9911796707
TMI Blog2016 (8) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure b. treating the repairs to plant and machinery of Rs. 3 606434/- as capital expenditure against revenue expenditure claimed by the appellant 2. Brief facts of the case are that assessee is a limited company engaged in the business of manufacturing and export of iron and steel forgings as per the specifications provided by the buyers. For the year assessee filed its return of income on 30th September 2009 declaring total income of Rs. 109299947/-. Ld. assessing officer assessed the total income of the assessee under section 143 (3) of the income tax act at Rs. 120046060/-making various disallowances. Out of the disallowances, the first appellate authority deleted some. On the disallowances sustained by the 1st app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious year the expenditure incurred by the assessee in this year are quite significant. Further, he stated that the nature of expenditure such as MS angles and plates could be incurred on items involving building structure. He further held that these items are non-recurring in nature and therefore the above items are having enduring benefit, hence, capital in nature. 5. On appeal before us, the Ld. AR of the assessee submitted that it is not in dispute that the expenditure is incurred by the assessee company. He further stated that merely based on magnitude of expenses incurred in the previous year in comparison to the current year disallowance could not be made and held that expenditure is capital in nature. He further submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, plates, iron sheets etc. It is important to note the explanation given by the assessee before the lower authorities. It was submitted that the appellant company's nature of operation of manufacturing activity of forging of iron and steel requires the heating process. It was further submitted that appellant is doing business from the same building for more than 2 decades. No extension of building was carried out by the assessee during the year. Assessee explained that the forging is the process by which metal is heated and reshaped by plastic formation. The heating process is used at a temperature of 1100°C. Whole process is a continuous process and impacts building structure on a regular basis. Therefore, to keep it in usable c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e factory by repairing the roof and floor and therefore no advantage of enduring nature was obtained by the assessee. Therefore respectfully following the decision of Hon'ble Delhi high court, we reverse the finding of the lower authorities that the expenditure is capital in nature. In view of this, we hold that the expenditure incurred by the assessee is revenue in nature and there is no benefit of enduring nature obtained by the assessee. In view of this ground, No. 2 of the appeal of the assessee is allowed. 8. Ground No. 3 of the appeals that assessee has incurred an expenditure of Rs. 3 606434/- as repairs to plant and machinery which is held by the Ld. assessing officer as capital expenditure. During the year, assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies but just because the magnitude and the nature of items shown to have been incurred for the repairs and maintenance it has been disallowed and held to be capital expenditure in nature. He further relied on the decision of the Hon'ble Delhi high court, as stated in earlier ground. He submitted that in view of the above decision the disallowance made by the lower authorities might be deleted. 10. Ld. DR relied on the orders of the lower authorities and vehemently submitted that the expenditure incurred by the assessee are not in the nature of repairs expenditure but are in the nature of Capital Expenditure and the Assessee has got the Benefit of Enduring Nature. 11. We have carefully considered the rival Contentions a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
