1992 (10) TMI 31

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..... l, Jaipur Bench, Jaipur, has referred the following question of law arising out of its order dated July 23, 1981, in respect of the assessment year 1978-79, under section 256(1) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the expenditure amounting to Rs. 18,402 incurred by the assessee-company on the repl .....

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..... f the fuel cost. It was also observed that the petrol engine which has been removed had not reached the stage where it could have been thrown out as a scrap. No realisation from the sale of the petrol engine was shown and, therefore, the disallowance was sustained. The Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, has held that the replacement of the petrol engine by the diesel engine does .....

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..... ation. If the expenditure is to bring into existence an asset or advantage for the enduring benefit of the business, that is also one of such consideration which has to be taken into consideration. Replacement of machinery in the usual course of business which is worn out would be to maintain the machinery. In CIT v. Mir Mohammad Ali [1964] 53 ITR 165, the Supreme Court has held that a diesel eng .....

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..... or working it with a view to produce profits. The finding given by the Tribunal was considered to be a finding of fact. In the present case, neither has it been alleged nor proved from the record that the petrol engine required massive repair or was worn out nor has it been shown that the said engine has been disposed of in any manner. This point was raised by the Commissioner of Income-tax (App .....

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..... engine was worn out or unserviceable or not. In these circumstances, we are of the view that the Income-tax Appellate Tribunal was not justified in holding that the expenditure incurred by the assessee-company on replacement of the petrol engine with a diesel engine is an allowable deduction and no advantage of enduring nature is obtained and, therefore, the expenditure was not allowable as reve .....

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