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TMI Blog2019 (7) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... AO, JJ. For The Appellant (s) : MR. VARUN K. PATEL (3802) ORAL ORDER (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1.00. This Tax Appeal under section 260(A) of the Income Tax, Act, 1961 (for short "the Act, 1961) is at the instance of the revenue and directed against the order passed by the Income-tax Appellate Tribunal in ITA No.1060/Ahd/2015 dated 27/09/2018 for the year 2003-04. 2.00. The revenue has proposed the following questions:- "(a). Whether in the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in treating the expenditure incurred by the assessee on replacement of Rotor assembly, Impeller assembly, Gas Chromatograph, Relay and control Panel as revenue expenditure instead of capital expenses?" 3.00. The findings recorded by the CIT are regards the proposed question referred to above reads as under :- 4.3. I have given my careful consideration to the facts of the case, the reasons recorded by the AO and submission made by the appellant. From the details submitted by the appellant it is seen that Rotor assembly valued at ₹ 13,294,744 and the Impeller assembly valued at ₹ 25,20,570 are only a part of X-701 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts so replaced were independent machine or were parts which required to be fitted in place of broken parts of the Turbine. As per the Hon'ble ITAT, Ahmedabad the clear findings were required to be given by the AO which were not available in the order of the AO. Considering these facts the Hon'ble ITAT, Ahmedabad remanded the matter to the file of the AO with direction to examine the issue and decide the same de novo but by affording reasonable opportunity of being heard to the appellant. Though, this direction was given by the Hon'ble ITAT, Ahmedabad in the case of appellant for AY 2003-04 while deciding the similar issue as per ground of appeal no.8. As in the case of appellant the issue is similar for the year under consideration also and therefore as per direction of Hon'ble ITAT, the AO was required to examine the issue and to decide the same de novo after affording reasonable opportunity of being heard to the appellant. But instead of giving clear finding in the order u/s 143(3) r.w.s. 254 of the Act after bringing the materials on record, the AO has given very general findings in such order. Further, in the remand report also the AC has not brought out any material on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the materials on record. On the basis of report of the Inspectors, the A0 after discussing technical aspect of this part of machine in his remand report has finally stated that this part was not visible outside but looked like whole system and the whole system was looking renovated. As per the AO it was observed that the whole panel was replaced with new panel and it looked like an independent Unit capable of functioning independently viz. Coal Handling Plant. On the other hand, the appellant in its rejoinder to the remand report has mainly stated that the panel is not the Coal Handling Plant but it is one of equipments machineries which constitute the Coal Handling Plant. As per the appellant a panel cannot function independently as Coal Handling Plant. As per the appellant, the deduction in the case of similar panel being panel C-1600 has been allowed by CIT(A) for AY 2010-11. The appellant had relied upon decisions of Hon'ble Supreme Court in the case of Sarvana Spinning Mills (TIOL-2007-TIOL-147-SC(I). It is submitted by the appellant that old panel was required to be replaced due to deterioration in insulation material, (Hylem Base) obsoletion of pares and discontinuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of net amount ₹ 2,55,82,153/- on the ground that the items are in the nature of independent machine and average life span is 5 years or more and in one item life span is 20 years which suggests that these items can be used independently. 14. The assessee went in to appeal before the CIT(A). The CIT(A) after examining the facts of the case and items of machinery to replace component and relying on various case laws examined the explanation of the assessee and on the basis of explanation furnished by the assessee, deleted the additions disallowance made by the AO. 15. Being aggrieved, the Revenue has filed this appeal before us. The Id.CIT-DR strongly relied on the orders of the AO. 16. On the other hand, the Id.Counsel for the assessee submitted that the issue is covered by earlier years order of ITAT in assessee's own case for A.Y.2008-09. Further in the past A.Y.2000-01, 2002-03 when the matter restored to A0 it was accepted as revenue expenditure by AO in set-aside proceedings (page 8 of CIT(A) order) and the Authorised Representative (AR) has placed reliance on the decision as relied on by the CIT(A) in para 4.3 of his order. 17. We have considered the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... component, cost of total plant and past history of disallowance and appellate decision in past in respect of similar components and the facts which were explained with the help of diagram/process chart showing that replaced component is part of the main plant. The CIT (Appeals), therefore found from the details of additions to that the fixed assets that addition of independent machinery has already been capitalised and claim is made only for depreciation. Thereafter, the CIT (Appeals) on the above facts found that the expenditure claimed as revenue expenditure is in respect of components of the machinery which cannot be treated as the independent machinery in itself as they are not capable of functioning independently. It was further held that the chemical and fertilizer plant was very large plant within which again there are large machines and within the machine there are components requiring replacement due to wear and tear, that was different plants within the fertilizers and chemical plant. Reference was also made to past history of disallowance wherein the Tribunal had set aside the issue to the Assessing Officer for the assessment years 1998-99 to 2002-03, who in turn accept ..... X X X X Extracts X X X X X X X X Extracts X X X X
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