9911796707
TMI Blog2022 (9) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case are that the assessee company is engaged in the business of manufacturing, trading / selling and exporting of Ferro Alloys, filed its return of income for the A.Y.2009-10 on 25.09.2009, declaring total income of 'Nil' after set off of brought forward unabsorbed depreciation of Rs.35,49,77,824/-. The case was selected for scrutiny. On verification of records, it was noticed that the assessee company had debited an expenditure of Rs.4,58,23,694/- towards repairs, which the Assessing Officer (AO) has held as capital in nature, whereas the assessee claimed the same as revenue expenditure. The AO has completed the assessment u/s 143(3) by disallowing Rs.4,58,23,694/- after allowing depreciation @15% on the said sum. 3. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of expenditure incurred by the assessee gives the advantage of enduring nature to the assessee company, such expenditure is not periodical in nature and it is more or less like one time repairs. The Ld.DR further submitted that the Ld.CIT(A) erroneously passed the order and therefore, requested to set aside the order passed by the Ld.CIT(A). 5. On the other hand, the Ld.AR submitted that the assessee company has incurred only repair works and there is no enhancement of capacity and if the assessee wants to change the entire unit, it would cost about more than Rs.60 crores. He further submitted that the assessee had incurred only Rs.4.58 cores and the Ld.CIT(A) has considered all these facts and allowed the assessee's appeal rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place. In the process, the 'tamping paste' alumna refractory due to elevated temperatures. When the furnace is cooled with water, the damage of lining is known. This lining needs 'replacement' at an interval of 3 to 5 years. When the lining takes place the 'auxiliary' and 'allied' parts of furnace needs to be changed due the fact that they lose their strength due to excessive heat at 2000 degree centigrade. Having understood the process of working of furnace it is known that the material required for repairs is obviously 'Tamping paste', 'store consumption' includes mechanical, electrical, civil and fabrication but does not include the 'steel shell' are 'crucible lining'. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of each case. In the instant case the Assessing Officer's observation are not supported by material. Therefore on overall consideration of facts and circumstances and the examination of bills I am of the considered opinion that the expenditure incurred is revenue in nature and therefore to be allowed. Accordingly, the addition of Rs.4.58 crore made by Assessing Officer is deleted." We have also perused the decision rendered by the Hon'ble Supreme Court in the case of CIT Vs. Saravana Spinning Mills (supra), as it has categorically held the difference between capital expenditure and revenue expenditure. The ratio laid down by the Hon'ble Apex Court, in the case, the repairs fall under the category of revenue expenditure o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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