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2016 (4) TMI 900 - AT - Income TaxClaim for repair and maintenance expenditure - Held that:- The fact of the matter is that if any asset forming part of block of assets gets discarded, depreciation thereon on its unabsorbed cost continues to be available till the same gets totally charged or realized by way of sale/scrap, etc. In other words, the circumstances adversely impacting the realization of the benefit/advantage envisaged from the capital expenditure, even if unrealized – in whole or in part, would not render it as of revenue nature, and the law provides for a complete absorption of such expenditure, i.e., as that which does not suffer from such an impact. The assessee may well be able to secure its renewal. The same, in any case, i.e., irrespective of extension, is not to be confused with the nature of the expenditure incurred – capital or revenue. In other words, the fallacy in the argument lies in determining the nature of the expenditure based on or with reference to the period of the right of occupancy. The two are independent of each other. In the instant case, it has already been indicated that the entire expenditure is in the nature of a set-up cost of the business. Even assuming, for which there is nothing on record to suggest so, that the business was already set up at the previous location, dislocation is disruptive of its business and would accordingly be required to be set up again. To the extent this entails additional expenditure, the same only implies a higher capital expenditure in-as-much as the capital work or assets discarded (at the old location) cannot be put to use again. Such discarded assets shall, however, continue to be subject to depreciation under law, as explained earlier. In view of the foregoing, the assessee’s claims cannot be acceded to, and the treatment accorded by the Revenue is to be upheld. It may also be clarified that though the assessee has impugned the entire expenditure claimed (Rs.11.34 lacs), the net (of depreciation) disallowance is only for ₹ 91,940/- (1,33,914 – 41,974). An acceptance of the assessee’s claim (at any further appellate stage) would entail withdrawal of depreciation and, as explained earlier, an allowance of the entire expenditure incurred for ₹ 8.39 lacs. - Decided against assessee
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