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2016 (11) TMI 943 - ITAT JAIPUR

2016 (11) TMI 943 - ITAT JAIPUR - [2016] 50 ITR (Trib) 58 - Disallowance of repair of machinery expenses - revenue v/s capital expenditure - Held that:- Replacement of the machinery was within the ambits of the expression "current repairs" which was needed as per the view point of the assessee as a business man. Hence, hereby direct to allow the expenditure in question as revenue expenditure. Ground allowed in favour of assessee. - I. T. A. No. 524/JP/2013 - Dated:- 21-4-2016 - Mukul K. Shrawat .....

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al nature of ₹ 12,57,360 after allowing depreciation of ₹ 1,88,604 and the Commissioner of Income-tax (Appeals) has erred in confirming the action of the Assessing Officer." 2. Facts in brief as emerged from the corresponding assessment order passed under section 143(3) dated December 23, 2010, were that the assessee in individual capacity is in the business of "grit manufacturing". On verification of accounts it was noticed by the Assessing Officer that the assesses h .....

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ter was carried before the first appellate authority, the learned Commissioner of Income-tax (Appeals) has affirmed the action of the Assessing Officer in the following manner : "I have considered the assessment order and submissions made by the authorised representative. The crusher plant comprises separate machines like crusher, vibrator, conveyor, granulator, etc. Purchase of all these items together could very well afford the appellant to set up a new crusher plant. Alternatively these .....

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on and such amounts cannot include any expenditure in the nature of capital expenditure. For example, the crusher is a machinery which comprises a number of metal plates and expenditure on repair or replacement of broken or worn out metal plates could qualify a current repairs but the expenditure on purchase of a new crusher would not constitute current repairs. The expenditure on replacement of a crusher, conveyor granulator, etc., would in fact be in the nature of capital expenditure since it .....

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relevance since the actual production and sales would depend on the utilisation of production capacity of the plant and machinery. Further, it is admitted by the authorised representative of the appellant that the turnover in the assessment year 2006- 07 was ₹ 8,89,500 whereas the same was ₹ 50,58,025, i.e., there is an increase of more than 550 per cent. In fact, the increase in the turnover is 568 per cent. and it definitely supports the contention of the Assessing Officer that th .....

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tter to the Commissioner (Appeals) without stating any opinion on the contention of the assessee that replacement of assets, without increase in production capacity, would amount to revenue expenditure. In fact the issue in the case of the appellant is the allowability of expenditure claimed as current repairs under section 31(i) of the Act. In this regard, the decision of the hon'ble Supreme Court of India, in the case of CIT v. Saravana Spinning Mills P. Ltd. [2007] 293 ITR 201 (SC) is qui .....

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stated that the purchases were nothing but part of the machinery and because the expenditure was only towards replacement of the machinery, therefore, it was nothing but repairs and maintenance of the machinery, hence, in the nature of "revenue expenditure". As far as the genuineness of the expenditure is concerned, the same was not doubted by the Assessing Officer. The only objection of the Assessing Officer was that by incurring the expenditure in question, a capital asset has been .....

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