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2019 (4) TMI 576 - AT - Income TaxExpenditure for repairs and maintenance to plant & machinery - Revenue or capital expenditure - current repair - HELD THAT:- If the expenditure incurred by the assessee would not result in replacement of old machinery with new, then it may come within the ambit of current repair, but expenditure on such a magnitude which ultimately replaces full machinery within one or two years, then it would not come under concept of “current repair”. AO has observed that the assessee has incurred expenditure to the extent of 60.93% of the value of the machinery in the AY 2010-11 and 31.58% in A.Y.2011-12, meaning thereby, by way of this method, almost 92% expenditure were incurred in two years on the value of the plant & machinery. It amounts to replacement. CIT(A) in this background has rightly observed that other companies in similar line were incurred expenditure to the extent of 2% to 6%, whereas the assessee has incurred expenditure at 43%. The CIT(A) rightly upheld disallowance of expenditure partly by treating it in the capital field. We do not find any error in the order of the CIT(A) in both years on this issue. An alternative contention has been raised that in case expenditure is not allowed as revenue expenditure, then depreciation on the disallowed amount be granted to the assessee. We remit this aspect to the file of the AO. He will work out and grant depreciation to the assessee on the addition made by disallowing the current repairs. This alternative contention of the assessee is accepted. - Decided partly in favour of assessee.
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