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TMI Blog2010 (12) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... of moulds - Revenue or capital expenditure - Mere fact that the moulds were used in production process could not be conclusive on the issue of nature of expenditure as held by this Court in Malhotra Industrial Corporation's case (2001 -TMI - 12991 - PUNJAB AND HARYANA High Court) - Replacement of moulds to be held as revenue in nature. X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also the written submissions made by the assessee before the first appellate authority. We find that the assessee owns two furnaces namely M/s Magathermic make 3 MT capacity furnace and GEC 3.5 MT capacity furnace. The GEC furnace was extensively damaged in a fire which broke out in the factory of the assessee on 11.6.99. The assessee carried out repairs by way of replacement of a transformer and the panel static inverter generator pertaining to the furnace which was damaged. The cost of the transformer and the panel static inverter generator was claimed as revenue expenditure. In this background the CIT(A) has concluded that the expenditure has not resulted either in enhancement of the capacity of the furnace nor any new asset has come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm the conclusion drawn by the CIT(A) on this issue. The revenue accordingly fails on this count." 5. As regards question no.2, the assessing officer disallowed deductions claimed by the assessee on expenditure incurred on moulds used in manufacturing process. The assessing officer held the said expenditure to be capital expenditure entitling the assessee only to depreciation instead of entire deduction. The CIT(A) reversed the view of the assessing officer and held the expenditure in question to be revenue expenditure which has been affirmed by the Tribunal in the following terms:- "We have considered the rival submissions. Having regard to the products manufactured by the assessee namely steel and iron ingots, runners and risers, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a situation the assessing officer was fully justified in holding the same to be capital expenditure following the law laid down in Ballimal Naval Kishore's case (supra). He further submits that replacement of moulds was also capital expenditure as moulds were part of machinery used in production process. 8. Learned counsel for the assessee supported the view taken by the CIT(A) and the Tribunal. 9. Whether the expenditure in question is capital or revenue expenditure has to be determined in the facts and circumstances of individual case. Tests of expenditure being of enduring nature or for acquiring new assets are broad tests, though not conclusive for all situations. Reference may be made to Assam Bengal Cement Co. Ltd. Vs. CIT 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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