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TMI Blog2016 (5) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) sub zero treatment. From the assessee’s submissions, reproduced above, it is evident that heating of items in furnace was done at a temperature up to 1200ċ and also at sub zero temperature. The ld. CIT(A) has very rightly observed that it is obvious that the items loaded in the furnace can suffer major damage due to the extreme temperature. It was explained before ld. CIT(A) that the fixtures were mostly those items on which the products whose heat treatment were to be carried out were loaded and then both the fixture and the product were put inside the furnace. In such a situation ld. CIT(A) has rightly observed that fixtures would suffer major damage and, therefore, the assessee’s claim that they could be used only for 2-3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome declaring total income at Rs. Nil. The assessment was completed at a total income of ₹ 59,12,897/- by treating following expenses as capital in nature: - Furniture fixtures - Machine spares - Repairs maintenance 3. Ld. CIT(A) allowed the assessee s appeal. Being aggrieved, the assessee is in appeal before us and has taken following grounds of appeal: 1. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting addition of ₹ 59, 12,897/ - made by the AO by capitalizing expenses on Furniture Fixtures, machine Spares and Repair Maintenance, which were claimed as revenue expenses by the assessee. 2. On the facts and circumstances of the case and in law, the Ld. CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sist of three type of heat treatment of die steel and aerospace components such as : 1. Vaccum heat treatment 2. Plasma ION Nitriding 3. Sub Zero Treatment etc. The process of head treatment is below :- 3. Stress relieving 4. Hardening 5. Tempering almost 3 times 6. Sub Zero on some of the products Fixtures The main fixtures required for the above process that is made of Mild Steel (MS), Stainless steel (55) and Graphite. The fixtures are required for loading product in the furnace, type of fixture required as per type of materials which is going to heat treatment into to furnace. Estimating an accurate expected life of a fixture would be very difficult, since the life of identical fixtures can vary from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary to keep the machinery in working condition and due to this expenditure the assessee has neither acquired a new assets nor the value of exting assets in increased. We are enclosing herewith some bill given by the parties for repairing work which is ready reference to show that expenditure is a revenue nature. Hence the assessee has debited repairs expenses in their revenue account. Graphite Rod, Block and Hot Zone Box For head shielding in the furnace two layers of graphite elements backed by three layers of stainless steel sheet are required, the use of graphite rod and blocks are one time as once they are heated they can be melt, break or loose so they got unshaped and unusable, we have to change unusable graphite mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of business carried out by assessee assumes importance. In assessee s case the firm was doing vacuum heat treatment for various parties on job work basis. The nature of work consisted of 3 types of heat treatment of die steel and aerospace components, such as (i) vacuum heat treatment; (ii) plasma ion nitriding; and (iii) sub zero treatment. From the assessee s submissions, reproduced above, it is evident that heating of items in furnace was done at a temperature up to 1200ċ and also at sub zero temperature. The ld. CIT(A) has very rightly observed that it is obvious that the items loaded in the furnace can suffer major damage due to the extreme temperature. It was explained before ld. CIT(A) that the fixtures were mostly thos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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