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2015 (1) TMI 430 - HC - Income TaxDeduction u/s 31 - current repair to machinery or plant - replacement of parts - Capital expenditure or Revenue Expenditure - Held that:- From a perusal Section 31, it becomes clear that an assessee would be entitled to deduct the expenditure incurred for any current repair to machinery or plant; and the one incurred for payment of premium of insurance. What constitutes current repairs was explained by various Courts. The Bombay High Court in Commissioner of Income Tax v. Chowgule and Co. (P) Ltd. 214 ITR 523 identified about 8 parameters, in this behalf. The gist thereof is that irrespective of the expenditure incurred, the replacement of a part of an existing machinery would constitute current repairs, and such expenditure cannot be treated as capital expenditure; and that in the name of causing repairs, an assessee shall not be entitled to bring an altogether a new asset, into existence. - The mere fact that the new parts are different from those that were replaced, in terms of cost, or efficiency; by itself does not lead to the conclusion that the assessee has acquired new item of machinery. It is not uncommon that the parts of an item of machinery, which is an independent unit, have different efficiency and endurance. Though the new part, which replaced the old one, in a machinery, is costlier and more efficient, it would not lead to an inference that an item of new machinery has been acquired, much less the cost incurred therefore can be treated as capital expenditure. - Decided against Revenue.
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