TaxTMI 
TaxTMI 
2010 (8) TMI 689
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....the same is allowable as a deduction in the year in which it was incurred ? (ii) Whether the Income-tax Appellate Tribunal was justified in treating the expenditure incurred on replacement of membranes as a capital expenditure especially when there is no extra capacity generated and the expense incurred is only for replacement of old and worn out membranes ? (iii) Whether the Income-tax Appellate Tribunal was justified in relying upon the irrelevant fact that the assessee had shown the expenditure incurred on the replacement of membranes in its books of account as deferred revenue expenditure ? (iv) Whether, on the facts and in the circumstances of the case, the amount of Rs. 18,07,00 due to the assessee from PNFC which has been ordered to be wound up by this hon'ble court by its order dated July 21, 2000, is a 'doubtful debt' particularly in view of the fact that on the sale of assets of PNFC by the official liquidator there are absolutely no chances of any unsecured creditor like the assessee to get any amount ? (v) Whether, on the facts and in the circumstances of the case, the action of the authorities in ordering the initiation of penalt....
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....91,401 (Rs. 2,44,76,754-one-third of Rs.1,04,56,059).' 10. The hon'ble Income-tax Appellate Tribunal, Ahmedabad, has discussed various case law which have also been relied upon by the assessee. So I need not discuss these case law individually. Moreover, there is no single case law which is directly on the facts in the present case. There are the case law pertaining to the facts in individual cases. It is a settled law that the decision is given by the hon'ble courts with reference to the question of law and the facts of that case. There is no case law which has been relied upon by the assessee pertains to the replacement of membrane. I am in agreement with the reasons given by the Assessing Officer because of the following reasons : (i) The assessee has claimed the said expenditure only in the computation of income. (ii) In the earlier assessment years, the assessee has been claiming the expenditure in the span of three assessment years. This shows that the assessee himself admits that such expenditure has been enduring benefits. (iii) The ratio of the decision of the hon'ble Income-tax Appellate Tribunal, Ahmedabad, in the case of Amtrex Ap....
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....e Tribunal, Ahmedabad, Amtrex Appliances Ltd. [2005] 94 TTJ 396 (Ahd). Although the decision in the case of Dr. Morepen Ltd. is decided in favour of the assessee but the relevant observations as given by the hon'ble Income-tax Appellate Tribunal in para. 6 of the order by referring the case of Amtrex Appliances Ltd. [2005] 94 TTJ 396 (Ahd) are reproduced as under : 'The learned Departmental representative, in the course of his arguments has relied upon the decision of the Ahmedabad Bench of the Tribunal in the case of Amtrex Appliances Ltd. [2005] 94 TTJ 396 (Ahd). In this case, sales promotion expenditure has been held by the Tribunal to be allowable as one-fifth over a period of five years. It is, therefore, submitted by the learned Departmental representative that in the instant case also, the sales promotion expenses be allowed on the same basis as adopted by the Assessing Officer. We have perused the said decision and find the same stands on an altogether different footing. In the case before the Ahmedabad Bench, the assessee himself had debited only one-fifth amount of the expenditure in its profit and loss account of the year under consideration and spread over the....
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.... (4) CIT v. Cominco Binani Zinc Ltd. [1993] 204 ITR 56 (Cal) ; and (5) Punjab State Industrial Development Corporation Ltd. v. CIT [1997] 225 ITR 792 (SC). 8. On the basis of this, it has been submitted that the entire expenditure should have been allowed as revenue expenditure. 9. We are unable to accept the submission. The assessing authority, the Commissioner of Income-tax (Appeals) as well as the Tribunal held that the expenditure was in the nature of capital expenditure, having regard to the fact that the item in question, i.e., membrane had life of three years and eight years. The item in question is an equipment without which manufacturing is not possible. It is not an expenditure of the nature which is exhausted immediately. There is no single or rigid test for holding an expenditure to be revenue or capital. Generally enduring benefit of an expense, i.e., trade test or new asset test or functional test may be employed for determining the expenditure to be capital or revenue depending upon the nature of the business carried and the nature of expenditure incurred. In the facts and circumstances of the case, the nature of expenditure cannot be....