TMI Blog2014 (10) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... increase in exports of iron ore from 16 million in 2005 to 50 million till March 2012, there was a need to build a new bridge without which it would not be possible to continue to export on sustainable basis. Until the new Usgao bridge came into operation there was long line of trucks waiting on either side of existing bridge to transport the iron ore. By this, precious time was lost which in turn trucks made less numbers Of trips per day. This in turn increased cost of transport. After the new bridge was commissioned loaded trucks and empty trucks moved in opposite direction without having to stop or wait for the bridge passage. This establishes clearly that the share of expenses for construction of the new Usgao bridge has resulted in revenue in terms of cost per ton transported as well as increase in the quantity of ore exported/sold. Expenditure incurred by company as share for construction of New Usgao bridge cannot be capital expenditure but is entirely revenue expenditure. Amounts paid as contribution for construction of a bridge for providing easier access for its workmen and movement of goods would be permissible revenue expenditure as had been held in CIT v. Coats Viyell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eplaced old machine. In the instant case we find that entire hull of the ship was not changed. Every ship has to go for dry docking almost for every year and these annual repairs are essential because there is always lot of were and tear of parts, resting of steel plates of hulls with requires the replacement and repairs we cannot be made without taking into dry rock. We find that by incurring these expenses the sea sip in training condition. The assessee has made renovation and replacement of parts therefore, this is revenue expenditure.We are of the view that the CIT(A) is justified in his action and our interference is not required. Addition on royalty payment - Held that:- Looking to the facts and circumstances of the case, we find that the assessee has submitted before the CIT(A) that assessee has paid the royalty with penal interest on 1,99,152 MT to Mining Department, Goa. It is a regular practice followed in Goa when that as and when the ore is extracted and moved from the mine for the sale, royalty is paid. The ore of 1,99,152 MT was lying on the mine during the financial year 2007-08 and it was moved out of mine in the financial year 2010-11. The royalty has been paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O ignoring the decisions of the supreme court in the case of CIT v/s Saravana Spinning Mills Pvt. Ltd 293 ITR 201 and Ballimal Naval Kishore V/s. CIT (1997) 244 ITR 414, Modi Spinning Weaving Mills Co. Ltd V/s. CIT (Del) 200 ITR 544). Current repairs does not include capital expenditure u/s. 31. 5. The Ld. CIT(A), Panaji has erred in deleting addition of ₹ 15,25,16,576/- made by the AO towards unaccounted / excess stock by ignoring the strong evidence collected by the AO in the shape of letter dated 06/12/2010 given by the Directorate of Mines and Geology, Government of Goa which confirms the production or the extraction of ore in the mines of the assessee at 7,833MT only during the period relevant to A.Y. 2008-09. 2.1. Wherein the following grounds are raised by the assessee in A.Y2008-09. 1. CIT-Appeals has erred in upholding disallowance u/s. 14A of ₹ 3,240,027/-. The Disallowance u/s. 14A r.w.s. Rule 8D works out to ₹ 22,201/-. 2. The CIT(A) has erred in treating contribution of ₹ 13,854,167/-, to Goa Infrastructure Development Company Limited, a Government undertaking, towards construction of Usgao Bridge which is essential for smooth an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year is as under: The Assessing Officer found that assessee was moved funds from one scheme to another possibly with a view to get better returns. Therefore, the Assessing Officer has relied upon the various decisions and he has calculated the disallowance u/s. 14A r.w.s. 8D, a sum of ₹ 32,40,027/- ,. The assessee has given the calculation of disallowance u/s. 8D but Assessing Officer was of the view that this calculation of the assessee is not as per law, therefore, he disallowed a sum of ₹ 32,40,027/- 3.2. The matter carried to CIT(A) and CIT(A) has dismissed the appeal of the assessee. 3.3. During the course of hearing, we find that the assessee has given the calculation of his disallowance u/s. 14A r.w.Rule 8D which read as under: 1 Amount of expenditure directly relating to Dividend Income 2 The amount of interest which is not directly attributable to any particular income or receipt Formula AxB/C A=Amount of Interest other than interest included in ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recalculate the disallowance u/s. 14A r. w. Rule 8D of the IT Act, and CIT (A) is directed to pass the speaking order after considering this calculation and pass the order as per law giving opportunity of hearing to the assessee. Appeal of the Assessee is allowed statistical purpose. 