TMI Blog2012 (10) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assessee. - ITA No.1480/Mds/2011 - - - Dated:- 30-4-2012 - N S Saini, Vikas Awasthy, JJ. For Appellant: Shri Shaji P Jacob Addl . CIT DR For Respondent: Shri Vikram Vijayaahavan, Adv. ORDER Per: N S Saini: This is an appeal filed by the Revenue against the order of Commissioner of Income Tax(A)-I, Coimbatore dated 29.06.2011. The sole grievance of the Revenue in this appeal is that Ld. Commissioner of Income Tax(A) erred in holding that expenditure incurred on installation of laser upgradation kit is revenue expenditure. 2. The brief facts of the case are that the assessment for Assessment Year 2002-03 was completed u/s.143(3) read with section 147 on 27.12.2007 on total income of fRs.43,61,561/- in which expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer to decide whether the expenditure can be allowed as current repairs as Sec.31 of the Income Tax Act. The Assessing Officer observed that the assessee had taken an alternative plea before the Tribunal that if it is not allowed as current repairs, then it can be allowed as business expenditure u/s.37 of the Act. The Assessing Officer observed that the Tribunal has not given any direction to the Assessing Officer whether it can be allowed as business expenditure u/s.37. Therefore, the Assessing Officer observed that in respect of the claim of assessee that it is only current repairs, it is held that as there was no replacement to any existing spare parts, therefore, it cannot be claimed as current repairs and disallowed the claim of the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it cannot be claimed as current repairs. He has not adjudicated on the issue whether the expenditure is capital or revenue in nature. 5.6. The company purchased the original laser machine in the year 1997 and was using it for conducting eye surgeries to correct refractive errors by laser technology. Because of the technological development in these zyoptic machines, certain parts had to be upgraded and added to the original lasik machines for better surgical procedures. The original supplier M/s.Bosch and Lomb brought out an upgradation kit, which when fitted with the original equipment, results in more precise surgeries and high success rate. As per the information provided by the appellant company, the upgrade essentially enables t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the decision of the Hon ble Supreme Court in the case of C.I.T. Vs. Mangayarkarasi Mills Pvt. Ltd., in [2009] 315 ITR 114 (SC) and the decision of the Hon ble Supreme Court in the case of C.I.T. Vs. Saravana Spinning Mills P. Ltd. in [2007] 293 ITR 201 (SC) has held that expenditure incurred by the assessee on reconditioning and overhauling of the machine has given the assessee a benefit of enduring nature, and therefore, the amount was not allowable as current repairs u/s.37(1), but was capital in nature. 5. On the other hand, Ld. Authorised Representative of assessee supported the order of the Ld. Commissioner of Income Tax(A). 6. We have heard the rival submissions and perused the orders of the lower authorities and mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure was current repairs u/s.31 of the Act was not correct. He therefore proceeded to consider and decide whether the expenditure in question was capital or revenue expenditure and allowable u/s.37 of the Act. The Commissioner of Income Tax(A) has held that according to the information given by the assessee, the upgradation essentially enabled measurement of high order optical aberrations of the eye and hence helped in precise surgical treatment. The upgrade cannot function on its own and can only improve the treatment performed by the basic machine. Thus, he was of the view that it cannot be inferred that no separate machine has been brought into existence nor the expenditure can be considered as capital in nature. He held that sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also, the expenditure incurred by the assessee by purchasing of upgradation kit was to carry out precision eye surgery by using advanced technology, which was the need of the time in the line of the business of the assessee, therefore was an expenditure in revenue filed and hence, allowable deduction to the assessee. Further, the Ld. DR relied on the decision of Hon ble Delhi Court in the case of Bharat Gears Ltd.(supra), which was on the issue whether the expenditure was current repairs or not u/s.31 of the Act and hence not applicable to decide the present issue under consideration which is whether the expenditure in question is capital or revenue in nature and allowable u/s.37(1) of the Act. We therefore, confirm the order of the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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