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2019 (7) TMI 677

JARAT HIGH COURT] expenditure claimed as revenue expenditure is in respect of components of the machinery which cannot be treated as the independent machinery in itself as they are not capable of functioning independently. The chemical and fertilizer plant was very large plant within which again there are large machines and within the machine there are components requiring replacement due to wear and tear, that was different plants within the fertilizers and chemical plant. Reference was also made to past history of disallowance wherein the Tribunal had set aside the issue to the AO for the assessment years 1998-99 to 2002-03, who in turn accepted the explanation furnished by the appellant in de novo assessment proceedings and no additions were made. On perusal of the facts noted by the CIT (Appeals) as well as affirmed by the Tribunal, it is clear that question (a) raised by the revenue is a pure question of fact and in the absence of any perversity being pointed out in the concurrent findings of fact recorded by the Tribunal, does not give rise to any question of law - R/TAX APPEAL NO. 144 of 2019 - 8-7-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, JJ. For The Appellant (s) : MR. V .....

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ile deciding the similar issue as per ground of appeal no.8. As in the case of appellant the issue is similar for the year under consideration also and therefore as per direction of Hon ble ITAT, the AO was required to examine the issue and to decide the same de novo after affording reasonable opportunity of being heard to the appellant. But instead of giving clear finding in the order u/s 143(3) r.w.s. 254 of the Act after bringing the materials on record, the AO has given very general findings in such order. Further, in the remand report also the AC has not brought out any material on record to establish that the assertion of the appellant/Chartered Engineer that the parts of the machine are not independent machine but are parts of main Unit was incorrect. The AO during the course of remand proceeding had deputed the Inspectors of his office for identifying the place of fittings of the parts in the Plant and Machinery of the appellant company and to observe its function. The AO in his remand report has discussed the technical aspect of Assembly of Turbine Rotor, Gear Shaft with Gear Part and Nozzle Ring on the basis of report of the Inspectors and has finally stated that these it .....

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ut it is one of equipments machineries which constitute the Coal Handling Plant. As per the appellant a panel cannot function independently as Coal Handling Plant. As per the appellant, the deduction in the case of similar panel being panel C-1600 has been allowed by CIT(A) for AY 2010-11. The appellant had relied upon decisions of Hon ble Supreme Court in the case of Sarvana Spinning Mills (TIOL-2007-TIOL-147-SC(I). It is submitted by the appellant that old panel was required to be replaced due to deterioration in insulation material, (Hylem Base) obsoletion of pares and discontinuation of such panel from product range thereby non availability of spare support from OEM. As per the appellant further the panel has also been subject to many flashover in past necessitating replacement of panel. The submission of the appellant as made in its rejoinder to the remand report and which is reproduced in earlier paragraph of this appeal order is found to be tenable. It is stated that my predecessor i.e. earlier CIT(Appeals)- 3, Vadodara in his appeal order in appeal no. CAB(A)-3/271/14-15 dated 05/01/2015 as passed for AY 2003-04 in the case of appellant in connection with the set-aside issu .....

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this appeal before us. The Id.CIT-DR strongly relied on the orders of the AO. 16. On the other hand, the Id.Counsel for the assessee submitted that the issue is covered by earlier years order of ITAT in assessee s own case for A.Y.2008-09. Further in the past A.Y.2000-01, 2002-03 when the matter restored to AO it was accepted as revenue expenditure by AO in set-aside proceedings (page 8 of CIT(A) order) and the Authorised Representative (AR) has placed reliance on the decision as relied on by the CIT(A) in para 4.3 of his order. 17. We have considered the facts and perused material available on record and found that the AO has accepted this issue in its set-aside assessment order for A.Y.1999-2000 passed u/s.143(3) read with section 250 of the Act dated 29.12.2009 (paper book, page 630 para 4.5 of the order). Since, the revenue has accepted this issue in the set-aside assessment proceedings, therefore, we do not find any infirmity in the order of CIT(A). Accordingly, this ground of Revenue is dismissed. 7. We also find that the issue is covered against the Revenue by order of this bench. Since the issue is covered against the revenue by the above order of Tribunal as well as by the .....

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, Concentrated Nitric Acid and Methanol were manufactured. Various plants and equipment were in continuous operation in corrosive and acidic atmosphere. It was found that no new assets were created in the process of replacement of worn out parts. There was no capacity addition. The replacement of components of old machinery was made to bring to its original state of efficiency so that the entire integrated manufacturing unit which was considered as a profit making apparatus functions efficiently to its capacity and produces quality products. The CIT (Appeals) after perusing the paper book which contains the details like name of the main plant or machinery to which the replaced component pertains, cost of replaced component, cost of total plant and past history of disallowance and appellate decision in past in respect of similar components and the facts which were explained with the help of diagram/process chart showing that replaced component is part of the main plant. The CIT (Appeals), therefore found from the details of additions to that the fixed assets that addition of independent machinery has already been capitalised and claim is made only for depreciation. Thereafter, the C .....

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