4. Ground NO. 2 which read as under:- 2. The CIT(A) has erred in treating contribution of ₹ 13,854,167/-, to Goa Infrastructure Development Company Limited, a Government undertaking, towards construction of Usgao Bridge which is essential for smooth and efficient running of the business of the assessee, as a capital expenditure. 4.1. The short facts of this ground is that the assessee company has debited a sum of ₹ 1,38,54,167/- as contribution to Goa Infrastructure Development Co. Ltd., for construction of Usgao Bridge. It has been submitted that Govt of Goa has asked to mines at Usgao area construction the bridge as the bridge was used by them for transportation of minerals ores. The old bridge was claimed to have been damaged because of the transportation undertaken by the mine owners. Since it was not possible for the mine owners to operate their mines and to transport ores, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The dispute related to expenditure incurred on construction of access road to the new Birla Periclase Plant at Vishakapatnam in Andhra Pradersh. This approach road had been constructed during the year on the land belonging to the Government and the ownership of the same was not with the assessee. Deduction for the same was claimed as revenue expenditure. The Tribunal relied on the Supreme Court judgment of Empire Jute co. Ltd. V. CIT[1980] 124 ITR 1 (SC), wherein it was held that the inference, whether a particular expenditure was in the nature of capital expenditure or revenue expenditure was dependent on the facts of thecase.A lump sum payments or enduring benefit is not conclusive test. The Supreme Court had further held that where the payment for securing an enduring advantage is in the revenue filed it would be revenue in nature. Where the expenditure was for operation and the working of an existing profit-making apparatus, it could only be revenue in nature. It is only where the expenditure was related to any addition or augmentation of the profit-making apparatus, the same would be capital in nature. Respectfully following the same, we allow the claim. This ground of Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s should be treated as repairs and be deductible from taxable income. The corrector of out lay is to whether it is capital or revenue does not depend upon magnitude of out lay but on his nature. We are of the view that when any expenditure incurred on account of facility assessee dreading operation or enabling maintenances and conduct of the assessee s business more preoperatively while living the fix capital on tax. Replacement of sand is revenue expenditure. In this case the assessee had incurred the expenses for preserving and maintaining already existing assets and does not bring a new assets or does not the assessee give on deferent advantage cannot be treated as capital expenses. In the case of CIT Vs. Hotel Control Pvt. Ltd. [2004] 265 ITR 109 (Uttaranchal), it was found admissible on the ground that the hotel situated at Mussorie had required such heavy expenditure as necessitated by climatic conditions. The issue had arisen because the assessee has treated it as deferred revenue expenditure prompting the Assessing Officer to treat it as a capital expenditure. Renovation was conceded in providing flush system for latrines, replacing tiled roof by cement roof, construction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has incurred this expenditure for business purpose. The assessee offer for taxation of sale value of scrap generated in the year in which it is sold. The assessee has relied upon the decision of CIT vs. Crescent Films (P.) Ltd. 214/248 ITR 670 (Mad.) wherein it is held that in the case of salvaging asset if the expenditure or nature of transaction is such as to be regarded as one in the revenue field, it cannot be treated as capital, merely because such expenditure is incurred for the purpose of salvaging the capital. We find that the CIT(A) is justified in his treating this expenditure as revenue expenditure and our interference is not required. In the result, revenue appeal is dismissed on this ground. A.Y.2007-08 treated as a revenue expenditure. 7. Ground No.4This ground relates to deleting the addition of ₹ 35,89,64,088/- as capital expenditure incurred on ship renovation viz M V Sunrise.The assessee company has incurred the following expenditure which read as under:- Sr. No. Particulars Amount (US$) Remarks 1 Towards the payment to cosco (Nantong) Shipyard Co. