TMI Blog2013 (10) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... work has been carried out on the structure of the factory building as well as with respect to the equipment. Executive cabins have been made, it floors related, AC sheets were installed on the top of the factory roof, the broken roof in the milk section was replaced, cables replaced, cooling tower and affluent plant revamped, angles and still rods replaced, iron rods and channels replaced in molasses tanks, installation work done in power house and milk section brass cables replaced structural repairs in mill section and boiling section and so on. Thus, exhaustive and extensive overhauling of the structure and equipment with regard to factory building and equipment have been carried out which was certainly necessitated on account of the fact that the appellant had taken over a factory that had remained closed. Current repairs - Expenditure has been incurred for replacing the broken part of the factory/plant in question and making the plant fit for use - Thus, when the expenditure has been incurred prior to the use of the plant and machinery in question then it does not fall under the category of current repairs – Decided against the Assessee. - ITA No.2325,2772/Mum/2011 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sec 69C of the I.T. Act 1961 be deleted. 3) The learned CIT (A) erred in disallowing the claim of depreciation to the extent of Rs 56,800/- on the fixed assets acquired during the previous year on the alleged ground that the said purchases of assets are unexplained. In this respect she ought to have appreciated that once the assets are put to use and form part of the block of assets the assessee is entitled to claim depreciation for the same as provided under sec 32 of the I.T. Act 1961. Your appellant humbly prays that the said claim of your appellant in respect of depreciation be allowed in full. 4) The learned CIT (A) erred in disallowing Rs 2,09,72,674/- u/s 40(a)(ia) of the I.T. Act 1961. 5) In this respect she ought to have accepted the explanation offered by your appellant and the report of their auditors that there was no default in deduction of TDS which would attract disallowance u/s 40(a)(ia) of the I.T. Act 1961 Your appellant humbly prays that the disallowance of Rs 2,09,72,674/- u/s 40(a)(ia) of the I.T. Act 1961 be deleted. 4. In these cross appeals the revenue has raised the following grounds: 1. On the facts and in the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved by confirmation of the addition to the extent of Rs. 5,86,292/- and proportionate depreciation and the revenue is aggrieved by the deletion of part addition. 6. We have heard the Ld. DR as well as carefully perusal the relevant material on record we note that the assessee has made the addition to the fixed assets to the tune of Rs. 12,41,497/-. The details of the fixed assets purchase during the year and depreciation claimed are given by the Assessing Officer in para 4 as under: Sl. No. Nature of Assets Name of the person from whom assets was stated to have been purchased Date Amount Depreciation Claimed 1. Plant and Machinery Kirti Corporation 31/10/2006 700000 52500 2. Plant and Machinery B. N. Shartri 31/03/2007 39780 2984 3. Plant and Machinery Contract Advance DG Repairing 31/03/2007 8704 653 4. Car J K Mumbai- 368010100000599 07/03/2007 194935 9747 5. Furniture Fixture T. V. Purchased 03/07/2006 115000 5750 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the facts and material we do not find any reason to interfere with the finding of the CIT(A) qua this issue. Hence the respective grounds of the parties in respect of addition u/s 69C and disallowance of depreciation are dismissed. 10. Ground No. 2 in the revenue s appeal and Ground No. 4, 5 of the assessee s appeal regarding deletion of addition made u/s 40(a)(ia). During the assessment proceedings the AO asked the assessee to furnish details of TDS made in respect of various expenses claimed in the profit and loss account. The assessee contended that the payment in respect of lease rent and Crushing Charges, Packing Material, Printing and Stationary, Transportation Charges etc. do not fall under TDS provisions. The AO did not accept the contention of the assessee and disallow the expenses to the tune of Rs. 2,39,42,030/- u/s 40(a)(ia) for want of TDS. On appeal, the CIT(A) has held that the Packing Material and Printing and Stationary are not subject to TDS and accordingly deleted the addition in respect of Packing Material and Printing Stationary. Hence, the CIT(A) has given part relief to the assessee. We have heard the Ld. DR and perused the relevant material the AO fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents do not exceed Rs. 20,000/-. However, from the material as furnished by the appellant it is inferred that the aggregate exceeds Rs. 50,000/- and hence this plea is not tenable. Moreover, no specific party-wise details have been furnished by the appellant such as name of party, amounts paid, date(s) of payment etc and hence I am upheld the action of the A.O. in this regard. As regards crushing charges and Factory Rent, it is a fact that no tax has been deducted on the sums as specified by the A.O, neither has a certificate been obtained from the A.O either for nil-deduction or for deduction at a lower rate. Hence, I decline to interfere with the action of the A.O. as regard, crushing charges and Factory Rent are concerned. So also, the appellant has defaulted in tax deduction at source under s. 194J, where professional charges of Rs. 17,33,322/- are concerned. Hence, the A.O. was correct in law to disallow the said sums to the extent as specified herewith, under s. 40(a)(ia). 13. It is clear from the finding of the CIT(A) that a relief with respect to packing material, printing and stationary charges have been granted to the assessee because it does not involved any job work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been incurred, the same cannot be brought to tax as income under the deeming provisions of the Act. Presumably the A.O. has brought to tax the said sum under s. 69C. The condition precedent for invoking section 69C is that amount spent must be an expenditure incurred. When the condition is not satisfied, s. 69C cannot be invoked. Further, from the details as present in the assessment order, it is seen that A.O. has himself indicated that sums are in the nature of advance for purchase of capital equipment. Therefore, the addition as made by A.O. is not sustainable. The addition of Rs. 1,50,19,180/- is hereby deleted. 16. The addition is made u/s 69C then the claim of expenditure is not a pre-condition of such addition. Accordingly, we set aside the order of the CIT(A) qua this issue and remit this issue to the record of the CIT(A) to reconsider the issue a per the requirement of section 69C. 17. The only ground left is Ground No. 1 in assessee s appeal regarding disallowance of expenditure by treating the same as capital in nature. The AO noted that the assessee claimed deferred repairs amount to Rs. 2,15,73,054/- in the computation of income. The AO further noted that under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture of the factory building as well as with respect to the equipment. Executive cabins have been made, it floors related, AC sheets were installed on the top of the factory roof, the broken roof in the milk section was replaced, cables replaced, cooling tower and affluent plant revamped, angles and still rods replaced, iron rods and channels replaced in molasses tanks, installation work done in power house and milk section brass cables replaced structural repairs in mill section and boiling section and so on. Thus, exhaustive and extensive overhauling of the structure and equipment with regard to factory building and equipment have been carried out which was certainly necessitated on account of the fact that the appellant had taken over a factory that had remained closed. Therefore, the A.O. was correct in stating that the said expenses cannot be treated to be in nature of current repairs. That being so, the A.O. ought to have added back the sum of Rs. 43,14,611/- as well, that had been charged to the profit and loss account being 1/6th of the amount deferred. 19. It is clear from the finding of the authorities below that the expenditure has been incurred for replacing the bro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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