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TMI Blog2014 (9) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble High Court in 1994-95 A.Y - Nothing has been placed to show that the machines were lying idle or had become unfit for production and in fact no argument in that line has been advanced by the Revenue - the arguments of the Revenue have no merit – Decided against revenue. - ITA No. 906/Del/2013, ITA No.1371/Del/2013 - - - Dated:- 18-7-2014 - Diva Singh, JM T. S. Kapoor, AM,JJ. For the Petitioner : Sh. M. K. Madan, CA For the Respondents : A. Mishra, CIT DR and Y. Kakkar, DR ORDER Per Diva Singh,JM. These cross appeals have been filed by the Revenue and the assessee against the order dated 18.12.2012 of CIT(A)-XXXI pertaining to 2009-10 assessment years on the following grounds respectively:- In ITA No-1371/Del/2013 1. The order of Ld. CIT(A) is not correct in law and facts. 2. On the facts and in the circumstances of the case, the commissioner of Income Tax(A) has erred in deleting the addition of made by AO amounting to ₹ 31,76,827/- on account of treatment of expenditure on repair of plant and machinery as capital expenditure. 3. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this account. Complete details were filed and the same had been examined. It has been taken to notice that during the financial year some of the amount provided on this account had not actually been paid. Total amount in this regard debited to the books of accounts is ₹ 77.20Lacs out of which payment of ₹ 66.48 Lacs have been made during the relevant financial year 2008-09. The assessee company in reply dated 25.03.2011, has submitted that it has been adequately disclosed in the Tax Audit Report that disallowance has not been made on the basis of decision of Kolkatta High Court in the case of Exide Industries Ltd. vs. UOI (292 ITR 470) relying upon the decision of Apex Court in the case of Bharat Earth Movers (245 ITR 428). The reply filed by the assessee company has been examined and considered. Reliance place by the assessee on the judgement of Hon'ble Kolkatta High Court in the case of Exide Industries is of no help to the assessee as the Department has filed SLP against his decision which has been admitted by the Apex Court. It is pertinent to mention here that Ld. Commissioner of Income Tax, Central-1, New Delhi, in the case of the assessee company for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve encashment, we vacate these directions in view of the interim orders of the Hon'ble Supreme Court extracted above. The AO is directed to follow the directions of the Hon'ble Supreme Court and dispose of the matter de novo in accordance with law, without being influenced by the order of the CIT. 6.1. It was also contended that the AO has not given effect to the ITAT's order. 7. Considering the same the issue was concluded by the CIT(A) in the following manner:- 3.2.4. I have examined the facts of the case as well as the submissions of the appellant. With due respect, I note that ITAT has not expressed its view as to whether the disallowance under 43B on the issue was called for or not. ITAT has merely directed the AO to follow the directions of the Hon'ble Supreme Court. 3.2.5. The directions of Hon'ble Supreme while admitting departments SLP against the order of Hon'ble Kolkata High Court in the case of Exide Industries Ltd. is reproduced below:- We further make it clear that the assessee would, during the pendency of civil appeal pay tax as if section 43B(f) is on the statues book but at the same time it would be entitled to make its cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was her submission that deciding the issue without reference to material and relevant facts would be of no purpose and the issue as such may be restored. 10. We have heard the rival submissions and perused the material available on record. It is seen the that no doubt the position on facts was influx during the time when the return was filed however with the passage of time the position on facts qua the issue under consideration would have crystallized. Consideration of these relevant facts heeding to the request of the Ld. Sr. DR that qua the provisions it is necessary to see what amount was actually paid as per the HR policy of the assessee, the issue is restored to the AO who shall necessarily take into consideration the decision of the Apex Court wherein the SLP is pending. The AO accordingly is directed to consider the issue de novo after giving the assessee a reasonable opportunity of being heard. 11. In the result the appeal of the assessee is allowed for statistical purposes. 12. Although the Revenue has raised three grounds however Ground No-1 and 3 the Ld. CIT DR stated require no adjudication and the sole issue agitated is Ground No-2. The relevant facts qua the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered of capital nature 3737444/- Less:-Depreciation allowed @ 15% 560617/- Amount to be added in income of the assessee 3176827/- 13. Aggrieved by this the assessee went in appeal before the First Appellate Authority. Before the CIT(A), it was contended that no doubt in 1994-95 the Hon'ble High Court had confirmed the addition however in the consolidated order for 1994-95, 2005-06 2006-07 the Hon'ble High Court had also confirmed the deletion of addition made by the ITAT on similar issue and the Hon'ble High Court had also infact mentioned that from 1995-96 onwards to 2004-05 assessment year, similar disallowance made by the AO had been deleted by the ITAT which has been accepted by Revenue. 13.1. It would be appropriate to extract the submissions advanced from para 3.1.4 of the impugned order at this stage:- The Hon'ble ITAT has distinguished the facts of 94-95 with that of subsequent years on the ground that in that year Machine had become unfit for production and by subsequent reconditioning carried out it resulted in imparting useful life to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.30,385/- 4. Repair of Sl-3 Lappers - Rs.4,65,000/- 5. Repair of Bore Grinder IG-140 - Rs.74,434/- 6. Repair of Micromatic Grinder - Rs.2,36,500/- 7. Repair of SKL-2 Lapper - Rs.2,36,500/- Total - Rs.37,37,444/- 3.1.7. From the above it is seen that the expenditure has been incurred towards repair of the machines. There is no evidence that any of these machines were lying idle or were in broken-down condition. AR has categorically stated that none of the machines were lying idle or had become unfit for production. In these circumstances the facts of the current assessment year do not appear to be same as those for A.Y. 1994-95. AO has made additions merely stating that on the similar issue for A.Y. 1994-95 ITAT has confirmed the addition and the matter was pending before High Court of Delhi. He has not mentioned that for all the subsequent years upto 2006-07, ITAT has deleted the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal and the Court held the expenditure to make it fit was to be taken as capital expenditure. Referring to the facts of the present case it was argued the expenditure is categorically and patently revenue expenditure and the machines were not lying idle and unfit for production and infact the expenditure pertains only to their repairs. Accordingly the expenditure it was argued has rightly been held by the CIT(A) as allowable expenditure for repair. 18. The appeal was fixed for clarification as qua the evidence of expenditure the respective stand was found to have not been addressed. However on the date of hearing the Ld. AR took the stand that the evidence has not been doubted by the AO, consequently the department has not questioned this, as the AO has treated the expenditure as capital expenditure relying on the view taken in 1994-95 and since the issue under challenge was whether the expenditure was Capital or Revenue the factum of expenditure having been incurred has never been in any doubt. The said position was concurred with by the Ld. CIT DR. 19. We have hard the rival submissions and perused the material on record. On a careful consideration thereof, we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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