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stal, lifeboats, tunnel, accommodation decks, main deck, hatch cover chains, cargo hold, bulkheads, side stiffeners, hopper plates, hull heads, tank hop, stool space stiffeners, double bottom plates, tank hop plates were overhauled or renewed. before AO that dry docking is necessary for running the ship or not and whether the assessee has obtained the certificate from Chartered engineer s certificates before and after the Dry docking, any documents(s) from the authorities specifying that the aforesaid dry-docking was essential, Navigation certificates before and after the dry-docking. The assessee has produced the following documents which read as under: Certificate of Indian Registry dated: 21.07.1998 that show that the Ship M.V.Sunrise was built in 1974 and had a double reversible diesel engine of 1973 make. Certificate of class issued by Indian Register of Shipping on 17.02.2006 vide certificate no. 06047 as per which subsequent to survey carried out in March/September 2005, the ship was certified for transshipment services in fair weather within 12 nautical miles off ports on west coast of India and for transit between them in ballast till 29.03.2010. Certifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenditure and we find that M.V Surise was purchased by the assessee company in 1998. It s written down value is ₹ 22,08,13,601/- The expenditure incurred by the assessee company during the last financial year was 35,89,64,088/- on dry-docking and ₹ 11,70,335/- on other repairs. The Assessing Officer was of the view that this repair comprise change of the entire hull of the ship. Thus, the major part of the ship was replaced. This undoubtedly extended the life of the ship. The dry drop expenses did not cleans the hull but it cleans every part of the ship like propeller, valves, hatch cove, hydraulic jacks, engine, turbo charger, deck piping, conveyor belt, cranes, slew etc. Therefore, all the ships were either overhauled or renewed. The Assessing Officer was of the view the ship despite retaining its old name and old registration, actually became a new asset with a long life capable of benefiting assessee s business for an extended period of time. Therefore, he treated this expenditure in capital nature. He relied upon the explanation to section 31 that was inserted w.e.f. 1.04.2004 specifically excludes any expenditure in the nature of capital from current repairs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at China and Singapore 535,524.91 These are related expenses 7 Towards our technical consultancy, supervision during repairs and providing funds being 5.25% of the full amount 445,380 These are the Fees Total 8,929,812,80 I have gone through the assessment order and the submission of the appellant. The facts that emerge from the assessment order and submission of the appellant, can be summarized as under: 1) The appellant purchased an old sea vessel a Cargo Ship and converted the same into a transshipper. 11) During the year under consideration and in the subsequent year, the appellant claimed to have spent substantial amount in repairs and maintenance. III) The A.O concluded that since substantial amount has been spent, the assessee has achieved benefit of enduring nature and therefore the expenditure should be capitalized. He also decided that since the vessel was not used for that year and the subsequent year, no depreciation be allowed for those two years. IV) The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as capital expenditure. 7.4. The learned AR relied upon the order of CIT(A). 7.5. We have heard the rival contention of both the parties. Looking to the facts and circumstances of the case, we find that the assessee has purchased M.V. Sunrise ship in 1988. The assessee company has incurred the following expenditure which read as under:- Sr. No. Particulars Amount (US$) Remarks 1 Towards the payment to cosco (Nantong) Shipyard Co. Ltd for dry-dock charges and related charges 43,98,000.00 These are all the charges of shipyard which include the repairs and servicing of the ship. These repairs are mainly the replacement of steel plates and other parts. The hull of the ship is of steel plates. Since the ship is always in water, the hull gets corroded and hence the majority of steel plates required to replaced. The file containing brief information of this dry-docking expenses is enclosed. 2 Towards the supply of bunker at Singapore and China ocean as per bills enclosed 16,88,577.49 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rew during their stay in china and Singapore 1,769,221 5.25% consultancy service 92,884 6 Operation expenses like travelling, stationery, telephone etc incurred at china and Singapore 21,529,649 5.25% consultancy service 1,130,307 Total 358,964,088 The AO has verified this expenditure and he was of the view that major part of ship was replaced. This undoubtedly extended the life of the ship. The dry docking was undertaken Casco (Nantong) Shipyard-China. The Assessing Officer was of the view that every part of the ship like propeller, valves, hatch cove, hydraulic jacks, engine, turbo charger, deck piping, conveyor belt, cranes, slew