Tribunal allows appeal on repair expenses, deems them maintenance, not capital expenditure.

The Tribunal allowed the appeal, overturning the disallowance of repairs and maintenance expenditure amounting to Rs. 37,50,699/-, finding the expenses to be related to preserving and maintaining existing assets rather than capital expenditure.

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Issues Involved:
The judgment deals with the disallowance of repairs to machineries amounting to Rs. 37,50,699/-, treating it as capital expenditure under the Income Tax Act, 1961 for the Assessment Year 2017-18.

Issue 1: Disallowance of Repairs to Machineries

The appeal was filed against the order passed by the ld. Commissioner of Income Tax(Appeals) pertaining to the disallowance of repairs to machineries amounting to Rs. 37,50,699/-, treating it as capital expenditure. The assessment order revealed that certain expenses incurred by the assessee were in the nature of replacement and not repairs. The Assessing Officer (AO) disallowed repairs and maintenance expenses to the tune of Rs. 72,79,477/-, considering them as capital expenditure. The AO relied on the decision in the case of Ballimal Naval Kishore Vs. CIT to support his finding. The assessee argued that due to the corrosive nature of the products manufactured, machinery parts needed to be repaired and replaced to maintain working capability. The ld.CIT(A) partially upheld the AO's order, restricting the disallowance to Rs. 37,50,699/-, finding only a portion of the expenses to be related to replacement. The Tribunal disagreed with the Revenue's conclusion that the replacement expenses were not in the nature of current repairs, emphasizing that the expenses were for preserving and maintaining existing assets. The Tribunal allowed the appeal, stating that there was no reason to uphold the disallowance of repairs and maintenance expenditure.

Conclusion:
The Tribunal allowed the appeal of the assessee, overturning the disallowance of repairs and maintenance expenditure to the tune of Rs. 37,50,699/-.

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