2010 (12) TMI 783

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....ddition of Rs.1,33,17,366/- made by the AO disallowing the assessee's claim for deduction as revenue expenditure towards purchase of GC sheets, aluminium sheets and new fabrications for replacing the roof of the factory. The CIT(A) ought to have appreciated that the assessee company had undertaken extensive renovation of the factory building by replacing the roof and other fixtures required to house the machinery which resulted in enduring benefit to the assessee and therefore the said expenditure ought to have been treated as capital expenditure.   3. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and that o....

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....ssee has carried out extensive repairs and renovation and therefore the same is to be treated as capital expenditure. In support of his contention, he placed reliance upon the decision of the Hon'ble Supreme Court in the case of Ballimal Naval Kishore vs. CIT (224 ITR 414)(SC) wherein it has been held that the expenditure for preserving or maintaining existing asset (and not for renovation or restoration) only would be current repairs and where new machinery, furniture, sanitary fittings and electrical wiring are installed in a cinema theatre and extensive repairs are carried out to the structure of the building these are not current repairs.   Shri S. Anantha, Learned counsel for assessee, on the other hand submitted that there was....

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....her, the genuineness of the expenditure has not been doubted by the authorities below.   5.1. The only question before us is as to whether it is capital in nature or revenue in nature. Learned counsel for assessee also brought to our notice recent decision of the Hon'ble Supreme Court in the case of CIT vs. Saravana Spinning Mills P Ltd. (293 ITR 201) (SC) wherein the Hon'ble Supreme Court, after considering the decision in the case of Ballimal Naval Kishore cited supra, has observed that "the simple test that must be constantly borne in mind is that as a result of the expenditure which is claimed as an expenditure for repairs what is really being done is to preserve and maintain an already existing asset and the object of the expen....