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Issues involved: The correctness of the order of the Ld. CIT(A)-21, Mumbai for the assessment year 2007-08 is questioned by the Revenue, raising concerns regarding the allowance of expenditure as revenue expenditure and the entitlement for depreciation on assets at the rate of 30%.
Expenditure allowed as Revenue Expenditure: The assessee, engaged in the hiring of earthmoving equipments, faced scrutiny assessment for the year, with the Assessing Officer questioning the expenditure under the head "Repairs & Maintenance." Despite the assessee's explanation that the expenditure was for current repairs and not capital in nature, the AO disallowed a significant amount as capital expenditure. However, the Ld. CIT(A) allowed the expenditure considering the nature of the business and the necessity for maintenance of heavy machineries used for rental purposes. The Tribunal upheld this decision, emphasizing that the expenditure was for maintenance and not for creating new assets, in line with the Supreme Court's ruling in CIT Vs Saravana Spinning Mills Pvt. Ltd. (2007) 293 ITR 201 (SC). Depreciation Claim at 30%: The dispute over claiming depreciation at the rate of 30% on certain assets like Transit Mixers, Concrete pump, JCB holder, and Mobile crane arose when the AO held that the assets did not qualify for the higher rate of depreciation. The assessee justified the claim based on the nature of the business involving hiring out heavy commercial vehicles. The Ld. CIT(A) accepted this explanation, allowing the higher rate of depreciation. The Tribunal supported this decision, citing relevant IT Rules and judicial precedents that upheld similar claims for vehicles used in businesses like that of the assessee. The Tribunal found no reason to interfere with the Ld. CIT(A)'s decision, ultimately dismissing the Revenue's appeal.
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