2023 (3) TMI 1056 - HC - Income Tax

Nature of expenses - Expenses relating to purchase of steel rolls by treating the same as revenue expenditure - HELD THAT - As relying on SARAVANA SPINNING MILLS P. LTD. 2007 (8) TMI 16 - SUPREME COURT the expenses incurred for replacement of the steel rolling machine are revenue expenditure and thus the Tribunal was fully justified in dismissing the revenue s appeal. Thus, we find no ground to interfere with the order of the Tribunal. Deemed dividend u/s 2(22)(e) - Tribunal deleted addition - HELD THAT - The finding of the CIT(A) remained uncontroverted before the Tribunal and also the fact that the findings were based on documents which were placed for consideration even before the Assessing Officer. Thus, we find that the conclusion arrived at by the Tribunal on the second issue does not call for interference.

Summary

Issues involved:
The judgment involves two main issues: (i) Excess claim of expenses for the purchase of steel rolls treated as revenue expenditure, and (ii) Addition of deemed dividend misinterpreted under specific sections of the Income Tax Act.

Excess claim of expenses for purchase of steel rolls:
The appeal was filed by the revenue under Section 260A of the Income Tax Act against the Tribunal's order allowing excess claim of expenses for the purchase of steel rolls as revenue expenditure. The Tribunal affirmed the order passed by the Commissioner of Income Tax treating the purchase of steel rolls as revenue expenditure. The Tribunal relied on a previous decision and noted that the expenditure on rolls for a steel rolling mill falls under current repairs and not capital expenditure. The High Court referred to relevant legal provisions and judgments to support the Tribunal's decision, emphasizing that the expenses for replacement of the steel rolling machine are revenue expenditure. The Court found no grounds to interfere with the Tribunal's order, as the factual aspects were thoroughly considered by the CIT(A) and remained uncontroverted.

Addition of deemed dividend under specific sections:
The second issue involved the addition of deemed dividend under specific sections of the Income Tax Act, which the Tribunal had deleted. The Tribunal's decision was based on factual findings that were uncontroverted and supported by documents placed before the Assessing Officer. The Court found no reason to interfere with the Tribunal's conclusion on this issue as well. Consequently, the appeal filed by the revenue for the assessment year 2005-06 was dismissed, with the substantial questions of law answered against the revenue. The appeal for the assessment year 2006-07 was also dismissed due to low tax effect, along with the connected application.

Separate Judgement:
No separate judgment was delivered by the judges in this case.