TaxTMI 
TaxTMI 
2012 (9) TMI 9
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....the year under consideration the cost of replacement of 15 Air conditioners and stabilizers under buyback scheme aggregating to Rs.3,97,500 was claimed as revenue expenditure under the head "plant and machinery repairs". This claim, however, was not accepted by the Assessing Officer as he took the expenditure to be capital in nature being the amount incurred not on account of repair of plant and machinery, but the same having been spent on the replacement of Air conditioners. He also initiated penalty proceedings under section 271(1)(c) of the Act. 3. In response to show cause notice issued under section 271(1)(c) of the Act, the assessee tendered an explanation contending that there are two opinions on the issue of claim of deduction an....
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....allowance stood upheld by the Appellate Tribunal and the assessee has preferred an appeal before the Hon'ble Allahabad High Court in ITA No. 238 of 2007 whereby the following substantial question of law stands admitted:- "Whether the Tribunal was justified in treating replacement of air conditioners under exchange offer, which does not create new asset in the block of asset, as capital expenditure?" 6. The said question of law has been admitted in view of the judgments in Commissioner of Income Tax & Another vs. Sagar Talkies (2008) 217 CTR (Kar) 74 (DB) and a better view taken by Punjab and Haryana High Court in Commissioner of Income Tax vs. Industrial, Cables (India) Ltd. (2007) 209 CTR (P&H) 167 relying upon Empire Jute Co. Ltd vs....
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.... admitted by the High Court. It was, in these circumstances, that the Tribunal came to the conclusion that the assessee had neither concealed the income nor filed inaccurate particulars thereof. In recording this finding, the Tribunal felt that if two views of the claim of the assessee were possible, the explanation offered by it could not be said to be false. This, however, is not the factual position in the case before us. The facts of the present case thus are distinguishable. 19. It is true that mere submitting a claim which is incorrect in law not amount to giving inaccurate particulars of the income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide. If the claim besides being incor....
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....Heard parties with reference to the material on record and the case laws brought to our notice. Essentially the expenditure on replacement being not for renewal or restoration but for preserving or maintaining the existing asset is not a current repairs. Such a view finds support from the judgment by Hon'ble Apex Court in the case of Commissioner of Income-tax v. Sri Mangayarkarasi Mills P. Ltd. [2009] 315 ITR 114 (SC). In the appellant's case before us the assessee made claim as revenue expenditure on account of replacement of old Air conditioners in their hotel by equal number of new Air conditioners under buyback scheme, for which an exchange offer was available. At the relevant time when the claim was made and particulars thereof were f....