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2016 (1) TMI 413 - ITAT AHMEDABAD

2016 (1) TMI 413 - ITAT AHMEDABAD - TMI - Disallowance of expenditure for replacement cost of remembraining in membrance cell-III - Held that:- As decided in assess's own case the attempt to contend that life of membrane would be spread over from 3 to 5 years or that the amount involved for replacement of membrane is huge and, therefore, the departure on the part of the Revenue could be said as justified, in our view, cannot be countenance for two reasons. One is that the amount involved would n .....

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he addition and in the alternative allow the cost of remembraining in membrance cell-II as revenue expenditure. Decided in favour of the Assessee. - ITA No. 2551/Ahd/2012 - Dated:- 19-11-2015 - Shri Kul Bharat, JM, & Manish Borad, AM. For The Appellant : Shri Sanjay Agrawal, CIT,DR For The Respondent : Shri Sunil Talati, AR ORDER PER Manish Borad, Accountant Member. This appeal of Revenue is directed against the order of CIT(A)- I, Baroda, in appeal No.CAB-I/283/11-12, dated 31.8.2012. Asses .....

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ase of CIT vs. Saravana Spinning Mills (P) Ltd. (2007) 293 ITR 201 (SC) 2. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary. 2. Briefly stated facts of the case are that assessee is a Limited Company engaged in the business of manufacturing and trading of chemicals and generation of power. Return of income was filed on 23.9.2009 declaring total income of ₹ 88,18,01,350/- and thereafter the return of income was revised on 6.9.2010. The case w .....

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remembraning in membrance cell-II, Baroda amounting to ₹ 7,18,67,080/-. Looking to the nature and volume of expenditure and life of the component ranging between 3 to 5 years, Assessing Officer deemed it fit to treat this expenditure of ₹ 7,18,67,080/- as capital expenditure and accordingly after allowing depreciation of ₹ 2,51,53,478/- from the total cost of remembraining in membrance cell-II at ₹ 7,18,67,080/- added ₹ 4,67,13,601/- (Rs. 7,18,67,080/- (-) ₹ .....

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SC). 5. On the other hand, the ld. AR of the assessee submitted that this issue has been decided in favour of the assessee by the Hon ble Jurisdictional High Court in assessee s own case in Tax Appeal Nos.798 & 799 of 2010 vide order dated 19/01/2015. 6. We have heard the rival contentions and perused the material on record. Before examining the issue we would like to mention that there seems to be a mistake in the grounds of appeal taken up by the Revenue in relation to amount mentioned. Th .....

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d by correct figure i.e. ₹ 4,67,13,601/-. The ld. DR has accepted the mistake and now we proceed with the ground of Revenue against action of CIT(A) in deleting the addition of Rs. ₹ 4,67,13,601/- made on account of disallowance of expenditure for replacement cost of remembraining in membrance cell-III. 7. The above issue came up before the Tribunal in assessee s own case for Asst. Year 2003-04 wherein the Co-ordinate Bench decided the issue in favour of assessee on the basis that As .....

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P) Ltd. (supra). The relevant portion of the decision of Hon ble Jurisdictional High Court is reproduced below :- 8. We may record that in the decision of the Apex Court in case of Saravana Spinning Mills P.Ltd. (supra), the Apex Court observed at para 13 on page 208 and 209, the relevant of which, reads as under:- "An allowance is granted by clause (i) of Section 31 in respect of amount expended on current repairs to machinery, plant or furniture used for the purposes of business, irrespec .....

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owability of expenditure as deduction in respect of repairs made to machinery, plant or furniture by restricting it to the concept of "current repairs". All repairs are not current repairs. Section 37(1) allows claims for expenditure which are not of capital nature. However, even Section 37(1) excludes those items of expenditure which expressly falls in Sections 30 to 36. The effect is to delimit the scope of allowability of deductions for repairs to the extent provided for in Sections .....

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xistence or to obtain a new advantage." After observing the aforesaid, when the Apex Court further examined the facts of the said case, it was found that each machine including the Ring Frame was an independent and separate machine capable of independent and specific function and, therefore, treated the expenditure as capital in nature. Such is not the fact situation in the present case because no material is referred to by the A.O. nor by the C.I.T. (Appeals) leading to the conclusion that .....

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ar view has been taken in the other decisions relied upon on behalf of the assessee as also in several cases including in Arihant Builders Developers & Investors (P) Ltd. v. ITAT (2005) 277 ITR 239 (MP), Asstt. C.I.T. V/s. Gendalal Hazarilal & Co. (2003) 263 ITR 679 (MP), C.I.T. V/s. Neo Poly Pack (P) Ltd. (2000) 245 ITR 492 (Delhi), 4. Dhansiram Agarwalla V/s. C.I.T. (1996) 217 ITR 4 (Gauhati). C.I.T. V/s. Shiv Sagar Estate (2002) 257 ITR 59 (SC). Union of India V/s. Satish Pannalal Sha .....

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ces or reasons for such departure. Therefore, ground no.4 in the appeal for the AY 1999- 2000 & ground no.2 in the AY 2000-01 are allowed. 10. If the observations are further considered in light of the abovereferred decision of the Apex Court in case of Excel Industries Ltd. (supra), we do not find that the approach on the part of the department to take up a different stand in absence of any material or valid reason could be said as justified. The consistency expected on the part of the Reve .....

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