TaxTMI 
TaxTMI 
2016 (11) TMI 943
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.... after allowing depreciation of Rs. 1,88,604 and the Commissioner of Income-tax (Appeals) has erred in confirming the action of the Assessing Officer." 2. Facts in brief as emerged from the corresponding assessment order passed under section 143(3) dated December 23, 2010, were that the assessee in individual capacity is in the business of "grit manufacturing". On verification of accounts it was noticed by the Assessing Officer that the assesses had incurred an expenditure of Rs. 12,57,360 towards purchase of jaw crusher, vibrator, granulator and conveyor. The explanation of the assessee was that the expenditure was towards repair of machinery. On the other hand, the Assessing Officer was of the view that the expenditure was towards purcha....
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....urchase of a new crusher would not constitute current repairs. The expenditure on replacement of a crusher, conveyor granulator, etc., would in fact be in the nature of capital expenditure since it involves substitution of an old machinery/asset by a new asset, having a long life, which would provide advantage of an enduring nature. The authorised representative has submitted that the replacement of machinery is revenue expenditure since there is no finding by the Assessing Officer that the production capacity of plant has increased. The authorised representative has cited the figures of the total cost of production and sales of the assessment years 2008-09 and 2009-10 which is not of much relevance since the actual production and sales ....
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.... heard both the sides. The basic question is that whether a new plant and machinery was purchased by the assessee which could be termed as a new independent capital asset. However, from the details furnished as well as a copy of the invoice placed on record on page 12 of the paper book it appears that the purchases were in the nature of jaw crusher, vibrator, granulator and conveyor totalling Rs. 12,57,360. The appellant has vehemently stated that the purchases were nothing but part of the machinery and because the expenditure was only towards replacement of the machinery, therefore, it was nothing but repairs and maintenance of the machinery, hence, in the nature of "revenue expenditure". As far as the genuineness of the expenditure is con....