2007 (9) TMI 183

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.... account expenditure?" 2. The facts of the case in brief are as follows:- 3. The respondent assessee is a captive power plant for M/s. Hindustan Aluminium Corporation Ltd. (Hindalco). It is a hundred per cent subsidiary company of Hindalco. During the relevant Assessment Year 1979-80 it had two Thermal Power Plants of generating capacity 67.5 MW each. During the Assessment Year in question, the assessee claimed the revenue expenditure to the extent of Rs.1,05,44,904/- as cost of Turbine Rotor. The said expenditure was disallowed by the Assessing Authority as it was treated as a capital expenditure. The order of the Assessing Authority was confirmed by the First Appellate Authority. In second appeal, the Tribunal after making analysis ....

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....nctioning cannot generate electricity. It is being used in the Turbo Generator Set as its an essential part. On these findings recorded by the Tribunal a question arises - whether the expenditure incurred on the change/replacement of Turbine Rotor is a revenue expenditure or capital expenditure. 7. Considered the respective submissions of the learned counsel for the parties. 8. We find that the controversy stands concluded by the judgment of this Court in the case of Commissioner of Income Tax Vs. Kanodia Cold Storage (supra) wherein it has been held as follows:- "Replacement of worn out parts dies not by itself bring in a new asset. In considering the nature of an expenditure one should consider the productive unit as a whole and ....

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....airs alone can come within the connotation of the word "current repairs" in Section 31(i) of the said Act as it stood at the material time. They are effected to preserve and maintain the asset, viz. air-conditioner or carding machine."................................................................................................................................................................................................................................. ".............The basic test to find out as to what would constitute current repairs is that the expenditure must have been incurred to "preserve and maintain" an already existing asset, and the object of the expenditure must not be to bring a new asset into existence or to obtain a ne....