2025 (12) TMI 1432

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...., 1961 [the Act] dated 23 December 2019 was partly allowed. 2. The assessee's only ground of grievance is the disallowance of professional charges to the extent of Rs. 154,167 on the ground that the expenditure incurred is towards issue of fresh capital and same is required to be capitalised and further the learned CIT - A has enhanced this disallowance made by the assessing officer on account of repairs and maintenance of plant and machinery by treating it as a capital in nature on the ground that it provided enduring benefit to the assessee. 3. Brief facts shows that the assessee is a company, engaged in the business activity of manufacturing of drugs and pharmaceuticals such as manufacturing of hard gelatine capsule sales, hard cel....

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..... The assessee stated that these expenditure are normal, routine repairs and Maintenance expenses, does not increase any production capacity and also do not give any enduring benefit to the assessee. Therefore it was claimed that these expenditure are revenue in nature. The learned assessing officer did not accept the reply of the assessee because of the reason that according to him the narration of the expenses suggest that these expenses are capital in nature but claimed as repairs and maintenance expenditure therefore he disallowed a sum of Rs. 1,588,668 holding that these are capital expenditure. On appeal before the learned CIT - A, he found that that the expenditure in the table shown by the learned assessing officer has an arithmetic....

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....erefore, the orders of the learned lower authorities on this issue are on rock solid foundation. 8. I have carefully considered the rival contention and perused the orders of the learned lower authorities. This is challenged as per ground No. 2 of the appeal where the assessee incurred expenditure on repairs and maintenance part of the lower authorities have considered them to be capital expenditure in nature. The learned CIT - A has considered the expenditure on purchase of magnetic enclosure, magnetic bullet and permanent magnets to be a capital expenditure. These are the items which are used to remove ferrous contaminations such as iron and steel from free-flowing materials and are installed in pipelines to capture and retain ferrous ....

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....so not held it to be a capital expenditure. Though there may not be the criteria for deleting the disallowance but that is also having a persuasive value wherein an independent auditor's report did not say that capital expenditure has been classified as a revenue expenditure in its audited accounts. Even otherwise looking at the nature of the expenditure, details provided by the assessee, the narration produced by the assessing officer and the opinion of the learned CIT - A also does not suggest that these expenditure is capital in nature. Accordingly we allow ground No. 2 of the appeal of the assessee and the direct the learned assessing officer to hold that the expenditure on repairs and maintenance is a revenue expenditure incurred b....