenue income or loss was sustained and Ld. DR was unable to cite any change of facts or law. There is no force in the ground raised by Revenue. Disallowance u/s 14A read with rule 8D - HELD THAT:- It appears admitted from the matter on record that during the year under consideration, no exempt income has been earned by the assessee and ld. CIT(A) has although taken note of judgment of Maxopp Investment Ltd. [2011 (11) TMI 267 - DELHI HIGH COURT] but failed to distinguish it on facts, as present assessee had no exempt income. On the contrary the judgments relied on behalf of the assessee expressly held that as assessee has not claimed any exempt income, no disallowance u/s 14A is required. Ground is allowed in favour of assessee. Disallowance on account of depreciation - damaged assets as for the destroyed - AO had directed the disallowance of depreciation, on the understanding, that the WDV is liable to be adjusted with the Claim amount raised with the insurance company - CIT(A) also sustained the addition with the further reasoning that if the assets were destroyed or lost in the earlier years then such an asset was not put to use for the business purpose, therefore entire claim of depreciation of such use plant and machinery has to be disallowed - HELD THAT:- The order of Ld.CIT(A) on basis of non use of assets is not sustainable. CIT(A) erred in giving directions to Ld AO to examine the insurance claim of the appellant and identify assets which were required to be replaced as these had got destroyed and those which were damaged and required repair and that the WDV will be reduced in respect of only those assets which were destroyed is not sustainable. In relevant year the Assessee was not required to adjust the WDV of the block of assets, for the amount of insurance claim submitted irrespective of assets being of the category destroyed or damaged. Grounds of assessee is allowed. Nature of expenditure - disallowance of repair and maintenance expenditure treating the same as capital expenditure - As submitted on behalf of the assessee that assets replaced were existing assets and no new asset has come into the existence - HELD THAT:- There appears to be no error in the findings of Ld. CIT(A) while referring the matter back to ld. AO to consider the expenses into repair and maintenance expenses or replacement expenses. As a distinction has to be made if the replacement is of a baby part only, then the same cannot be considered to be a capital expenditure. It is only when a baby part alone cannot be repaired and the whole of machine is required to be replaced, the expenditure of replacement will be of capital nature. Thus, in regard to these grounds there is no substance in the contentions on behalf of the revenue or the assessee.
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