TMI Blog2021 (12) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in assessee s own case for AYs 1995-96 to 1999-00 and following the decision rendered in case of Neyelli Lignite Corporation Ltd. [ 2016 (4) TMI 675 - MADRAS HIGH COURT] , we are of the considered view that it was a case of merely overhauling machine by replacing its old parts as it was having problem due to size variation. Overhauling the old machine at less than of 1/6th of its price as a new unit i.e. for ₹ 36,35,125/- as against new unit for ₹ 2.98 crores is a prudent business decision and by overhauling the old machinery, no new asset has been created and as such, these are to be treated as revenue expenses - so long as only part of the machinery has been replaced as in the instant case to preserve and operate the existing machinery/assets without any enduring advantage, it would be treated as revenue expenditure - expenditure incurred by the assessee for reconditioning of plant and machinery are to be treated as revenue expenditure - Decided in favour of assessee. - ITA No. 315/Del./2017 ITA No. 6933/Del./2017 - - - Dated:- 25-11-2021 - SHRI R.K. PANDA, ACCOUNTANT MEMBER And SHRI KULDIP SINGH, JUDICIAL MEMBER ASSESSEE BY : SHRI M.K. MADAN, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in assessee s own case for AY 1994-95 against the assessee treated the expenditure of ₹ 36,35,125/- as capital in nature rather granted depreciation on the same and thereby made addition of ₹ 23,62,833/-. 6. Assessee carried the matter before the ld. CIT (A) by way of filing the appeals who has confirmed the addition by way of dismissing the appeals. Feeling aggrieved by the orders passed by the ld. CIT (A), the assessee has come up before the Tribunal by way of filing the present appeals. 7. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 8. Undisputedly, assessee company has claimed expenditure to the tune of ₹ 36,35,125/- on account of reconditioning of plant and machinery i.e. CNC Control Panel with manufacturing supply and fitment of 3 Axes CNC kit on WMW Grinder Machine, spare parts mounted on the machine and CNC retrofitting three axes and reconditioning of WMW internal Bore Grinder as revenue expenditure. It is also not in dispute that the AO has not found any fault wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in assessee s own case for AY 1994-95 is not applicable to the facts and circumstances of the case because machine during the year under consideration remained in operating state till April 2010 whereas in 1994-95 machine was lying idle. 11. To further support his arguments, ld. AR for the assessee relied upon the decision of the coordinate Bench of the Tribunal in its own case for Assessment Years 1995-96 to 1999-00 order dated 21.07.2006, copy available at pages 12 to 26 of the paper book. Ld. AR for the assessee also relied upon the judgment rendered by Hon ble Madras High Court in case of Neyelli Lignite Corporation Ltd. 388 ITR 172. 12. However, on the other hand, to repel the arguments addressed by the ld. AR for the assessee, ld. DR for the Revenue vehemently relied upon the Tribunal order passed in assessee s own case in AY 1994-95 confirmed by Hon ble High Court and further contended that by overhauling the machine, new assets have been created. 13. Assessee has brought on record documents to support its arguments, which are as under :- (i) Detail of reconditioning of plant machinery of ₹ 36,35,125/-; (ii) Copy of bill dated 25.06.2012 of Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 2.98 crores is a prudent business decision. 15. Identical issue has been decided by the coordinate Bench of the Tribunal in assessee s own case for AYs 1995-96 to 1999-00 (supra) by distinguishing the earlier order passed by the coordinate Bench of the Tribunal for AY 1994-95 which was confirmed by Hon ble Delhi High Court by returning following findings :- 35. We find that the facts in the present years are distinguishable from the facts that were before the Tribunal in the assessment year 1994-95. In that year the assessee repaired the machinery which were completely broken down and lying unutilized since the year ending on 31-3-92. The same were renewed in the assessment year 1994-95 relevant to the year ending on 31-3-94. In these circumstances, the Tribunal held that the machine had become unfit for production and by subsequent reconditioning carried out resulted in imparting useful life to an old and unfit machine. Thus resulting in a benefit of enduring nature. In the years under appeal, we find that no material has been brought on record by the Revenue to show that even in a single case that the machines were broken down and lying idle from an earlier pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e identical issue has been decided as to whether expenditure incurred on charging parts of the machinery would treat as capital expenditure or revenue expenditure. Operative part of the order is as under:- so long as the assessee has not replaced the entire boiler and bucket wheel excavator and what were replaced was only parts of the boiler, the expenditure towards it was only to preserve and maintain the existing asset without any enduring advantage. 18. In view of what has been discussed above and by following the order passed by the coordinate Bench of the Tribunal in assessee s own case for AYs 1995-96 to 1999-00 and following the decision rendered by Hon ble Madras High Court in case of Neyelli Lignite Corporation Ltd. (supra), we are of the considered view that it was a case of merely overhauling machine by replacing its old parts as it was having problem due to size variation. 19. In the light of above discussion, we are of the considered view that overhauling the old machine at less than of 1/6th of its price as a new unit i.e. for ₹ 36,35,125/- as against new unit for ₹ 2.98 crores is a prudent business decision and by overhauling the old machi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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