9911796707
TMI Blog2012 (10) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment for Assessment Year 2002-03 was completed u/s.143(3) read with section 147 on 27.12.2007 on total income of fRs.43,61,561/- in which expenditure incurred for purchase of Zyoptic retrofit kit and other items amounting to Rs.62,20,500/- lakhs claimed as revenue by the assessee was treated as capital in nature. On appeal, the Commissioner of Income Tax(A) upheld the order of the Assessing Officer, but directed to allow depreciation on the above machinery. The assessee filed appeal before the Tribunal and the Tribunal vide its order dt.06.11.09 in ITA No.191/Mds./09 remitted the issue back to the Assessing Officer with the direction to verify whether the expenditure incurred of Rs.62.20 lakhs being cost of upgradation kit viz. 'Zyopti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that as there was no replacement to any existing spare parts, therefore, it cannot be claimed as current repairs and disallowed the claim of the expenditure of assessee. 3. On appeal, the Ld. Commissioner of Income Tax(A) allowed the claim of assessee as business expenditure u/s.37 of the Act. Ld. Commissioner of Income Tax(A) held as under:- "5.5. I have gone through the submissions made by the appellant and the order of the Assessing Officer. The Hon'ble ITAT Tribunal 'C' Bench has remitted the issue back to the Assessing Officer with the direction to verify whether the expenditure incurred of Rs.62.20 lacs being the cost of upgradation kit is capital or revenue in nature after affording opportunity to the assessee. The Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in more precise surgeries and high success rate. As per the information provided by the appellant company, the upgrade essentially enables the measurement of high order optical aberrations of the eye and helps imprecise surgical treatment. The upgrade cannot function on its own and can only improve the treatment performed by the basic machine. Form this, it can be inferred that no separate machine has been brought into existence nor the expenditure can be considered as capital in nature. The appellant filed a letter from Bosch and Lomb who have confirmed that they have supplied Laser upgrade kit and Orbscan on 28.12.2001 for Rs.622,20,500/-. The A.R. has produced the photograph of upgrade kit along with Orbascan. The Orbascan is a diagno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Commissioner of Income Tax(A). 6. We have heard the rival submissions and perused the orders of the lower authorities and materials available on record. In the instant case, the assessee has purchased Zyoptic retrofit kit and other items amounting to Rs.62,20,500/- lakhs for upgradation of its original lasik machine for conducting eye surgery which helped in doing precision eye surgery. This was necessitated because of technological development in Zyoptic machine and required certain parts to be upgraded and added to the original lasik machines for better surgical procedures. The assessee claimed the entire expenditure as revenue expenditure. The Assessing Officer was of the view that the expenditure incurred by the assessee was not cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no separate machine has been brought into existence nor the expenditure can be considered as capital in nature. He held that since the basic lasik machine was brought in 1997 for better performance, certain parts had to be replaced and added for improving the performance and quality of treatment to the patients. Therefore, the expenditure incurred was revenue in nature and allowed the same as a business expenditure u/s.37 of the Act. We find that it is not in dispute that the Tribunal had remanded the matter back to the Assessing Officer to adjudicate whether expenditure in question was capital or revenue in nature. Therefore, Ld. Commissioner of Income Tax(A) has rightly adjudicated the issue of allowability of the expenditure u/s.37(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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