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TMI Blog2011 (8) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal is right in law and on facts in reversing the order passed by CIT(A) and thereby deleting the addition made on account of provision for expenses amounting to Rs. 11,75,534/-? (E) Whether the Appellate Tribunal is right in law and on facts in reversing the order passed by CIT(A) and thereby deleting the addition made on account of disallowance of exemption amounting to Rs. 28,59,527/-?" 2. With respect to question no.A, counsel for the revenue vehemently contended that the Assessing Officer as well as the CIT Appeals had found sufficient evidence to hold that the expenditure of Rs. 1,45,82,065/- claimed by the assessee was not genuine. She submitted that such conclusions were based on the evidence collected while framing the assessment which included the report of the stamp revenue authority indicating that the vouchers were stamped subsequently. Taking us through the orders passed by the Assessing Officer and CIT Appeals, she contended that the Tribunal ought not to have interfered with such findings which were based on the evidence on record. 3. We, however, find that the question of genuineness of the expenditure claimed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention that the accounts for the subsequent years filed on the basis of corrupt software as soon as such mistakes were noticed, even before issuing of show cause notice, the assessee corrected the accounts and submitted the same which also tally with audit accounts. 6. The Tribunal also recorded that considering the nature of business of the assessee, the truck fright expenses were required to be incurred to carry on the business. The profit margin of the assessee was quite fair and reasonable as compared to the previous year also. The Tribunal compared the assessee's expenditure under the said heading under the previous year and found that the same were comparable to the consideration. 7. It can be also noticed from the orders of AO and that of CIT(A) that both these authorities concluded the issue against the assessee respondent by inquiring on random basis. 8. Out of 37 parties, only four were issued noticees by AO and only one cheque against each party was verified for deciding genuineness of transaction and this method for proving malafide was approved by CIT(A). Tribunal has rightly not endorsed to these findings of both the authorities which lack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the facts and circumstances of the case, the assessee has provided all the relevant details to prove the genuineness of expenses and therefore merely because some of the details could not be furnished or the accounts were not reconciled because of mistake of other party, the addition could not be warranted. It is also observed that the clearing and forwarding expenses are quite fair and reasonable as compared to previous year. The profit margin is also fair as compared to previous year as well as in comparable cases. Therefore, looking to the totality of facts the addition is deleted. This ground of appeal is allowed." 11. From the above, it can be seen that the conclusions of the Tribunal were based on appreciation of evidence on record. No question of law arises. 12. With respect to disallowance of Rs. 17,45,865/- claimed by the assessee by way of revenue expenditure and instead treating the same as capital expenditure by the revenue authorities, we find that the issue arises in the following factual background. The assessee had carried out repairs of its dumpers by replacing the body of the dumpers and claimed such expenditure as current repairs. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behind Section 31(i) is to preserve and maintain the asset and not to bring in a new asset. In our view, Section 31(i) limits the scope of allowability of expenditure as deduction in respect of repairs made to machinery, plant or furniture by restricting it to the concept of "current repairs". All repairs are not current repairs. Section 37(1) allows claims for expenditure which are not of capital nature. However, even Section 37(1) excludes those items of expenditure which expressly falls in Sections 30 to 36. The effect is to delimit the scope of allowability of deductions for repairs to the extent provided for in Sections 30 to 36. To decide the applicability of Section 31(i) the test is not whether the expenditure is revenue or capital in nature, which test has been wrongly applied by the High Court, but whether the expenditure is "current repairs". The basic test to find out as to what would constitute current repairs is that the expenditure must have been incurred to "preserve and maintain" an already existing asset, and the object of the expenditure must not be to bring a new asset into existence or to obtain a new advantage." 15. Bearing in mind the ratio of the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eleted. This ground of appeal is allowed in favour of the assessee." 17. From the above it can be seen that the Tribunal allowed the liability on the ground that the same had arisen during the year in question. We find no infirmity in the view of the Tribunal. 18. With respect to ground no. E, we find that the Tribunal considered the issue in the following manner:- "5. We have considered the rival submission. The assessee is having food processing unit at Kandla SEZ. The assessee is doing various processing for the food grains exported. The various processes are involved like clearing the goods, shorting out goods and removing waste material, applying medicines as per the export standards, again shorting out goods of good quality, packing into export quantity and then finally exporting them. All these processes are carried out with huge automatic machine. The assessee has to follow international standard to bring the goods to export quality and acceptable in the international market. Since the issue is covered by the assessee's own case vide ITA No. 407/RJT'2006, however, as the CIT (A) has raided some different issue let us examine in this context a ..... 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