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2015 (10) TMI 2438 - AT - Income TaxReplacement cost - submission that the Assessee had submitted that the said expenditure was incurred for increasing the efficiency of the said machinery - revenue v/s capital expenditure - Held that:- A perusal of the photographs of the MDSI controller shows that the said equipment is a computer terminal which controls the lathe. It is an admitted fact that the said controller has been replaced due to technological advancement and not on account of damage or irreparable position of the MDSI controller. Further, it is an admitted fact that the MDSI controller which was already available on the said machine was low memory variety which was replaced by a high memory variety. Thus, totally new equipment has been added under the guise of replacement. On a specific query it was admitted by the ld. AR on behalf of the Assessee that the actual cost of the total equipment including the lathe in 2001 was ₹ 53 lacs whereas the replacement of the controller alone in 2007-08 is at a cost of ₹ 35 lacs. The Assessee in its written submission has also categorically admitted that the said replacement was due to technological advancement and for increasing the efficiency. Thus, it becomes clear that the said lathe by this replacement has become more efficient thereby resulting in increase in the capacity and getting extended life. This is nothing but in the capital field. Thus, the said expenditure can be termed only as a capital expenditure and not as current repairs. This is because no repair has been done but replacement of an already running equipment with another higher efficiency equipment. - Decided in favour of revenue.
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