9911796707
TMI Blog2015 (6) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure incurred on Dry Docking Expenses are revenue in nature. 3. Incidentally, Income Tax Appeal Nos. 19 of 2010 and 22 of 2010 relate to the very same assessment year, i.e. 2005-2006; but, according to the learned counsel for the appellant, the appeal and cross-appeal in the Tribunal occasioned the filing of the two appeals. We say this because the learned counsel for the respondent would point out that Income Tax Appeal No. 19 of 2010 may not be maintainable. 4. Respondent / assessee is engaged in oil exploration. The Assessing Officer disallowed the expenditure incurred by the respondent / assessee towards the maintenance of vessels and rigs on the basis that it will be a capital expenditure. In appeal, the appellate Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order as to how these expenses are of capital nature. CIT(A) in that year has noted in para 9 of his order that the assessee in its written submissions has explained the nature of Dry Docking expenses and it is apparent from the description that the expenditure involved are not just repair but total overhaul and renovation of the vessels. He further stated that assessee had also not been claiming these expenses as revenue expenditure in its books of accounts and these expenses are not debited to profit and loss account as discussed in assessment order and by making these observations, learned CIT(A) in that year has upheld the assessment order. When we go through these explanations of the assessee as reproduced by the AO in the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has not furnished before us computation of income filed by it along with return of income and the profit and loss account for the relevant years. Under these facts, we feel that for the purpose of verification of the amount actually incurred by the assessee on this account in these three years, the matter should go back to the file of AO. We, therefore, restore this matter back to the file of AO in all the three years for the limited purpose of verifying the amount of deduction claimed by the assessee and the amount of actual expenditure incurred by the assessee in the relevant years. Deduction should be allowed by the AO to the extent of the amount incurred by the assessee for this purpose in the relevant year ensuring that any amount d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our attention to the unreported judgment of the Hon'ble Apex Court in Civil Appeal Nos. 6366-6368 of 2003 with Civil Appeal Nos. 6946-6948 of 2004 dated 23rd March, 2015. Therein, we notice the following finding: "19. In the instant case, as noticed above, the assessee did not want spread over of this expenditure over a period of five years as in the return filed by it, it had claimed the entire interest paid upfront as deductible expenditure in the same year. In such a situation, when this course of action was permissible in law to the assessee as it was in consonance with the provisions of the Act which permit the assessee to claim the expenditure in the year in which it was incurred, merely because a different treatment was deprive the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exact amount, which could be claimed as the revenue expenditure, has remitted the matter back. We also notice the following finding by the Commissioner of Income Tax (Appeals): "8.2 I have gone through the order of the AO and the submissions of the AR very carefully. Under the Merchant Shipping Act, every floating rigs and vessels have to undergo a compulsory survey within specified intervals in order to determine whether it is seaworthy and can withstand the safety standards laid out. Under such surveys, the structural and mechanical fitness of a floating installation is tested. The expenses on dry docking are on account of removing the old paint and repainting the same, overhauling the propellers, thrusters, gears and electric motors, r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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