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TMI Blog2017 (6) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-6-2017 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER, AND Shri Duvvuru RL Reddy, JUDICIAL MEMBER For The Appellant : Mr.K.S.Balakrishnan,Advocate For The Respondent : Mr.Supriyo Pal, JCIT, DR ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER This appeal of the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-15, Chennai dated 27.05.2016 pertaining to assessment year 2006-07. 2. The main grievance of the assessee in its appeal is with regard to challenging the order of Ld.CIT(A) in directing the AO to add ₹ 10,35,717/- being replacement of some portion of the machinery to the income of assessee. 3. The facts of the issue are that the assessee herein claimed an amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee incurred expenditure of Rs. 1,39,566/- on an EOT crane which was more than 35 years old and the hoist of the crane was being regularly maintained and used. The hoist could not be put into use any further and needed replacement. Therefore, a new wire rope hoist was procured to replace the same. The assessee incurred expenditure of Rs. 2,02,566/- on EOT crane used for handling the casting for gas cutting. The crane was more than 25 years old and could not be put to use any further and needed replacement. Therefore, a new wire rope hoist was procured which replaced the same. Further the assessee incurred Rs. 1,08,935/- on a hoist used for handling the pattern for inspection which was very old and could not be put to use any furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er an enduring benefit of better and more efficient production over a period of time. Thus, replacement of machinery, as in the instant case, cannot be classified as revenue in nature. Hence, the assessee's claim of deduction u/s.37 is not tenable. As regards, the contention, raised in the course of hearing, that the expenditure is more or less in the nature of repairs, it would be relevant to note that the Hon'ble Apex Court in its decision in CIT v. Saravana Spinning Mills (P) Ltd. (293 ITR 201) has mentioned two exceptions in which replacement could amount to current repairs, namely: where old parts are not available in the market, or where old parts have worked for 50-60 years. In the instant case, the assessee had not claimed e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this, the assessee is in appeal before us. 5. We have heard both the parties and perused the material on record. The plea of the ld.A.R is that amount of ₹ 10,35,717/- to be allowed as a revenue expenditure and reliance placed by the Ld.CIT(A) on the judgement of Apex Court in the case of CIT Vs. Saravana Spinning Mills P. Ltd. (293 ITR 201)(SC) which is not correct. According to him, the expenditure is allowable expenditure u/s.37 of the Act or Sec.31 of the Act. In our opinion, the argument of the ld.A.R is totally misconceived. This issue is already settled by the Tribunal vide its order dated 16.03.2012 cited supra and the Tribunal has given a categorical finding in its order in para 8 9 that the expenditure is capital expe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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