TMI Blog2017 (5) TMI 1686X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax(Appeals)-IV, Baroda, dated 06/09/2013 for the Assessment Year (AY) 2008-09. 2. Assessee s appeals in ITA No.2930/Ahd/2013 and revenue s appeals in ITA No.2921/Ahd/2013 for A.Y. 2008-09. 3. Assessee has taken following Grounds of appeals: i. The learned CIT(A) erred in confirming the action of the Assessing Officer in disallowing expenditure on consumption of stores and spares of ₹ 64,31,768/- on the grounds that the same was a capital expenditure. ii. The learned CIT(A) erred in not admitting the additional ground of appeal relating to claim of depreciation of ₹ 3,16,68,491/- on Goodwill. 4. Revenue has taken following Grounds of appeals: On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in i. (a) upholding disallowance made in respect of expenses claimed on account of stores and spares to the tune of ₹ 1,13,97,990/- only, as against disallowance of ₹ 2,12,01,483/- on this count made by AO. (b) relying upon earlier years decision held in the light of Hon ble Apex Court s decision in the case of Saravana Spinning Mills 293 ITR 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect figure of ₹ 1,58,95,270/- as per the AR) upheld by CIT(A). Now ₹ 99,03,493/- amount in dispute by Department. Same are reflecting in AO s order Page No. 9, Para No.6 and CIT s Page No.5, Para No.5. The relevant Para of the order of the ITAT in assessee s own case is reproduced here under: Ground No.3 of the assessee's appeal is for disallowance of ₹ 51,49,4577- out of consumption of stores and spares during the previous year. The assessee has claimed expenditure of ₹ 5710.25 lacs on account of consumption and replacement of stores and spares treating the same as Revenue expenditure. The details of stores and spares were submitted before the A.O. by the appellant but on verification of details the ld. A.O. found that in case of following item the expenditure is having nature of capital. Sr.No. Item Amount Depreciation rate Depreciation amount 1. BEARING ASSEMBLY 1,009,620 17.50% 1,76,684 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments from both sides. The ld. CIT(A) had observed that this replacement of stores and spares can be used independently and its of replacement of plant and machinery. As per A.O's observation it has endorsing benefit to the assessee. The matter is required to re-examine with reference to addition confirmed by the CIT(A). The A.O. is directed to re-examine the nature of expenditure item-wise and take decisions as per law. Ground no.4 is against confirming disallowance of depreciation amounting to ₹ 7,93,490/- on the assets leased by the appellant to Western Railways. The appellant had leased certain railway wagons to Western Railway and claimed depreciation on it. The A.O. asked to give justification for claiming of depreciation on those railway wagons. The assessee offered explanation before the A.O. and claimed that lease rent of ₹ 72,15,314/- was credited in P L account and had shown as income and an amount of ₹ 27,71,806/- being lease equalization amount was debited to the P L account and shown as reduction from the lease rent. But as in computation of total income, the lease equalization amount of ₹ 27,71,806/- was added in the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06-07 dated 3101-2007 at paras 17 to 17.3.6 on page Nos.42 to 56 the claim of the appellant has been disallowed. Relying on my predecessor's order for A.Y. 2003-04 the disallowance of depreciation of ₹ 7,93,490 is confirmed. Now the assessee is before us. The ld. Counsel for the appellant contended that the railway wagons were given on lease to Western Railway since 1997-98. The lease rent has been offered for taxation and depreciation on assets have been claimed. He further drew our attention in assessee's own case for A.Y.03-04 to 05-06 in ITA Nos. 1373 3993/Ahd/07 2401/Ahd/08. The operative part of the Co-ordinate 'D' Bench decision is as under: We have heard the rival contentions and perused the facts of the case. As regards reliance on the decision of the Hon'ble Supreme Court in the case of Asea Brown Boveri Ltd.(supra) by the learned DR, the arguments of the learned DR that the assessee had purchased the equipments for the economic life of the plant itself and not more than that. As a matter of fact, it is not a case, as is appearing from different clauses of the lease deed that the equipments leased will be returned back t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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