TMI Blog2011 (10) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... repairs/restoration of capacity. - No substantial question of law arisen - decided in favor of assessee. Computation of MAT (Minimum Alternate Tax) - Deduction u/s 80HHC - Decision of Apex court in Ajanta Pharma Ltd. vrs. Commissioner of Income Tax (2010 -TMI - 77381 - SUPREME COURT) - Held that:- Book profits are to be computed by making deductions as prescribed in clause [a] to [f] of explanation appearing in subsection [2] and by reducing the income as per various heads, as stipulated in clause (i) to (iii) thereof. The provisions of Section 80 HHC are held to operate in different sphere. The Hon'ble Apex Court has noted essential conditions for invoking Section 80 HHC (1) and found that same were conditions of eligibility. Section 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80,85,276/- could not have been treated as on current repairs. He has contended that this expenditure is too high to accept it as revenue expenditure. According to the department, this was a capital expenditure. 4. Shri Thakkar, learned Counsel on the other hand has pointed out that the nature of expenditure is already accepted by two authorities and it being a finding of fact, this Court should not interfere. 5. After hearing the respective counsel, we find that the assessee has claimed expenditure of Rs. 1,80,85,276/- on account of repairs of 40 MVA Transformer. A.O. had found that the book value has been completely exhausted, and therefore, held that it was of case of making new transformer. The assessee submitted that, if it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure. A.O. has disallowed that claim and he treated it as capital in nature. Even in books of account the assessee had treated it as capital expenditure. The assessee had claimed that replacement made at the most amounted to a repair made to the process of manufacture of yarn. The Hon'ble Apex Court noted that if replacement was held to be "current repairs" in such case, Section 31(I) of Income Tax Act will be completely redundant. The Hon'ble Apex Court found that repairs implies existence of a part of machine which has malfunction. We, therefore, find that this judgment does not help the department at all in the present facts. 8. Shri Thakkar, learned Counsel has made reference to judgments of Hon'ble Apex Court reported at (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Apex Court has noted essential conditions for invoking Section 80 HHC (1) and found that same were conditions of eligibility. Section 80 HHC (3) deals with computation of tax incentive. Section 115 JB, vide clause (iv) exclude eligible profits derived from exports. It is also noted that computation of book profits under section 115 JB is different from normal computation under 1961 Act/computation under Chapter VIA. The argument of department that both "eligibility" as well as "deductibility" of the profit needs to be considered together for working out deductions, is found without merit. In this connection reference can be made to the judgment of ITAT Mumbai Bench which has been restored by the Hon'ble Apex Court by setting aside the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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