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2010 (2) TMI 140 - HC - Income TaxCapital Expenditure versus revenue expenditure - purchase of second hand machinery for use of its parts to maintain (repair) existing machinery - Power of the Tribunal to give a finding to an issue which was not before it - Assessee claimed the value of second hand machinery as revenue expenditure. But department disallowed the claim on the ground that during the relevant assessment year old machineries purchased by the assessee had not reached Bangalore, therefore the said claim has to be disallowed and that if at all the assessee is entitled to his claim same can be considered for the next assessment year. Held that: When the entire sale consideration is paid and when the machinery purchased by him has been despatched by the vendor from USA, sale transaction is completed and as per the provisions of the Sale of Goods Act, title to the goods has been passed on to the assessee and he has become the owner of the second hand machineries purchased by him to use them as spare parts even though the goods have been reached Airport at Bangalore in the month of August, 2001 and it is to be noted that when actually goods were delivered to the assessee is not the criteria to consider the sale transaction. - second hand machinery purchased by the assessee ought to be considered as spare parts for the existing old machineries and allowed as revenue expenditure - when an assessee purchased the spare parts for the existing machineries, same cannot be treated as capital expenditure and it has to be treated as revenue expenditure since these spare parts are purchased for the maintenance of the existing equipments
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