2015 (2) TMI 118

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....y considered. 2. Both these appeals are admitted on the following question of law:- "Whether, on the facts and circumstance of case, the Appellate Tribunal was right in law in deleting the addition made on account of expenses incurred for replacement of membrane cells-II, treating the same as capital expenditure, by following the rule of consistency and without considering the issues on merits?" 3. We have heard Mr.Parikh, learned counsel appearing for the appellant - Revenue and Mr.Shah, learned counsel appearing for the respondent - Assessee. 4. The short facts of the case appear to be that the A.O., for the A.Y. 1999-2000, vide order dated 26.03.2002, treated expenditure of Rs. 25,13,20,259/- for replacement of remembraning i....

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....preaded over 3 to 5 years of the membrane and, therefore, it has been rightly held by the A.O. as well as by C.I.T. (Appeals) and the Tribunal has committed error in holding against the Revenue by treating the expenses as revenue expenditure and not the capital expenditure. Mr.Parikh, learned counsel also relied upon the decision of the Apex Court in case of Commissioner of Income Tax V/s. Saravana Spinning Mills P.Ltd. reported in 293 ITR 201(SC) and contended that the A.O. has referred to the said decision and has relied upon the same for mentioning that the expenditure was capital expenditure and not revenue expenditure. 7. Whereas, Mr.Shah, learned counsel appearing for the Assessee contended that the rule of consistency should have ....

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.... irrespective of whether the assessee is the owner of the assets or has only used them. The expression "current repairs" denotes repairs which are attended to when the need for them arises from the viewpoint of a businessman. The word "repair" involves renewal. However, the words used in Section 31(i) are "current repairs". The object behind Section 31(i) is to preserve and maintain the asset and not to bring in a new asset. In our view, Section 31(i) limits the scope of allowability of expenditure as deduction in respect of repairs made to machinery, plant or furniture by restricting it to the concept of "current repairs". All repairs are not current repairs. Section 37(1) allows claims for expenditure which are not of capital nature. Howe....

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....bserved thus:- "11.1. The aforesaid decision has been followed by the Hon'ble jurisdictional High Court in their subsequent decision in Lalludas Children Trust V/s. C.I.T., 251 ITR 50(Guj). Similar view has been taken in the other decisions relied upon on behalf of the assessee as also in several cases including in Arihant Builders Developers & Investors (P) Ltd. v. ITAT (2005) 277 ITR 239 (MP), Asstt. C.I.T. V/s. Gendalal Hazarilal & Co. (2003) 263 ITR 679 (MP), C.I.T. V/s. Neo Poly Pack (P) Ltd. (2000) 245 ITR 492 (Delhi), 4. Dhansiram Agarwalla V/s. C.I.T. (1996) 217 ITR 4 (Gauhati). C.I.T. V/s. Shiv Sagar Estate (2002) 257 ITR 59 (SC). Union of India V/s. Satish Pannalal Shah (2001) 249 ITR 221 (SC). In the case of CWT V/s. M.K. Gupt....