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TMI Blog2008 (5) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate authority is superior to the Assessing Authority the order of Assessing Authority merges, on the issue contested, in the order of the appellate authority. The powers of the first appellate authority are co-extensive and co-terminus with that of the Assessing Officer and hence, on facts, once the appellate authority finds that the facts recorded by the Assessing Officer are not correct, in the proposed questions, there should be no suggestion to the contrary. - 63 of 1998 - - - Dated:- 5-5-2008 - D. A. MEHTA and Z. K. SAIYED JJ. Manish R. Bhatt for the Commissioner. None appeared for the assessee. JUDGMENT The judgment of the court was delivered by D. A. MEHTA J. - The Income Tax Appellate Tribunal, Ahmedabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was of an enduring nature. He, therefore, disallowed the said expenditure. 3. The assessee carried the matter in appeal before the Commissioner (Appeals), who came to the conclusion that the commitment charges are incurred in respect of debentures issued by the company to acquire more working capital and were thus wholly and exclusively incurred for the purposes of business. In relation to the amount spent towards repairs and replacement, it was held by the Commissioner (Appeals) that the expenditure was incurred for the purposes of running the existing auto loom shed in a more efficient manner. 4. The Revenue assailed the order of Commissioner (Appeals) before the Tribunal. The Tribunal vide impugned order dated 8.5.1998 agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a deduction under sec. 36 of the Act. 8. The aforesaid findings of Commissioner (Appeals) have been confirmed by the Tribunal. Admittedly, money borrowed by issuance of debentures is in the nature of loan and cannot assume characteristic of investment. In fact, the assessee is under a liability to return such borrowed funds upon maturity of debentures or earlier, if the term of the debentures so provide. Therefore, the expenditure in the nature of commitment charges at the time of issuing such debentures would be on revenue account only, considering the fact that the expenditure had been incurred in a existing business. Even otherwise, the position in law is well settled and expenditure which is incurred even on capital account would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenditure before recording the aforesaid findings. In the circumstances, the appellate authorities have rightly examined the issue by appreciating as to whether the quantum of expenditure is substantial when compared to gross block of assets so as to suggest that there is a replacement of assets on capital account. It has been found on facts that the expenditure is not very high when compared to gross block of assets in light of the depreciation claimed and allowed during the year which comes to the tune of Rs. 2.82 crores. 12. Hence, in the facts and circumstances of the case, even as regards second question, it is not possible to record that any error in law has been committed by Commissioner (Appeals) and the Tribunal. According ..... X X X X Extracts X X X X X X X X Extracts X X X X
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