TaxTMI 
TaxTMI 
2021 (12) TMI 54
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....f Rs. 23,62,833/- by holding the same as capital expenditure. 3. That the ld. CIT (A) has erred in confirming disallowance of Rs. 32,95,425/- on account of leave encashment u/s 43B of the Income Tax Act, 1961." "ITA NO.6933/DEL/2017 (AY 2014-15) 1. That the order passed by the ld. CIT (A)-24 is bad in law & on facts. 2. That the ld. CIT (A) has erred in confirming disallowance of Rs. 58,41,637/- on account of leave encashment u/s 43B of the Income Tax Act, 1961." GROUND NO.1 OF AYs 2013-14 & 2014-15 3. Ground No.1 of Assessment Years 2013-14 & 2014-15 are general in nature, hence need no adjudication. GROUND NO.3 OF AY 2013-14 GROUND NO.2 OF AY 2014-15 4. Ground No.3 of Assessment Year 2013-14 and Ground No.2 of Assessment Year 2014-15 are not pressed at the time of hearing, hence dismissed as not pressed. GROUND NO.2 OF AY 2013-14 5. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee company is into the business of manufacturing of Automotive Gears, Gear Boxes, Industrial furnaces and other automobile components. Assessing Officer (AO) called upon the assessee to explain as to why t....
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....nditioning/repair of plant and machinery as capital expenditure?" 10. Ld. AR for the assessee challenging the impugned order passed by the ld. CIT (A) contended inter alia that when the machinery viz. WWW INI Bore Grinder, WMW INI 77501, etc. got defected it needs repair and by getting the same repaired no new asset created and has placed on record production chart available at page 9, inspection and investment proposal note dated 02.03.2010 highlighting the problem of "size variation", said proposal of repair was prepared by unit head and approved plan available at page 23a and 23b of the paper book and he has also filed purchase order available at page 10 & 11 of the paper book by placing on file POS detailing sharpline scope of work available at pages 16 to 22 of the paper book; that as per production report initially, efforts were made to rectify the defects but when it failed, proposal was put up by the Unit Head suggesting overhauling of the machinery for which note was prepared in March, 2010; that machinery remained in operating state till March 2010 and thereafter order was placed to Sharpline Automation for supply of CNC Control Panel and to do various jobs and total a....
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.... (ix) Copy of Commissioning Report dated 27.07.2012; (xii) Annexure for PO dated 19.05.2010 & 20.05.2010; (xiii) Copy of capital investment proposal note dated 02.03.2010; and (xiv) Quotation for purchase of new machine. 14. We have duly perused aforesaid documents viz. production chart, available at page 9 of the paper book, capacity proposal note dated 02.03.2010, highlighting the problem of "size variation" available at pages 23a & 23b of the paper book, quotation for purchase of new machine available at pages 27 to 41. All these facts go to prove inter alia that from the production chart available at page 9, it is proved that machine was not operating state in April, 2010; that from the inspection and investment proposal note dated 02.03.2010 available at pages 23a and 23b, it is proved that there was a problem of "size variation" affecting the repair of the machine; that from the internal production report regarding WMB Internal Grinding machine which was giving problem due to size variation, proposal for overhauling the machine was put up and on the basis of which order was placed with Sharpline Automation for supply of CNC Control panel ....
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.... wholly or partly. Ordinarily, the insertion in a machine of new parts for old and worn out parts is in the nature of current repairs or revenue expenditure, even if the old parts are required to be replaced after a long time. The mere fact that the repairs result in all improvement is not enough to take the repairs out of the category of current repairs. The old principle invoking the test of improvement has to be applied with discernment in the present age when the march of technology and the unending fabrication of new materials and products make even current repairs, primarily, so called yield improvement in varying degrees. Therefore, we are of the view that the expenditure incurred by the assessee on repairs of machinery in the present years under appeal is a revenue expenditure allowable for deduction to the assessee. We, therefore, in view of the facts of the case in each of the assessment year under consideration, confirm the orders or the CIT (A) and dismiss the ground of appeal of the Revenue for each of the five assessment years under consideration. 16. Identical issue has been decided in assessee's own case in AY 2012-13 by the ld. CIT (A) vide order dated 23.06.201....