bearings, pedestal, lifeboats, tunnel, accommodation decks, main deck, hatch cover chains, cargo hold, bulkheads, side stiffeners, hopper plates, hull heads, tank hop, stool space stiffeners, double bottom plates, tank hop plates were overhauled or renewed. before AO that dry docking is necessary for ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration. This shows that dry-docking rejuvenatedrestored the old ship as a new asset. After verifying this expenditure the Assessing Officer has treated this expenditure as capital expenditure but CIT(A) has also verified the detail expenditure and he categorized following expenditure can never be treated as capital expenditure which read as under: Sr. No. Particulars Amount (US$) Remarks 1 Towards the payment to Cosco (Nantong) Shipyard Co. Ltd for dry-dock charges and related charges 4,398,000 These are all the charges of shipyard which include the repairs and servicing of the ship. These repairs are mainly the replacement of steel plates and other parts. The hull of the ship is of steel plates. Since the ship is always in water, the hull get corroded and hence the majority of steel plates required to replaced. 2 Towards the supply of bunker at Singapore and China ocean 1,688,577.49 This is the supply of fuel 3 Port disbursement charges r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, renewals and repairs were to keep business going withou8t breakdown of machinery, machineries were not replaced wholly nor new machineries were added, such expenditure cannot be treated as capital expenditure. In CIT Vs. Shri. Raani Laakshmi Ginning Spinning and Weaving Mills Ltd.. 256 ITR 592 (Mad). Replacement of old and worn out parts in machinery, finding that without replacing all those parts, production could not be carried on smoothly, held that no error in order of ITAT allowing deduction of the expenditure as revenue expenditure. In CIT vs Cooperative Sugar Ltd.239 ITR 908 (Ker). The machinery was replaced. It was held that expenditure incurred on replacement of machinery was revenue expenditure. In CIT vs Asher Textiles Ltd., 240 ITR 483. The old ceiling was replaced. It was held that expenditure on replacement of old ceiling made of hardboard set on wooden frames with thermostat wood insulation board set in aluminiumframesconstitute revenue expenditure. After the amendment of section 31, one must also take note of the Explanation inserted by the Finance Act, 2003 with effect from April 1, 2004, which rules out capital expenditure under section 31. But then, so does se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year, the assessee sold/otherwise moved2,24,030 MT of the iron ore. Rule 64-B of the MineralConcession Rules 1960 that deals with charging of royalty incase of minerals subjected to processing provide as under: 64-B. Charging of Royalty in case of minerals subjected to processing: - 1) In case processing of run-of-mine mineral is carried out within the leased area, then, royalty shall be chargeable on the processed mineral removed from the leased area. ii) In the case run-of-mine mineral is removed from the leased area to a processing plant which is located outside the leased area, then, royalty shall be chargeable on the unprocessed run-of mine mineral and not on the processed product. Iron-ore taken out from mines is subjected to processing to make it marketable through beneficiation. Consequently, provisions of these Rules are squarely applicable. As per this, the assessee should have paid royalty on at least 2,24,030 MT of the iron ore mined that he had removed from the vicinity of the mines. However, during the year, the assessee had paid royalty only on 75,833 MT. the assessee claims to have paid royalty on the remaining 1,99,152 MT of Fines only on08.10.2010. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 51,06,325 MT Excess: 2,74,985 MT The aforesaid shows that the assessee had sold/possessed as closing stock an excess amount of 2,74,985 T of iron ore vis-avis the amount of iron ore possessed by him as opening stock and that purchased by him during the year. This excess amount of iron ore totalling 2,74,985 MT, the assessee is claiming to have excavated from its mines. However, as per records, the assessee has mined only 75,833 MT of iron oreduring the year. Hence the assessee is in possession of excess stock of iron ore of 1,99,152 MT during this year. The assessee was accordingly asked to clarify as to why this quantity of 1,99,152 MT of iron ore claimed to have mined from Kelim mines but not actually mined as shown by the available records, be treated as unexplained stock. In its reply, the assessee has taken the stand that the actual amount of iron ore extracted from Kelim mines during the year was 2,74,985 MT, however royalty was paid only on 75,833 MT of iron ore as the remaining ore was of a view low grade on which no royalty was considered as payable. The explanation of the assessee