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TMI Blog2012 (5) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s 36(2)(i) of the I.T. Act, 1961 has not been fully satisfied." 2. So far as ground no. 1 on account of overhead expenditure on construction is concerned, the crux of arguments of the learned CIT DR is in support to the assessment order, for which our attention was specifically invited to para 4 of the assessment order and the findings contained therein. Reliance was placed upon the decision in CIT vs. Hi-line Pens (P) Limited; 306 ITR 182 (Del) and CIT v. Saravana Spinning Mills Private Limited (293 ITR 201) (SC). On the other hand, the learned counsel for the assessee defended the impugned order by submitting that the assessee is a statutory Corporation and the learned CIT(A) was quite justified in treating the expenses as revenue. 3. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is a statutory Corporation established under Warehousing Corporation Act, 1962. The assessee declared total income of Rs. 7,29,42,230/- in its return filed on 27.10.2005 which was assessed as such. Subsequently, notice u/s 148 was issued on 21.4.2009 and assessment u/s 143(3)/147 of the Act was completed on 21.12.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal nature. 3.2 On appeal, the learned CIT(A) considered the written submissions (as mentioned in para 5.3 of the impugned order) and concluded as under :- "5.4 I have carefully considered the submission of the appellant and findings of the Assessing Officer in assessment orders. I have also gone through the submission made by the appellant made by Assessing Officer in respect of claim of such overhead expenses. First of all it is noticed that the observation of the Assessing Officer that no detail was furnished in respect of overhead expenditure charged in P & L account and also the detail as to how the apportionment of overhead expenditure between construction and other activity was made is factually incorrect. In fact the appellant has submitted complete detail of such claim and also as to how such expenses are apportioned between capital and revenue expenses. On perusal of submission filed by the appellant during the assessment proceedings as also during the appellate proceedi9ng it is noticed that the appellant corporation is engaged in the business of storage of food grains and for such work they have to construct various Godowns. To carry out such construction work of Godo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as capitalised that portion of expenditure which has been incurred on construction of new Godowns. The remaining expenditure which has been incurred mainly on the staff attending the work relating to repairs and maintenance of existing godowns has been claimed as revenue expenditure. The expenditure incurred on repairs and maintenance on existing godowns numbering more than one thousand cannot said to be of capital nature. In the given facts and circumstances I do not find any irregularity in the claim of the appellant for remaining expenses claimed as revenue expenditure inasmuch as from such expenses neither any new assets has come into existence nor the appellant has derived enduring benefit from such expenses. Therefore, the addition made by the Assessing Officer in respect of A.Y. 2005-06, 2006-07, 2007-08 and 2008-09 amounting to Rs. 6758381/-, 57,42,716/-, 65,93,548/-and 58,49,314/- are hereby deleted." 3.3. If the aforesaid finding of the learned CIT(A), conclusion drawn in the assessment order and the assertion made by the learned respective counsel are kept in juxtaposition and analysed, admittedly, the chart of apportionment of overhead expenses was duly furnished by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent also may not help the revenue. 3.5 Section 31(i) of the Act limits the scope of allowability of expenditure as deduction in respect of repairs made to machinery, plant or furniture by restricting it to the concept of "current repairs". Admittedly, all repairs are not current repairs to decide the applicability of section 31(i), the primary test is not whether the expenditure is revenue or capital in nature. The basic test to find out as to what would constitute current repair is that the expenditure must have incurred to "preserve and maintain" an already existing asset and the object of expenditure must not be to bring a new asset into existence or to obtain a new advantage. "Repair" implies the existence of a part of the machine/plant or furniture which has mal-functions. The entire machine/plant or furniture, if replaced, the expenditure, so incurred did not fall within the meaning of current repairs. The object of repair and maintenance is to preserve and maintain existing asset and not to bring a new asset into existence. The ratio laid down by Hon'ble Bombay High Court in New Shorock Spinning & Mfg. Co. Ltd. Vs. CIT; 30 ITR 338 (Bom), CIT v. Saravana Spinning Mills Priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under the provisions of this Act, no new asset should come into existence and the expenditure must have been incurred on the existing asset. In view of these facts and judicial pronouncements, we find no infirmity in the stand of the CIT(A), on this issue, it is affirmed. 4. The next ground pertains to deleting the addition on account of bad debts. The stand of the learned CIT DR is that necessary conditions of allowance for claiming bad debts as provided u/s 36(1)(vii)/36(2) of the Act were not satisfied by the assessee. On the other hand, the learned counsel for the assessee defended the impugned order. 4.1 We have perused the record available on record and considered the arguments advanced by the learned respective counsel. The learned AO made the addition on account of bad and doubtful debt which is summarised as under :- Sl.No. A.Y. Rs. 1 2005-06 2641725 2 2006-07 1224593 3 2007-08 3875551 4 2008-09 162950 We find that the learned AO made the addition on account of bad debts on the plea that the assessee did not furnish the details of bad debts written off whereas the claim of the assessee was that this finding of the AO is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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