9911796707
TMI Blog2012 (11) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... r being capital expenses since the assessee's machinery maintenance expenses have been examined by the Assessing Officer and have been found to relate to purchase of items for replacement of parts of the machineries as also accepted by the assessee in his reply dated 9.11.2010 that about 99% maintenance expenses relate to replacement of worn out / broken parts and when it is evident that by incurring such expenses, the machineries used by the assessee were converted into new ones and increased their durability. ii) The Ld. Commissioner of Income Tax (Appeals) has erred in deleting the addition of machinery maintenance expenses made by Assessing Officer being capital expenses since it is evident from WDV of the machines 53,416/- and Rs. 4,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chinery was recorded at Rs. 4,76,569/-. In order to verify the nature of the expenditure the Assessing Officer issued questionnaire. In response, the assessee furnished details and forwarded the explanation. It was stated that the machineries were installed at the premises located at Pali and were never used at any other place. The machineries were very old and whenever additions were made in the past the same were duly reflected in the returns. Assessee also stated that the machinery for which the WDV was shown at Rs. 53,146/- was extremely old, may be more than 20 years and with the claim of depreciation year after year, the depreciated value of written down value came down to Rs. 53,146/-. It was stated that the machinery was purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) and submitted elaborate submissions. 5. Ld. Commissioner of Income Tax (Appeals) has noted that such expenditure were incurred during the past years and were duly reflected in the returns. The examples in this regard were as under:- Asstt. Year Amount of expenses (in Rs.) Sales 2006-07 24,86,057.00 2,90,99,633.00 2007-08 42,41,219.00 3,98,51,062.00 2008-09 44,76,290.00 4,06,23,623.00 5.1 Ld. Commissioner of Income Tax (Appeals) observed that a concern's size and operations play an important and significant role to determine whether the amount spent by the assessee is in the course of normal trading process or to assist in earning revenue or income. Ld. Commissioner of Income Tax (Appeals) gave a finding that the sales of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other items detailed in the list of repair. Ld. Commissioner of Income Tax (Appeals) further found that by incurring such expenditure, the assessee did not gain new advantage which increased his sales during the year. The assessee elaborately argued before the Ld. Commissioner of Income Tax (Appeals) that expenses incurred for maintaining the existing machinery did not bring into existence a new asset. It was contended that there was no single part he purchased lasted for one year or more. Ld. Commissioner of Income Tax (Appeals) further found that no part of the machinery can be independently used and constituted separate machine or which constitute substitution of an old asset by a new asset to categorize it as capital expenditure. Ld. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, nuts and bolts, washers, champs, PVC pipes, pulley, MS plates, wire mesh, welding rods, wooden gutka, ruli, shafts, lever pin etc. A perusal of the maintenance expenditure pertaining to the earlier years show that a full benefit was consumed in that period only because such expenditure was incurred in the subsequent year also and claimed by the assessee year after year. By incurring such expenditure assessee did not gain new advantage which increased the sales during the year. Ld. Commissioner of Income Tax (Appeals) also gave a finding that large number of parts get worn out and are replaced by new parts frequently within a year. In other words, Ld. Commissioner of Income Tax (Appeals) gave a finding that no single part that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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