is not supported by the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of iron ore mined by the assessee is 75,833 MT. In the case of Jai Sharda Rice Mills v. ITO (1991) 36 lTD 254, 258, it was held that the figure of stock checked and verified by other Government authorities should be preferred. In Century Foams (P). Ltd. v. CIT [1994] 210 ITR 625 (All.), it was held that if there was actual discrepancy in the stocks hypothecated to the bank and that shown in the accounts, for which the assessee failed to explain by. any acceptable explanation or material, no exception could be taken to the addition made by the authorities. Similar view was also adopted in the case of Kaila Sweet Supplier v. CIT [1998] 100 Taxman 59 (All.), where it was held that addition on account of difference between value of stocks declared to the bank and the value recorded in the assessee s books can validly bebrought to tax, if the information furnished by the bank contained not only the items of stock but also their quantity and the assessee did not discharge the burden cast on him to prove that the apparent was not real. In the instant case, the detailed figure of iron ore mined made available to the, Directorate of Mines, Government of Goa by the assessee is 75, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... longside vessel 1700 Action. Buyer-Adani (to China) 9 3 1.03.08 54 Alongside vessel 1730 Action. Buyer-Chennai. IRON ORE LUMPY 1 05.06.07 52.3 Avg. Rate for 53.55. Supplied at plot 575 United Trading. Buyer-DBB 2 22.12.07 52.07 Avg.Ratefor5l.22. Supplied at plot 360 United Trading. Buyer-DBB 3 07.01.08. 52.43 Avg. Rate for 51.2. Supplied at plot 400 United Trading. Buyer-DBB 4 15.02.08 51.29 Avg. Rate for 52.95. Supplied at plot 400 United Trading. Buyer-DBB 5 15.02.08 52.95 Avg. Rate for purchase from Balaji Mines and Minerals Pvt. Ltd. 400 United Trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that of a very low grade on which no Royalty was considered to be payable. The A.O., however, did not explain the explanation of the assessee and made the aforesaid addition. 7.5. In view of the above facts, it is important to understand the system followed in mining Industry in Goa. To quote from appellant s submission. It has been a regular practice followed in Goa that as and when the ore extracted is sold the Royalty is paid. The appellant also submitted the statement of account of Extraction contractor, who had extracted the ore, before the A.O., which was ignored while finalising the statement. The appellant also contended that the so called excess stock has been shown in the account statement. It s not a case, where the stock is in the negative meaning thereby that the same has been sold, out of books. The AO s contention that the stock shown by the appellant is in excess, is misconceived, as the same would only result in declaration of higher profit, meaning thereby higher taxes. Addition of the same has further increased the value of closing stock without any cogent reason. 7.6. Thus, in view of the totality of facts and the explanation and reconciliation f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al year 2007-08 and it was moved out of mine in the financial year 2010-11. The royalty has been paid to Director of Mines on 18.10.2010 shows clearly the quantity and year of extraction of ore on which the royalty is paid and assessee has paid royalty of ₹ 25,17,281/-. We find that after considering this evidence the Commissioner of Income Tax was of the view that assessee has paid the royalty on this iron ore, therefore, he has deleted the addition and our interference is not required. In the result, this ground of department s appeal is dismissed. ITA No.362/PNJ/2013 for A.Y.2009-10 9. Ground No.1 :- General in nature. 10. Ground No.2:- During the course of assessment proceeding, AO has observed that the assessee earned dividend income of ₹ 4,96,94,016/- during the year under consideration, but did not apportion any expenses towards this earning. In response to show cause, the assessee stated that this dividend has been earned on shares of M/s. Tungbhadra Minerals Pvt. Ltd., which came to the assessee as a result of family partition in the year 1982 and therefore no utilization of funds have been done towards earning in the income. However, The AO has inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them ₹ 10,20,56,570 C average of Total assets at the 1st day Of the year ₹ 777,36,49,695 Total assets at the last Day of the year ₹ 881,82,53,949 Average works out to ₹ 829,59,5 1,822 Thus in case of appellant Ax B/C 0xRs.10,20,56,570 ₹ 829,59,51,822 0 The amount equal to one and half percent of average investment on first day and last day of the year 0.50% of ₹ 10,20,56,570 ₹ 510,283 Total Rs.5,10,283 The CIT(A) has verified and he disallowed ₹ 5,10,283/- as the expenditure incurred towards the earning the interest income u/s. 14A. Therefore, he has