TaxTMI 
TaxTMI 
2014 (9) TMI 628
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....in law & on facts. 2. (a) That the Ld. CIT(A) has erred in confirming disallowance of Rs. 1,07,200/- on account of Leave encashment u/s 43B of the Income Tax Act, 1961. (b) That the Assessee craves, leaves to alter, amend, vary, add any grounds of Appeal." 2. Right at the outset it was submitted by the Ld. AR that in ITA No- 906/Del/2013 filed by the assessee the amount mentioned in Ground No-2(a) needs to be corrected as on account of a typographic error the amount stated inadvertently is Rs. 1,07,200/- whereas the correct amount should be Rs. 10,72,200/-. The said fact it was submitted would be borne out from para 3.2.1 of the CIT(A) and also evident from the last page of the assessment order wherein the addition of the said amount has been made by the AO. The statement of the Ld. AR was found to be correct and not disputed by the Sr. DR who on perusing the orders concurred with the submissions made. Accordingly the correction of the amount mentioned in ground 2(a) by way of typographic error is allowed to be carried out. 3. A perusal of the record shows that the assessee returned an income of Rs. 9,40,80,294/- which was processed u/s 143(1) of the Income Tax Act, 196....
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.... of the Assessing officer was erroneous because the date of the decision of the Hon'ble Supreme Court is 08.05.2009 and the order of the Assessing Officer was passed much after this date i.e.20.04.2010. The Assessing office was duty bound to make efforts to know about the fate of the SLP filed against the judgement of Hon'ble High Court in the case of M/s Exide Industries Limited vs Union of India (292 ITR 470) which the Assessing Officer failed to do. Hence the order passed by the Assessing Officer is erroneous on this account. The order of the Assessing Officer is also prejudicial to the interest of revenue....Therefore, the Assessing Officer is directed to disallow the claim of allowance of provision of leave encashment and modify the assessment order accordingly. 4.1. Keeping in view the findings of the Ld. CIT, C-1, New Delhi while completing the re-assessment proceedings for the assessment year 2007-08 and 2008-09, amount debited to the books of accounts on account of leave encashment payments and provisions was disallowed under section 148 and 263 respectively. Therefore, relying on my own assessment completed as mentioned supra, an amount of Rs. 10.72 lac is cons....
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....ion of Hon'ble Kolkata High Court which had held the provision as unconstitutional. In directing M/s Exide Industries Ltd. to pay the taxes as if S. 43B(f) is on the statue book, I am of the opinion that section 43B(f) is very much effective as on date. 3.2.7. I am not in agreement with the AR's argument that once the assessee adds back on his own the unpaid provision and pays tax, there could not be any further claim. If one is to interpret the directions of the Hon'ble Supreme Court, one of the options available to the assessee could be that he pays the taxes but makes a claim in the computation of income. However, it is upto the assessee to decide what procedure he would follow in the matter. That would be only a matter of procedure. 3.2.8. In this background I hold that if one goes by the spirit of Supreme Court's remarks as above, prima facie, the Hon'ble Supreme Court was not in agreement with the decision of Hon'ble High Court of Kolkata,. In this background I uphold and confirm the disallowance made by the AO as the wordings of Section 43B(f) are very clear and the amount debited without actual payment during the year cannot be allowed as a ded....
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.... re-conditioning of plant & machinery expenses. In response thereto the assessee submitted as per record letter dated 25.03.2011. Considering the same (specific para 6 and sub-para (a) to (g) thereof) the AO observed that the total amount on account of re-conditioning of plant & machinery works out to Rs. 37,37,444/-. On behalf of the assessee in the assessment proceedings it was contended that the expenditure was incurred on account of current repairs consequently no disallowance was required to be made. The AO was of the view that the said issue had been considered in detail and at great length in 1994-95 assessment year wherein the addition made by the AO which was deleted by the CIT(A) was confirmed by the ITAT and the same has been challenged before the High Court where the issue was pending. He allowed depreciation at the permissible rate and held the expenditure to be capital in nature. 12.1. The specific finding is reproduced hereunder:- 3.2. "As for the expenses of the year under assessment is concerned, the assessee has furnished details in respect of various plant and machinery, detailing scope of work done, copies of bills etc. Vide the reply dated 25.03.2011, the....
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....lying idle. 2. That the nature of the repair clearly demonstrates that expenses consist of (i) Overhauling & replacement of worn out parts (U & V axis) of Gear Grinding Machine-rectifying the variation in output profile. (ii) Repairing of Spindle assembly of HMT Internal Grinder. (iii) Repairing of valves of SL-31 Lappers. (iv) Scrapping and alignments. The expenses were incurred to restore the operational efficiency of Machines and smoothen the flow of production. Some of the worn out parts are replaced. Copies of the bills of repair filed in Assessment proceedings are also enclosed. Assessing Officer has not brought out any evidence on record to say that the nature of the repairs as per 94-95 is same as that of year under Assessment." 13.2. Apart from the above the assessee also made the following submissions:- 3.1.5. "He has also submitted the copies of the bills and vouchers supporting the expenditure incurred which were filed before the AO vide there letter dated 25.03.2011. The AR stated that from these facts it would be clear that no new asset has come into existence. Expenses have been incurred to restore the operational efficiency of the machines. N....
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....inding requirement of the part to be ground. There is always a thin line between what is capital expenditure and what is revenue expenditure. In the instant case, it is clear that the machines have been repaired by spending a considerable amount. However, the quantum of the money spent on repairs alone cannot be a ground for treating it as capital expenditure; when the expenditure itself is in the nature of current repairs. Since the appellant has been able to make out a case that the facts are different for the current assessment year as compared to that of 1994-95, there is no reason to sustain this disallowance. 3.1.9. Considering above facts, I do not find any merit in the disallowance made by the AO. All similar disallowances made for subsequent A.Ys on the ground that ITAT upheld the disallowance of 1994095 have been deleted either by ITAT/Hon'ble High Court and have reached finality (subject to the department's stand on the latest decision for A.Y. 2005-06 and 2006-07). The addition made by treating the expenditure on repairs as capital expenditure is, therefore, deleted." 15. Aggrieved by this the Revenue is in appeal before the Tribunal 16. Ld. CIT DR, Ms.....