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2016 (8) TMI 363 - ITAT DELHI

2016 (8) TMI 363 - ITAT DELHI - TMI - Repairs and maintenance of building - construction activity - revenue or capital expenditure - Held that:- The Main reason for the disallowances by the Ld. assessing officer is that the assessee has incurred expenditure on MS plate’s sheets and angles. Merely the assessee has used a particular material it cannot be said that the assessee has used it for the purpose of construction of a building without recording a specific finding about the nature of extensi .....

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capital in nature. The ratio laid down by the Hon’ble Delhi high court in CIT versus TS TECH SUN India Ltd (2012 (7) TMI 313 - DELHI HIGH COURT) squarely covered the issue in favour of the assessee wherein on the identical facts and circumstances Hon’ble high court has held that no extra capacity or space was created in the 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 D .....

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na, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by assessee against the order of Commissioner of income tax (Appeals)- XVI New Delhi dated 30/12/2013. In this appeal assessee has raised following two main grounds which are summarized as under:- a. treating the repairs to building of ₹ 3 158570/- as capital expenditure against claim of the appellant as revenue expenditure b. treating the repairs to plant and machinery of ₹ 3 606434/- as capital expenditure again .....

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arious disallowances. Out of the disallowances, the first appellate authority deleted some. On the disallowances sustained by the 1st appellate authority the assessee is in appeal before us on two major additions as mentioned in ground No. 2 and 3 of the appeal of the assessee. 3. Ground No. 1 of the appeal is general in nature, which is also not pressed by the assessee, and therefore it is dismissed. 4. Ground No. 2 of the appeal is against disallowance of ₹ 3 158570/- which according to .....

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siness of forgings and lot of heavy iron hammers are used at a very high temperature. Because of this it results into heavy wear and tear in the building also. However, the Ld. assessing officer came to conclusion that purchase of iron angles and plate are used for the covering or roof and therefore it has given the benefit of enduring nature and hence expenditure is capital in nature. Due to this, he disallowed ₹ 3158570/- holding the same as capital expenditure. On appeal before Ld. CIT .....

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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 submitted that looking to the nature of business of the company and this kind of expenditure is required on regular basis to keep the struct .....

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year. He further relied on the decision of the Hon ble Delhi High Court in case of CIT versus TS Tech Sun India Ltd dated 03/07/2012. He therefore submitted that the repair expenditure incurred by the assessee is not capital in nature and therefore they should be allowed as revenue expenditure. 6. Ld. DR relied upon the orders of the lower authorities and submitted that as the assessee has incurred substantial expenditure such expenditure looking to the nature of material consumed is definitely .....

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ellant 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 continuo .....

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the assessee has incurred expenditure on MS plate s sheets and angles. Merely the assessee has used a particular material it cannot be said that the assessee has used it for the purpose of construction of a building without recording a specific finding about the nature of extension or construction work carried out. It is also important to note that detail of expenditure selected by the Ld. AO then saying that it is a capital expenditure in nature without noting that it does not include any cemen .....

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and circumstances Hon ble high court has held that no extra capacity or space was created in the 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 en .....

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rnished details of these expenditure out of which Ld. assessing officer has picked up expenditure of ₹ 36060434/- which are pertaining to alloy steel round, miscellaneous assembly items, shapes and sections etc and held that these are capital in nature. Main reason for holding so is that that purchase of shapes and sections are used for the covering and making of roof and it gives the assessee an advantage of enduring benefit and hence it are capital expenditure in nature. Aggrieved by the .....

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ery for the regular upkeep. He further submitted that this expenditure has neither lead to any addition or increase in the annual production capacity of neither the assessee nor any addition to the existing plant and machinery. He further submitted that this expenditure incurred by assessee has not been disputed by the lower authorities 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 .....

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