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UN-NECESSART LITIGATION BY TAX AUTHORITIES ON WELL SETTLED MATTER ABOUT REVENUE EXPENDITURE – ‘dry docking expense for repair of ship are revenue expenditure.

Income Tax - Direct Tax Code - DTC - By: - CA DEV KUMAR KOTHARI - Dated:- 12-8-2015 - Relevant PROVISIONS AND LINKS: Sections 30, 31 and 37 of the Income-tax Act, 1961 Commissioner of Income Tax And Others Versus Oil & Natural Gas Corporation Ltd 2015 (6) TMI 104 - UTTARAKHAND HIGH COURT Followed in: Commissioner of Income Tax, Dehradun Versus Oil And Natural Gas Corporation Ltd. 2015 (7) TMI 995 - UTTARAKHAND HIGH COURT The assessee- Oil & Natural Gas Corporation Ltd (ONGC): The assesse .....

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ails of divestments in ONGC could not be readily found, however, author remember that earlier stake of government and its other PSU was more than 90%. ONGC had also been largest tax payer / largest tax paying PSU for many number of years. Capital or revenue expenditure: The concept of capital expenditure and revenue expenditure is well known and can be decided easily and there should not be litigation so as to waste public money on un-necessary litigation. Dry docking expenses: FROM http://econo .....

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to 24 months, as there could be machinery and systems that cannot be stopped while the ship is in use; these are also serviced, repaired or replaced at the same time. The normal steps followed are - the hull is cleaned of marine plants, painting with anti-corrosive and anti-fouling paints, hull inspection and repairs, shipside gratings cleaned and repaired, cleaning and surveying of tanks, rudder and carrier ring. Locking devices clearances are also examined. All overboard and sea suction valve .....

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AND FOR THAT PURPSOE DRY DOCKING IS REQUIRED. Therefore, there should not be any doubt that dry docking is a regular course in course of business wherein ship is used as a plant and machinery. Repairs and maintenance are integral part of activities in any activity in which some durable assets are used. Dry docking is for repair and maintenance of ships. Therefore, there should not be any reason for disallowing dry docking expenses by treating them capital expenses. Case of ONGC: We find that in .....

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