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2016 (4) TMI 675 - HC - Income TaxExpenses incurred on Life Extension Program (LEP) of Thermal Power Station - revenue v/s capital expenditure - Held that:- The question whether a particular expenditure would fall within the definition of the expression "current repairs" under Section 31(i) or not, does not depend upon what the assessee did or did not. After all if the expenditure is capitalised, the assessee takes the benefit of depreciation. If the expenditure is treated as revenue expenditure, it is either taken as an expenditure under Section 37(1) for computing income chargeable under the head "Profits and gains of business or profession" or treated as "current repairs" entitled to deduction under Section 31(i). Therefore, the contention of the learned Standing Counsel cannot be accepted. There was a clear finding in the order of assessment that the assessee had two options. The first option was to install a new plant which would have costed about ₹ 4.5 Crores per MW with a longer gestation period. The second option was to go in for the life extension program at a cost of ₹ 0.44 Crores per MW with a shorter gestation period. These findings of fact recorded by the Assessing Officer is accepted by the Revenue. Therefore, what follows out of these findings of fact, is the question to be addressed. After having found that there were two options open to the assessee and that the assessee had gone in for a cheaper option (almost 1/10th of the cost of first option), the Assessing Officer fell into an error in treating both options to be of the same nature. This error in the reasoning of the Assessing Officer was rejected by both the Appellate Authorities on the basis of the principles of law enunciated in various cases which we have discussed above. Therefore, we are of the considered view that the CIT (Appeals) as well as the Tribunal were right to found that the amount of expenditure actually incurred by the assessee, could not be taken to be of such a huge nature as to project it as capital expenditure. - Decided in favour of the assessee.
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