TMI Blog2002 (3) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction of Rs.11,11,600 can be claimed under section 31(i) of the Income-tax Act as a revenue expenditure as contemplated under section 37 of the Act. For this purpose alone, the matter is remitted back to the Tribunal for fresh disposal. Besides the second question raised by the appellant in this appeal is as follows: -"Whether, on the facts and in the circumstances of the case is not the expenditure of Rs.11,11,600 incurred on replacement of electric control panel a capital expenditure?" - The present direction answers the issue as well. As such it will not spring any surprise on the Revenue as well. The Tribunal is directed to consider the second question of law formulated by the Revenue in this appeal afresh and in accordance with law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case is not the expenditure of Rs.11,11,600 incurred on replacement of electric control panel a capital expenditure?" We have heard learned counsel for the Revenue as also learned counsel for the assessee. Section 31(i) of the Income-tax Act, inter alia, states as under: "In respect of repairs and insurance of machinery, plant or furniture used for the purposes of the business or profession, the following deductions shall be allowed-- (i) the amount paid on account of current repairs thereto;" (under lining for easy reference). The phraseology used is that the deduction can be claimed under the section only with respect to the amount paid on account of "current repairs" with respect to machinery, plant or furniture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court was considering the expression "repair". In that case the view taken by the court was that "when we think of repair of the original equipment as such is to set right the old equipment and it is restored back to its original utility, The repair does not contemplate large scale alteration of the existing structure or equipment as the case may be." But in this case, what was done is that the original equipment was totally changed and a new equipment replaced it. It cannot be said that it would be a repair of the electric control panel. In this situation, it would be a case of capital investment and would not be a case of repair. The test, therefore, which decides the question as to whether a thing is repaired or not is to see whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment is totally replaced. One cannot say that there is a current repair. In view of what is stated above the view of the order of the Appellate Tribunal has to be set aside and we do so. The questions raised are answered in favour of the Revenue. Disposed of. After the judgment was pronounced in this case on March 11, 2002, Shri P. Balachandran, learned counsel appearing for the assessee, submitted that he wanted to highlight certain aspects in this appeal further. Accordingly, we posted the matter today for being spoken to and is being heard today at length. Shri P. Balachandran, learned counsel for the assessee, invited our attention to the decision of the Supreme Court in CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi High Court in CIT v. Volga Restaurant [2002] 253 ITR 405 where the entire machinery got damaged due to a fire and was replaced by another equipment. Thereafter a claim was made with respect to Rs.1,45,516 as the amount expended. As against this claim a sum of Rs.25,563 was allowed and the balance was declared as capital expenditure. The facts of the case disclosed that the air-conditioner, furniture, etc., got completely damaged and were replaced with new equipment. The court held that the expenditure incurred by the assessee in replacement of the air-conditioner plant was a revenue expenditure. It allowed the entire claim. But here we have to note that only a small amount of Rs.1,45,516 was claimed for the replacement. It discloses the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal relying on any ground that is decided against him. In this case the question as to whether the claim would amount to a revenue expenditure or not was not pressed in aid by him for the reason that the assessee had succeeded in the appeal and there was no occasion for the assessee to do so. If the decision binding on the main aspect is against the Revenue, he can always sustain the relief granted to him relying on an issue decided against him. If this be the position, the claim of the assessee as to whether it will be a revenue expenditure could be examined by this court at this stage. But, however, as the question was not examined by the Tribunal the matter should be remitted for fresh consideration by the Tribunal to examine whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
