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TMI Blog2022 (9) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... easing the capacity i.e. 14870 tonnes of ferro manganese. There is no contradicting material before AO to come to conclusion that the repairs enhances the capacity - the expenditure is meant for preserving and maintaining the existing asset, but not bringing or creating a new asset or advantage. The expenditure being huge is not the consideration to decide whether it is revenue or capital expenditure. The expenditure can be one time affair or recurring affair. Determination of capital or revenue expenditure is totally based on the circumstances of each case. AO s observations are not supported by material, therefore, on overall facts and circumstances, he opined that the expenditure is revenue in nature. CIT(A) has rightly considered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO, the assessee preferred an appeal before the CIT(A). After considering the submissions of the assessee and by relying on the judicial decisions, the Ld.CIT(A) allowed the appeal of the assessee, saying that the expenditure which the assessee has incurred is revenue in nature. 4. Aggrieved by the order of the Ld.CIT(A), the revenue has preferred an appeal before the Tribunal and raised the following grounds : 1. The order of the Ld.CIT(A)-1, Visakhapatnam is erroneous both on facts and in law. 2. The Ld.CIT(A) has erred in directing the AO to delete the addition of Rs.4,58,23,694 treating the same as revenue expenditure instead of capital expenditure, when the AO noted that the nature of work orders given to various pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... htly. The Ld.CIT(A) relied on the judicial precedents and passed the order. Therefore, he pleaded for confirming the order passed by the Ld.CIT(A). 6. We have heard both the parties and perused the material placed on record. There is no dispute regarding quantum of expenditure incurred by the assessee, it is also not in dispute that the assessee has incurred repairs and there is no enhancement of capacity. The Ld.Counsel for the assessee has heavily relied on the decision of Hon ble Supreme Court in the case of CIT Vs. Saravana Spinning Mills Pvt. Ltd. (SC) 293 ITR 201. We have perused the order of the Ld.CIT(A). For the sake of clarity, we extract order of the Ld.CIT(A) as under : 4.4. At the outset, it is not in dispute that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;. It is seen from the details of expenditure that the appellant had spent the monies on their items. One of the items is capable of functioning independently without the furnace. However, the basic furnace i.e. steel shell was not replaced. It was only repaired. The wear and tear depends on the number of times the heats are produced rather than the periodic repairs. 4.5. It is one of the contentions of Assessing Officer that the furnace is procured in 1963 and never used for production is factually wrong. From the details furnished the furnace was procured in 1969 and went for repairs earlier. The expenditure incurred was not capable of increasing the capacity i.e. 14870 tones of ferro manganese. There are no contraverting material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure only. The Ld.AR relied on the decision of ITAT Chennai Bench in the case of ACIT Vs. M/s Kannappan Iron Steel Co.Pvt.Ltd. in I.T.A.No.1951/ Mds/2009 dated 24.06.2011. Perusal of the assessment order, order of the Ld.CIT(A) clearly shows that the total expenditure on repairs was Rs.4,58,23,694/-. No new asset came into existence as such the entire expenditure is allowable as revenue in nature. Apart from this, the Ld.CIT(A) has categorically mentioned in his order that the expenditure incurred was not capable of increasing the capacity i.e. 14870 tonnes of ferro manganese. There is no contradicting material before AO to come to conclusion that the repairs enhances the capacity. He further mentioned that the expenditure is mean ..... X X X X Extracts X X X X X X X X Extracts X X X X
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