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2020 (2) TMI 1285 - HC - Income TaxNature of expenditure - expenditure on the replacement of plant and machinery - revenue or capital expenditure - HELD THAT:- As relying on Desai Brothers [1974 (9) TMI 9 - GUJARAT HIGH COURT] we have no hesitation in coming to the conclusion that the Tribunal committed an error in holding that the expenditure incurred on replacement of plant and machinery is a capital expenditure. In such circumstances, we answer the first substantial question of law in favour of the assessee and against the Revenue. Disallowance being tools and dies written off - HELD THAT:- We take notice of the fact that while disturbing the finding of fact recorded by the CIT(A), the Tribunal has not assigned any good reason. The Tribunal straightway proceeded to disturb such finding. The expenditure incurred on dies and tools is a recurring revenue expenditure and no capital asset of enduring benefit comes into existence more so because the dies need to be replaced often. Second substantial question of law stands squarely covered by the decision in the case of Banco ([2018 (1) TMI 1309 - GUJARAT HIGH COURT) and Sunbeam (2012 (6) TMI 59 - DELHI HIGH COURT) and we propose to follow the ratio of both the decisions. - Decided in favour of assessee.
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