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TMI Blog2021 (11) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it shall not be treated as a precedent in any other case. Necessary computation shall follow as per law. Nature of expenditure - Expenditure on rail tracks and conveyor belt systems - revenue or capital expenditure - HELD THAT:- Assessee's case records as well as photographs of the corresponding rail tracks and conveyor belt systems and submits that both the lower authorities have erred in law and on facts in treating the assessee's revenue expenditure items as capital in nature despite the fact that the same were meant to be kept abandoned at sites for the use of the owner of the business only than that incurred for deriving enduring benefits in its own hands. We are also taken to the necessary factual position emanating f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in sustaining half (50%) of the ad hoc disallowance of 25% made in respect of miscellaneous expenditure amounting to ₹ 40,70,292. Having regard to the nature of expenditure location and scale of operations and the fact that there was no banking facility available at the site or nearby villages. the ld. Commissioner (Appeals) ought to have deleted the ad hoc disallowance made by the AO. 3. The Commissioner (Appeals) erred in holding the expenditure incurred towards rail and track cross as capital expenditure and In directing allowance of depreciation on the same. The Commissioner (Appeals) ought to have appreciated that the track and track cross are used and totally worn out material purchased from Railways. and they do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein banking facilities are not always available. The Revenue's argument on the other hand is that the assessee failed to prove all the impugned expenditure head by filing all the cogent supportive evidence. Faced with this situation and more so when both the parties have failed to justify their respective stands in entirety, we deem it appropriate that a lumpsum estimated disallowance of 8% only than that in issue @25% would be just and proper. We order accordingly. The assessee succeeds in part in its instant identical former substantive ground in all these years involving varying sums subject to a rider that it shall not be treated as a precedent in any other case. Necessary computation shall follow as per law. 4. Next comes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also capitalized. There was no claim of Ventilation Ducting in A.Y. 2013-14. The issue regarding capitalization of these items are discussed separately as under: 1. Rails and Track Cross: The appellant has undertaken the activity of the construction or tunnel. In simple parlance, the appellant needs to construct a model of movement for goods as well as personnel as the tunnel progresses and also for the excavation of the material, as the construction of tunnel progresses. The appellant has laid down the Rail tracks for the said purpose and the Track Cross (for the junction of Tracks). The appellant has thus bought the Rails from the Railways for this purpose. The claim of the appellant is that the Rails so bought from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly held the same as capital expenditure. The appellant stated that the same will be of no use after the project is complete, is a statement of not much consequence or relevance, as the Rails can against be sold in the open market as there has been not much wear and tear and even otherwise the same can be claimed as a sale in the block of asset. The above items are of enduring nature, therefore the action of the AO holding the same as a capital expenditure is upheld accordingly. The AO is however directed to give depreciation on the same accordingly on a year to year basis on such capitalization. 2. Conveyer Belt (along with Rollers and structures): As already stated that the Appellant is into the construction of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same has been rightly held as capital expenditure by the AO accordingly. The AO is however directed to give depreciation on the same accordingly on a year to year basis on such capitalization . The factual position is no different in remaining assessment years wherein the only distinction is that of corresponding sums of disallowance; as the case may be. 5. Learned counsel has taken us to the assessee's case records as well as photographs of the corresponding rail tracks and conveyor belt systems and submits that both the lower authorities have erred in law and on facts in treating the assessee's revenue expenditure items as capital in nature despite the fact that the same were meant to be kept abandoned at sites fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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