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TMI Blog2016 (2) TMI 1329X X X X Extracts X X X X X X X X Extracts X X X X ..... company is a subsidiary of Indian Oil Corporation Limited which holds 51.89% equity shares of assessee company and also a Miniratna of Central Public Sector Enterprise and was formerly known as Madras Refineries Limited and the assessee company shares are also held by Government of India. The assessee company is the second largest refinery in South India and has two refineries, one at Manali and second being Cauvery basin at Nagapattinam and in the business of refining crude into petroleum & petro-chemical products. The assessee company being Government Company is subject to supplementary audit of the financial statements under Sec.619(3)(b) of the Companies Act. For the assessment year 2008-09, the assessee filed e-return of income on 29.09.2008, declaring gross income of :1659,19,70,683/- and after considering deductions u/s. Chapter VIA, taxable income worked out to :858,63,68,998/- and Assessment u/s.143(3) of the Act was completed on 30.11.2010. Further assessee income was determined under u/sec.143(3) r.w.s 154 of the Act by order dated 20.01.2011 at :1696,65,08,090. On appeal to CIT(A), consequential order giving effect to Commissioner of Income Tax (Appeals) order, the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture was capitalized and depreciation was allowed. The assessee company relied on the Supreme Court decisions on reopening of assessment as a change of opinion, but in original assessment replacement of compound wall was not discussed and there is no change of opinion. The ld. Assessing Officer relied on the decision of Supreme Court in the case of Kalyanji Mavji & Company vs. CIT 102 ITR 287 and other various High Courts decisions i.e. (i) High Court of Mumbai in the case of Export Credit Guarantee Corporation of India Ltd. vs. Addl. CIT 30 taxman. Com 211 (2013) (ii) Gujarat High Court in the case of Praful Chunilal Patel and Vasanth Chunilal Patel vs. ACIT 236 ITR 832 (iii) High Court of Delhi in the case of Honda Siel Power Products Ltd vs. DCIT 197 taxman 415 (iv) High Court of Bombay in the case of Yuvaraj vs. Union of India (Bom) 315 ITR 84 and Co-ordinate Bench decision in the case of Chennai Petroleum Corp. Ltd in ITA No.66/11-12/LTU(A), dated 08.01.2013 and the objections of the assessee and passed re-assessment order. On other disputed issue of disallowance, the assessee filed a letter on 19.02.2014 explaining the reasons at page no.4 of the order as under:- "It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intenance or proper utilization of assets or for restoring it to its original condition. Such repairs does not bring into existence of new asset nor obtain a new or different advantage. The assessee has replaced the barbed wire fencing to construct compound wall for entire factory premises and existing foundation was removed and new foundation of stones laid were old asset is replaced and new asset has come into existence, and such new asset will have enduring benefit. Considering the facts and legal position of expenditure :40,98,880/- claimed, the Assessing Officer has disallowed the same as the construction of compound wall was completed on 01.08.2007 and the asset is put to use for more than 180 days and allowed deprecation @10% and balance added to the income and passed order u/s.143(3) r.w.s. 147 dated 27.02.2014. Aggrieved the assessee filed an appeal before the Commissioner of Income Tax (Appeals). 4. In the appellate proceedings, the ld. Authorised Representative reiterated his submissions on the issue of reassessment proceedings and validity and on the claim of replacement of barbed wire fencing with new compound wall. The ld. Commissioner of Income Tax (Appeals) upon s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nataka High Court in the case of Senapathy Synams Insulations Pvt. Ltd vs. CIT (2001) 248 ITR 656 and also jurisdictional High Court decision in the case of CIT vs. Binny Limited (1995) 215 ITR 536 based on the observations of jurisdictional High Court the ld. Commissioner of Income Tax (Appeals) has concurred with the findings of the Assessing Officer and treated the expenditure as capital in nature and confirmed the order of Assessing Officer. Aggrieved by the order of Commissioner of Income Tax(A) the assessee assailed an appeal before the Tribunal. 5. Before the Tribunal, the ld. Authorised Representative reiterated his submissions made before the Assessing Officer and in appellate proceedings. On the ground of challenging of reopening of assessment u/s.147, the ld. Authorised Representative submitted that assessee has furnished all materials before the Assessing Officer in the original assessment proceedings and assessment was completed on 30.11.2010. The issue has arised only because of change of opinion and not with new set of facts and the assessee relied on the decision of Apex Court in CIT vs Kelvinator India Limited (supra). On the issue of disallowance the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e platform and assessee has incurred expenditure in removal of the existing foundation of barbed wire fencing as the compound wall was constructed at Cauvery basin refinery and though the asset has been created but the purpose is not of enduring benefit and such expenditure has to be distinguished based on the functional test. Reliance placed by the assessee on the decision of Margayarakarasi Mills (P) Ltd (supra) were the replacement of ring frame in the existing textile machinery is a Revenue expenditure relates to repairs to plant and machinery. The assessee has considered replacement of barbed wire fencing as revenue expenditure and claimed deduction u/s.37(1) of the Act which is wholly and exclusively used for the purpose of business. The ld. Authorised Representative supported his arguments with the jurisdictional High Court decision which squarely covers the case of Southern Roadways Ltd (supra) were similar issue was dealt. On Comparison with the provisions of Sec.37(1) and the nature of expenditure and the treatment of expenditure in the books of Accounts also factual circumstances and Apex Court decisions relied by the assessee the expenditure takes the characteristic of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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