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TMI Blog2022 (9) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... nd reverse the orders of lower authorities. Appeal of assessee allowed. - ITA No. 513/CHNY/2021 - - - Dated:- 24-8-2022 - SHRI MAHAVIR SINGH , VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL , ACCOUNTANT MEMBER Appellant by : Shri N.Arjun Raj , CA Respondent by : Shri AR.V. Sreenivasan , Addl. CIT ORDER PER MAHAVIR SINGH , VICE PRESIDENT : This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Appeal No.CIT(A), Coimbatore- 3/10640/2019-20 dated 24.09.2021. The assessment was framed by the Income Tax Officer, Non-Corporate Ward 4(1), Coimbatore for the assessment year 2017-18 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the Act ) vide order dated 21.08.2018. 2. The only issue in this appeal of assessee is as regards to the order of CITA() not allowing the replacement of spare parts as revenue expenditure and treated the same as capital expenditure. Without prejudice, the assessee has also raised allowance of claim of deduction u/s. 80IA of the Act and computed levy of taxes u/s.115JC of the Act. For this, assessee has raised the following effective groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. of spindles : 1.008 In this very invoice, the German company i.e., Spindlefabrik Suessen GmbH noted that the spare parts are within the spinning mill and frame work of conversion. For EliTe spinning, we recommend to use high-performance spinning rings. Worn rings should be replaced before the conversion. Pls ensure that the pressure on the fron top roller is at least 16 kg. The travelling blower must be equipped with a special nozzle for the EliTe Compact Set. It is the task of the mill to adjust the travelling blower. All renowned manufacturers of travelling blowers offer such nozzles. It was the finding of the technical team that the following spares or components of the existing drafting system are reusable:- Top weighting arms with top roilers and complete cradles Bottom apron nose bar. Bottom apron tensioner with bottom aprons; it is recommended to install new synthetic bottom aprons. Back bottom rollers, front and knurled bottom rollers Finally the proforma invoice also gave a birds view that this change in spindles or ring spinning frame will not give enduring benefit or it will neither increase the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case. The yarn from the stage of Simplex is sent to Drafting before spinning. The drafting system is situated in the ring frames. The conventional drafting system has been replaced with the latest, state-of-the-art gadget called Compact Spinning . After examining the relevant details, we have found that this is a single piece gadget which is fixed to each Spindle. It is not a machinery by itself but only an attachment to the machine (like manual analog wall clock is fixed with battery operated system). It has been claimed as revenue expenditure. The old drafting systems have become scrap on replacement. The ld. A.R has taken us through a set of colour photographs to illustrate the nature and working of this 'Compact Spinning System'. It is seen from the records [paper book page 5] that the assessee had purchased 33 number of ring frames and 18 ring frames fitted with gadgets. The company has purchased 18 number of sets, as one set is required for one ring frame. Thus, total number of gadgets for 18 ring frames comes to 20,736 and the rate per gadget so purchased comes to Rs. 4,079/-. We have seen the commercial invoices enclosed in the paper book and found the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as a surprise but has to be treated as taken in business exigency. When a question regarding life of these gadgets was put to the ld. A.R, he stated that each gadget itself consist of many small parts and each part is assembled together to have one single gadget so, they are subject to heavy wear and tear due to continuous running. It was brought to our notice with certitude that these gadgets require constant replacement almost after four years at the maximum . We find that the Tribunal while adjudicating the matter has also taken into consideration various case laws decided by the Hon ble Supreme Court of India including Assam Bengal Cement Co. Ltd., Vs. CIT reported as 27 ITR 34 (SC); Empire Jute Co. Ltd., Vs. CIT reported as 124 ITR 1 (SC); Alembic Chemical Works Co. Ltd., Vs. CIT reported as 177 ITR 377 (SC); and the order of the Tribunal in the case of M/s. Vijayeswari Textiles Ltd., in ITA No. 963/Mds/2011 for AY. 2006-07 dated 23-08-2011. The co-ordinate bench of the Tribunal after discussing the facts of the case and the aforesaid decisions of the Hon ble Apex Court came to the conclusion that the expenditure incurred by the assessee on introducing the Compact Spin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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