AI Drafter 
TaxTMI 
TaxTMI 
2021 (11) TMI 139
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..../B3/CIT(A)-2 & CIT(A)-6, involving proceedings u/s. 143(3) of the Income Tax Act, 1961 [in short, 'the Act']; respectively. Heard both the parties. Case files perused. 2. We come to assessee's "lead" A.Y. 2013-14's appeal ITA No. 609/Hyd/2019 raising the following substantive grounds: "2. The Commissioner (Appeals) erred in sustaining half (50%) of the ad hoc disallowance of 25% made in respect of miscellaneous expenditure amounting to Rs. 40,70,292. Having regard to the nature of expenditure location and scale of operations and the fact that there was no banking facility available at the site or nearby villages. the ld. Commissioner (Appeals) ought to have deleted the ad hoc disallowance made by the AO. ....
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....nue expenditure are incorrect". 3. Coming to the former issue of miscellaneous expenditure disallowance made by the Assessing Officer and partly upheld in the CIT(A)'s lower appellate discussion, the learned counsel's sole argument before us is that the same involves various heads incurred at the corresponding civil construction contracts sites wherein banking facilities are not always available. The Revenue's argument on the other hand is that the assessee failed to prove all the impugned expenditure head by filing all the cogent supportive evidence. Faced with this situation and more so when both the parties have failed to justify their respective stands in entirety, we deem it appropriate that a lumpsum estimated disall....
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....Conveyer belt and Rollers and Structure (required for movement of conveyer belt) were claimed as a revenue expenditure by the appellant whereas the AO noted that the same has to be capitalized being items of enduring nature. In the A.Y. 2013-14, the above items were capitalized and in the subsequent A.Y. i.e. A.Y. 2014-15 and 2015-16, one more item of Ventilation Ducting was also capitalized. There was no claim of Ventilation Ducting in A.Y. 2013-14. The issue regarding capitalization of these items are discussed separately as under: 1. Rails and Track Cross: The appellant has undertaken the activity of the construction or tunnel. In simple parlance, the appellant needs to construct a model of movement for goods a....
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....evenue expenditure. It is the intrinsic quality of the asset, which is of relevance and not whether the asset acquired has been previously used or number of times it has had previous ownerships with regard to that asset. In the present case the asset which is the Rails and Cross Track have been in use with very marginal wear and tear, and are also not consumable items in nature, therefore the AO has rightly held the same as capital expenditure. The appellant stated that the same will be of no use after the project is complete, is a statement of not much consequence or relevance, as the Rails can against be sold in the open market as there has been not much wear and tear and even otherwise the same can be claimed as a sale ....
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.... than 15 years and the cost of Conveyer Belt increase with the increase in the length of tunnel and the Conveyer Belt installed at the beginning continues to be used for all the 15 years. The same corollary also applies to the issue of Railway Track already discussed above. Thus, the Conveyer Belt have enduring usage and is not a consumable and is the structure which is permanent in nature for the construction of tunnel, therefore the same has been rightly held as capital expenditure by the AO accordingly. The AO is however directed to give depreciation on the same accordingly on a year to year basis on such capitalization". The factual position is no different in remaining assessment years wherein the only distinction ....