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2019 (10) TMI 1165 - AT - Income TaxExpenditure on relocation of existing equipment - Nature of expenditure - revenue or capital expenditure - HELD THAT:- We observe that in proceedings before the CIT(A), the assessee had categorically submitted that the expenditure was incurred on replacement of perforated ceiling tiles in the laboratory. It is apparent from records that the expenditure was incurred on maintenance of the laboratory caused due to normal wear and tear. No new asset has come into existence, thus, we are of the considered view that the expenditure was in the nature of repairs and maintenance and not on capital account. The assessee has claimed expenditure on relocation of existing equipment to new Effluent Treatment Plant under the head ‘repairs and maintenance’. Revenue disallowed aforesaid expenditure on the premise that assessee would have got enduring benefit by relocation of the equipment and hence, the expenditure is capital in nature. We do not concur with the findings of the authorities below. It is not disputed by the Revenue that the equipment was already in existence. No new plant or machinery was purchased by the assessee. The relocation of the existing equipment by any stretch of imagination cannot result in creation of any new asset. At best it could have resulted in efficient running of the plant and machinery. Thus, the expenditure on relocation of existing equipment is revenue in nature. In the result, Ground No.II raised by the assessee is allowed. Treating the entire advance licence as taxable in the assessment under appeal - Year of assessment - HELD THAT:- Considering the decisions rendered in the cases of CIT vs Shoorji Vallabhdas & Co. [1962 (3) TMI 6 - SUPREME COURT], Morvi Industries Ltd. [1971 (10) TMI 5 - SUPREME COURT] and the provisions of section 28(iv) it is unambiguously clear that it is only to the extent that assessee has derived benefits from the licence during the impugned assessment year and the amount is chargeable to tax. Assessee has stated at the bar that in the subsequent assessment year assessee has offered to tax the amount to the extent benefit is derived under the licence. Hence, the Revenue is not deprived of tax on the benefit derived by assessee from advance licence. Thus, in view of the facts of the case and the decision of Hon'ble Apex Court, we find merit in the contentions of the assessee.
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