TMI Blog2001 (8) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... Replacement of Pipes to the main factory for all sections such as, Steam pipe, molasses and water-lines'. The Assessing Officer did not consider such expenditure to be revenue expenditure as claimed by the assessee and, therefore, disallowing such claim, he added the sum of Rs. 10,44,276 to the income of the assessee. He, however, allowed depreciation on these pipes at 33.1/3% being the rate applicable to plant and machineries. In appeal, learned CIT(A) upheld the order of the Assessing Officer. 3. Learned AR, of the assessee narrated, before us, the facts as to why there was necessity for repair and replacement of the pipelines in their factory. He stated that the sugar factory mainly consists of four sections namely (1) Milling Section, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. Learned AR of the assessee contended that because of the substantial high expenditure incurred for the year under consideration, the Assessing Officer has come to adverse conclusion without looking into the fact that replacement of pipe by itself would not go to change the nature of expenditure from revenue to capital expenditure. He further submitted that considering the overall expenditure of Rs. 1.23 crores spent towards repairs and maintenance during the year under consideration, the expenditure of Rs. 10,44,276 towards repairs and maintenance of pipelines is nothing but reasonable expenditure in the nature of revenue. On the above basis, learned AR of the assessee contended that the claim of expenditure under the heads 'Repairs and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appears learned Assessing Officer was swayed away to hold the expenditure in question to be 'Capital expenditure' considering the huge amount involved in the repairs and maintenance. In the case of Nathmal Bankatlal Parikh Co. Hon'ble Andhra Pradesh High Court in Full Bench has observed that repairs may be small or major. If it is a major repair, it may involve considerable amount of money. But the amount of money spent alone cannot be a factor to determine whether the expenditure falls under current repairs or not. It is the nature of the repairs carried out by the assessee that matters for grant of deduction. Their Lordships have further held that the test to determine whether the amount spent is capital or revenue in nature is, whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealities. If the object of making the payment is to acquire a capital asset, the payment would partake the character of a capital payment even though it is made not in lump sum but by instalments over a period of time. On the contrary, payment made in the course of and for the purpose of carrying on business or trading activity would be revenue expenditure even though the payment is of a large amount and has not to be made periodically. Keeping in view the above settled position of law, and considering the nature of works undertaken by the assessee which it usually undertook almost in every year to keep the Plant and Machinery run effectively (as is seen from the statements of expenditures towards Repairs and Maintenance for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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