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TMI Blog2012 (12) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... T OF INDIA) and in the case of CIT Vs. Janakiram Mills Ltd [2005 (4) TMI 39 - MADRAS HIGH COURT] and pointed out that in considering whether the expenditure is revenue or capital in nature, the proven tests have been evolved that if the expenditure is of the nature not leading to the increased production capacity and the same remaining as constant, even after replacement, then, the expenditure would be revenue in nature. Given the technicalities on the "revenue" and "capital expenditure", "current repairs" and its application to a finding based on facts, Assessing Officer should have adverted to the various facts involved in the use of steel rolls to arrive at the decision as to whether the assessee is entitled to deduction under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings, the assessee claimed that the iron rolls acquired and put to use were entitled to be granted 100% depreciation. The Assessing Officer pointed out that the machines were purchased after 17.10.1991 and they were put to use for less than one hundred and eighty days. Thus, the assessee was entitled to depreciation to 50% only. 3. The assessee filed revised return thereupon and requested that the cost of the iron rolls could be allowed as revenue expenditure. In the course of the assessment, the Assessing Officer enquired the Managing Partner, who affirmed that without rolls, the machines would not work, hence, they were part and parcel of the fixed assets. Apprised of the use of those rolls in the business and the treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Appellate Tribunal. 5. Reiterating its stand, the expenditure on replacement of iron roll is only as revenue expenditure, the assessee contended that the reasoning of the Commissioner of Income Tax (Appeals) was not sustainable in law. Pointing out to the iron rolls used at high temperature of 1200o C, the assessee pointed out that the life span of these rolls had to be taken into account while considering the claim. 6. The Income Tax Appellate Tribunal, however, pointed out that the Managing Partner of the assessee firm viz., Shri Mahindra Kumar Gupta gave in writing during the assessment proceedings that the assessee had no objection to treat iron rolls as 100% depreciable assets and withdraw the revised statement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hot iron and steel rollers. In this process, the rollers suffered serious damage necessitating replacement within short span of time. Thus, learned counsel submitted that when such an argument was placed before the Income Tax Appellate Tribunal, the reliance placed on by the Tribunal on the statement of the Managing Partner is not justified. 8. In this connection, learned counsel for the assessee placed reliance on the decision of the Apex Court in the case of Commissioner of Income-Tax Vs. Saravana Spinning Mills P.Ltd reported in (2007) 293 ITR 201 (SC), wherein, the Supreme Court pointed out that the claim for current repairs does not contemplate the expenditure incurred in replacement of a part of machinery. Referring to Section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007) 293 ITR 201 (SC) and in the case of CIT Vs. Janakiram Mills Ltd reported in (2005) 275 ITR 403 and pointed out that in considering whether the expenditure is revenue or capital in nature, the proven tests have been evolved that if the expenditure is of the nature not leading to the increased production capacity and the same remaining as constant, even after replacement, then, the expenditure would be revenue in nature. To consider whether the replacement resulted in increased production or not, the Apex Court remanded the matter to the Commissioner of Income Tax (Appeals). 9. When we look at the facts of the case herein, as the assessment appealed rests on the statement of the Managing Partner by withdrawing the revised statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al expenditure". 13. Given the technicalities on the "revenue" and "capital expenditure", "current repairs" and its application to a finding based on facts, we feel that the Assessing Officer should have adverted to the various facts involved in the use of steel rolls to arrive at the decision as to whether the assessee is entitled to deduction under Section 37 of the Act or not. When the authorities below had not adverted to any of these, we feel, the proper course herein would be to set aside the order of the Income Tax Appellate Tribunal. Accordingly, the order of the Income Tax Appellate Tribunal is set aside and the matter is restored to the files of the Assessing Officer to consider the claim of the assessee in the background of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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