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TMI Blog1992 (10) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ur, has referred the following question of law arising out of its order dated July 23, 1981, in respect of the assessment year 1978-79, under section 256(1) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the expenditure amounting to Rs. 18,402 incurred by the assessee-company on the replacement of petrol en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also observed that the petrol engine which has been removed had not reached the stage where it could have been thrown out as a scrap. No realisation from the sale of the petrol engine was shown and, therefore, the disallowance was sustained. The Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, has held that the replacement of the petrol engine by the diesel engine does not give advantage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure is to bring into existence an asset or advantage for the enduring benefit of the business, that is also one of such consideration which has to be taken into consideration. Replacement of machinery in the usual course of business which is worn out would be to maintain the machinery. In CIT v. Mir Mohammad Ali [1964] 53 ITR 165, the Supreme Court has held that a diesel engine is clearly m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a view to produce profits. The finding given by the Tribunal was considered to be a finding of fact. In the present case, neither has it been alleged nor proved from the record that the petrol engine required massive repair or was worn out nor has it been shown that the said engine has been disposed of in any manner. This point was raised by the Commissioner of Income-tax (Appeals) and even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn out or unserviceable or not. In these circumstances, we are of the view that the Income-tax Appellate Tribunal was not justified in holding that the expenditure incurred by the assessee-company on replacement of the petrol engine with a diesel engine is an allowable deduction and no advantage of enduring nature is obtained and, therefore, the expenditure was not allowable as revenue in nature ..... X X X X Extracts X X X X X X X X Extracts X X X X
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