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2023 (6) TMI 524 - AT - Income TaxNature of expenditure - current repairs - replacement of decayed parts - expenditure on repairs to machineries - treated as capital expenditure by revenue - HELD THAT:- Merely because the description of expenditures states to be replacement of certain parts or machinery, it cannot lead to the conclusion that the expenditure was not for the purpose of maintaining or preserving of an asset, and it resulted in creation of a new asset or new advantage to the assessee. Assessee had explained that it was in the business of manufacturing various acids which corroded its plant & machinery speedily, and therefore, its plant & machinery needed to be repaired and part of it replaced so as to maintain its working capability. Assessee had incurred huge expenses to the tune of Rs. 2.68 crores towards repairs & maintenance of plant & machinery and expenses only to the extent of Rs. 37.50 lakhs have been found to be capital in nature. Not in agreement with the Revenue that expenses were not in the nature of current repairs to be allowed in terms of section 31 of the Act particularly when the assessee had explained that considering the nature of manufacturing done by it, machinery parts corroded frequently warranting their replacement so as to maintain the machineries in working condition, which has not been controverted by the Revenue. And the finding of the Revenue of the expenses being capital in nature /noncurrent is based on mere description of the expense as replacement of certain machinery with no facts emanating from the records before us to substantiate the same. No reason to uphold order of the ld.CIT(A) confirming the disallowance of repairs & maintenance expenditure - Appeal of assessee allowed.
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