allowed the amount of ₹ 10,94,884/- u/s. 14A r.w. Rule 8D. 10.2. During the course of hearing the learned DR could not bring any evidence before us to show that calculation of Commissioner of Income Tax is not as per the rule, therefore, we ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The above table belies the contention of the assessee that dry-docking expenditure on M.V. Sunrise expenditure has to be incurred every year. To analyze the nature of the repairs further, the assessee company was asked to provide full details of the expenditure incurred on these repairs. The same were provided. (c).ii. It is seen that these repairs comprise change of the entire portion of the hull of the ship which is considered as unsafe or unfit. This undoubtedly extended the life of the ship. These details shows that during dry-docking not only the hull but every part of the ship like propeller, valves, hatch cover, hydraulic jacks, engine, turbo charge, deck piping, conveyor belt, cranes, slew bearings, pedestal, lifeboats, tunnel, accommodation decks, main deck, hatch cover chains, cargo hold, bulkheads, side stiffeners, button plates, tank hop plates were overhauled or renewed or replaced. Thus, the ship, despite retaining its old name and old registration, actually became a new asset with a long life capable of benefitting assessee s business for an extended period of time. (c).iii. It is to be noted that section 31 of the I.T. Act, 1961 that deals with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year in order to enhance its life that would give a benefit of enduring nature of the assessee company. The assessee s claim that this expenditure was of a routine nature necessary for operating and maintaining the vessel in good working condition is not really borne out by the facts on record. In fact, the assessee has debited expenditure incurred on routine repairs of M.V. Sunrise separately as follows: Purpose Amount (Rs.) General maintenance of SHIP 36,59,307/- For clearing spillage in M.V. Sunrise. 1,50,970/- TOTAL 38,10,277/- (c).v, Significantly, these amounts are not included in the amount of ₹ 48,60,08, 180/- that the assessee had incurred separately as a one-time expenditure in carrying out extensive dry-dock structural modifications of this vessel. This coupled with the facts that, (i)dry dock repairs of this magnitude had never been carried out in the earlier year; and (ii) dry dock repairs, in any case, are not carried out annually, negates the contention of the assessee that the expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herton V British Insulated and Heisby Cables Ltd. (1925) 10 TC 155 (HL) have been largely accepted. The Hon ble Supreme Court in Assam Bengal Cement Co Ltd. v Commissioner of Income Tax (1955) 27 ITR 34 (SC); Sitalpur Sugar Works Ltd v CIT (1963) 49 ITR 160 and a number of other decisions has adopted the test as laid down in Atherton s case, When expenditure is made....with view to bringing into existence an assetor an advantage for the enduring benefit of a trade, I think that there is very good reason for treating such an expenditure as property properly attributable not to revenue but to capital. Referring to Atherton s case, and certain other authorities on the distinction between capital expenditure and revenue expenditure and the tests to be applied, the Hon ble Supreme Court in Assam Bengal Cement Co Ltd. v Commissioner of Income Tax (1955) 27 ITR 34,45 observed: If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure. If on the other hand it is made not for the purpose of bringing into existence any such asset or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion allowable would be ₹ 4,86,00,818/- on this count . 11.1. The matter carried toCIT(A) and CIT(A) has allowed the claim by observing as under:- 6.3. I have gone through the assessment order and the contentions of the appellant. The A.O. has not doubted the genuineness of these expenses, but his main contention is that by spending such a huge amount, the appellant has achieved an enduring advantage. In my opinion, as also decided by me in earlier year, in the case of the appellant, the expenditure incurred shall still be categorized as current repairs because: i) We have to believe in the business acumen of the assessee that it will not spend anything until it is necessary for him in his business interest. ii) The expenditure on repairs was necessary to keep the vessel in good condition and sea-worthy. iii) The dry-docking and other repairs have not caused a change in capacity/tonnage or affected the efficiency in working of the vessel. iv) Now new asset has come into existence. In view of the above, the A.O. is directed to allow these expenses as revenue expenses and deleted the addition made on this account. 11.2. We have head the rival condition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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