TaxTMI 
TaxTMI 
2019 (7) TMI 676
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....ave considered the facts of the case, submissions of the appellant and order u/s 143(3) r.w.s. 254 and also the remand report of the AO. First of all, the AO in the order u/s 143(3) r.w.s. 254 of the IT Act has not brought out any material on record to establish that the various parts of machine as described in earlier paragraph of this appeal order were independent machine giving enduring benefit to the appellant. The direction of Hon'ble lTAT, Ahmedabad as given by it in ITA No. 1464/Ahd/2007 in the case of appellant was very clear. As per the Hon'ble ITAT, Ahmedabad on perusal of assessment order in which it has been written that Rotor Assembly is a part of X-701 Turbine, was broken and was required to be replaced by new Rotor to run Turbine. As per the Hon'ble ITAT, Ahmedabad its justification was given before the AO also. As per the Hon'ble ITAT, Ahmedabad similarly, that the gas chrornatoqraph, the matter required examination whether the parts so replaced were independent machine or were parts which required to be fitted in place of broken parts of the Turbine. As per the Hon'ble ITAT, Ahmedabad the clear findings were required to be given by the AO which were not available i....
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....As per the AO due to this replacement neither there was increase in production nor new addition of equipment/facility. As per the AO but the replacement was necessitated due to damage observed. As per the AO he was informed that with such repairs, part of Plant operation could be sustained and there was no increase in capacity of the Machine/Plant. As per the AO therefore it could be stated that these Impellers are not independent parts but the same were part of whole System viz. Naraxono Compressor Train WNA Plant. 4.9. Thus, it can be said that the AO himself in his remand report has accepted the fact that Conversion Kit for Pump Block and Set of Impellers for Naraxno Rotor are not independent parts capable of functioning independently, but the same parts of bigger machinery viz. Pump Block in Urea Plant and Naraxno Compressor Train, WNA Plant. The appellant in its rejoinder to the remand report has submitted that earlier CIT(Appeals)-3, Vadodara in its own case while allowing expenditure incurred for replacement of spare and parts. In set-aside proceedings of the Tribunal for A.Y. 2002-03 has observed that replacement of Rotor Assembly and Impeller Assembly is allowable as re....
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....nduring benefit is not only the best to decide that the expenditure is capital in nature. On this issue I agree with the submission of the appellant as made in letter dated 21/02/2016 (i.e. rejoinder to the remand report of the AO) which is reproduced in earlier paragraph of this appeal order. Considering all these facts, it is held that the expenditure incurred by the appellant on account of replacement of Conversion Kit Pump Block and Set of Impellers for Naraxno Rotor are not capital expenditure as the same cannot be treated as independent machinery in itself and they are not capable of manufacturing independently. In view of the this the AO is directed to treat the expenditure incurred on the replacement of Conversion Kit for Pump Block and Set of Impellers for Naraxno Rotor as revenue expenditure and accordingly allow the same. In result, the appeal of the appellant is partly allowed." 4.00. The aforesaid findings recorded by the CIT came to be affirmed by the tribunal holding as under :- "6. We have heard the rival contentions and find that the issue is covered by the earlier orders of ITAT in ITA No.1363/Ahd/2013 dated 17.05.2018 for A.Y.2009-10 and earlier orders as....
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....g the same we dismissed the appeal of revenue on this ground. Further, reliance placed in the case of Shri Mangayarkasi Mills (P) Ltd (supra) is not applicable, as in that case replacement of old machinery with new machinery was treated as capital expenditure, whereas, in the instant case, there is replacement of damaged parts in view of Chartered Engineering Certificate in respect of Turbine Rotor Assembly, Gear Shaft with Gear part, Nozzles Ring, 415V, 3000A 3 PHH PMCC for CPH are the parts of main machine not capable of functioning independently, hence facts are distinguishable. Therefore, the appeal of the revenue in respect of Ground No.1 is dismissed. 13. We have heard the rival contentions and find that the issue is covered by the earlier orders of ITAT in ITA No.1363/Ahd/2013 dated 17.05.2018 for A.Y.2009-10 and earlier orders as mentioned in the order of Tribunal in para 13 to 17 and Tribunal of Surat bench in I.T.A.No.1060/Ahd/2015 A.Y.2003-04 dtd. 27.09.2018 (copy filed) in assessee's own case. Since facts of this year are also same as in A.Y.2004-05 as discussed above for the assessment year 2004-05 by us. Therefore, following the same We dismissed the appeal of Reve....