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TMI Blog2019 (7) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... 02-03, who in turn accepted the explanation furnished by the appellant in de novo assessment proceedings and no additions were made. On perusal of the facts noted by the CIT (Appeals) as well as affirmed by the Tribunal, it is clear that question (a) raised by the revenue is a pure question of fact and in the absence of any perversity being pointed out in the concurrent findings of fact recorded by the Tribunal, does not give rise to any question of law. - R/TAX APPEAL NO. 145 of 2019 - - - Dated:- 8-7-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, 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.2903/Ahd/2016/SRT dated 24/10/2018 for the year 2005-06. 2.00. The revenue has proposed the following questions:- ( a). Whether in the facts and in circumstances of the case, the learned ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 to establish that the assertion of the appellant/Chartered Engineer that the parts of the machine are not independent machine but are parts of main Unit was incorrect. The AO during the course of remand proceeding had deputed the Inspectors of his office for identifying the place of fittings of the parts in the Plant and Machinery of the appellant company and to observe its function. The AO in his remand report has discussed the technical aspect of Conversion Kit for Pump Block and Set of Impellers for Naraxon Rotor on the basis of report of the Inspectors and in respect of Conversion Kit for Pump Block has finally stated that to avoid frequent pump block failure due to old design, the new design Pump Block (Conversion Kit) has been procured and installed at P-802B. As per the AO this is only liquid end replacement and there was no enhancement of pump capacity and there was no increase in production level of Urea. As per the AO this part was not visible externally, therefore it could be stated that it is internal part of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dently, but the same are parts of bigger machinery viz. Pump Block in Urea Plant and Naraxno Compressor Etrain, WNA Plant as these facts have been admitted by the AO himself in his remand report. In my opinion the replacement of this part has been made only to restore the machinery to its original state of efficiency so that the entire integrated manufacturing Unit which is considered as profit making apparatus functions efficiently and produces quality products. The enduring benefit is not only the best to decide that the expenditure is capital in nature. On this issue I agree with the submission of the appellant as made in letter dated 21/02/2016 (i.e. rejoinder to the remand report of the AO) which is reproduced in earlier paragraph of this appeal order. Considering all these facts, it is held that the expenditure incurred by the appellant on account of replacement of Conversion Kit Pump Block the appellant company. But this objection / observation of AO has got no basis. The undisputed fact is that Conversion Kit for Pump Block and Set of Impellers for Naraxno Rotor are not independent parts capable of functioning independently, but the same are parts of bigger machinery viz. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed 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 A0. 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 AO 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 and perused material available on record and found that the AO has accepted this issue in its set-aside assessment order for A.Y.1999-2000 passed u/s.143(3) read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is no longer res-integra in view of the judgement of this Court in the case of the very same assessee rendered in Tax Appeal No.1360 of 2018 decided on 29/04/2019. We may quote the relevant observations made by the Co-ordinate Bench of this Court in this regard : 4. It emerges from records that the manufacturing facility of the appellant included fertilizers and chemical plants complex wherein fertilizers like Urea and Ammonium Nitrophosphate and chemicals like Ammonia, Formic Acid, Acetic Acid, Weak Nitric Acid, Concentrated Nitric Acid and Methanol were manufactured. Various plants and equipment were in continuous operation in corrosive and acidic atmosphere. It was found that no new assets were created in the process of replacement of worn out parts. There was no capacity addition. The replacement of components of old machinery was made to bring to its original state of efficiency so that the entire integrated manufacturing unit which was considered as a profit making apparatus functions efficiently to its capacity and produces quality products. The CIT (Appeals) after perusing the paper book which contains the details like name of the main plant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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