TaxTMI 
TaxTMI 
2019 (4) TMI 621
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....s Contribution on the ground that the same was not deposited in the relevant fund on or before the due date. 3. Brief facts in this regard are the assessee has deducted PF contribution from its employees, but the same was not deposited in the Government account within the due date prescribed under respective laws. This discrepancy was pointed out by the auditors of the company in its report. The ld.AO with the aid of section 2(24)(x) r.w.s. 36(1)(va) of the Income Tax Act and following judgment of Hon'ble Jurisdictional High Court in the case of CIT v. Gujarat State Road Transport Corporation 366 ITR 170 (Guj) disallowed the claim of the assessee. The action of the AO was confirmed by the ld.CIT(A). Assessee is in further appeal before u....
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....e assessee fairly conceded that identical issue arose in the Asstt.Years 2010-11 and 2011- 12. The ld.CIT(A) has partly confirmed the disallowance out of the claim of current repairs to the plant & machineries. In further appeal, the ITAT confirmed the same by its order in ITA No.549/Ahd/2016 and others dated 11.3.2019. The discussion made by the Tribunal in the Asstt.Years 2010-11 and 2011-12 on this issue reads as under: "5. Now we take appeals of the assessee for the assessment years 2010-11 and 2011-12. 6. Assessee has taken four grounds of appeal in each assessment year. In brief, its sole grievance is that the ld.CIT(A)has erred in confirming the disallowance of Rs. 39,53,249/- out of Rs. 52,70,999/- and disallowance....
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....ld of capital, because according to the understanding of the AO, this major repair would give rise to enduring benefit to the assessee in the plant & machinery. In response to the query of the AO, the assessee submitted written submissions, wherein it has pointed out as under: ".... The major expenditure is incurred in the replacement of fire bricks and structures made out of steel and SS & MS plates and other assessories which are installed at the Furnace. The company is manufacturing Glaze Frit which requires heating of the raw material , in the process of manufacturing upto 1500 C. This heating at such high temperatures damages the fire tunnels made from fire bricks and also structures made out of steel and SS & MS Plat....
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.... & machinery which amounts to major replacement and construed as bringing of a new asset. He accordingly disallowed 25% of the expenditure out of the total claimed by the assessee. The finding recorded by the ld.CIT(A) reads as under: "5.3. I have considered the facts of the case, observations of the AO as well as remand report and the submissions of the appellant The expenditures disallowed by the AO as revenue expenditures are in the nature of purchase of MS steel plates, angles, shapes, bars, flanges etc. the AO has made a detailed analysis of the expenditure on repairs and maintenance incurred by the appellant company in its own case for different financial years as well as other companies involved in similar line of business a....
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....he purposes of repairs and maintenances only. 5.3.1. At the same time, from the details furnished by the appellant it is evident that a part of such state materials are required for the repair and maintenance of its kilns. Hence the entire expenditure cannot be held to be disallowable as revenue expenditure. Keeping in view the nature of business of the appellant company, it is held that 25% of such expenses can be allowed as revenue expenditure as needed for the purposes of repair of plants and machineries. The disallowance of balance expenditure as made by the AO is upheld. The appellant gets part relief accordingly." 9. Before us, the ld.counsel for the assessee reiterated his contentions as were raised before the AO. O....
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....nctions, in such situation repairs/substitution of an old machine would not come within the definition of "current repairs". In other words, if the expenditure incurred by the assessee would not result in replacement of old machinery with new, then it may come within the ambit of current repair, but expenditure on such a magnitude which ultimately replaces full machinery within one or two years, then it would not come under concept of "current repair". The AO has observed that the assessee has incurred expenditure to the extent of 60.93% of the value of the machinery in the Asstt.Year 2010-11 and 31.58% in A.Y.2011-12, meaning thereby, by way of this method, almost 92% expenditure were incurred in two years on the value of the plan....