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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri Mahavir Singh, JM & Shri Waseem Ahmed, AM]
ORDER Per Shri Mahavir Singh, JM: Both these appeal by revenue and Cross Objection by assessee are arising out of order of CIT(A)-XXIV, Kolkata in Appeal No.1157/CIT(A)-XXIV/Wd-1(4)/12-13 dated 24.12.2012. Assessment was framed by ITO, Ward-1(4), Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2008-09 vide its order dated 31.12.2010.
The only issue in this appeal of revenue is against the order of CIT(A) deleting the addition made by AO on account of repair of plant and machinery as capital receipt. For this, revenue has raised following ground no.1: “1. The Ld. CIT(A) has erred in deleting the addition of Rs.9,53,236/- (Rs.9,23,396/- + rs.29,840/-) made on account of repair to plant and machinery and other repairs.”
3. We have heard rival submissions and gone through facts and circumstances of the case. We find that the AO has made disallowance of repair of plant and machineries at Rs.9,23,396/- and repair to building at Rs.29,840/-. The AO while making disallowance on both the counts has observed as under: “3. Repair to Plant Claim was Rs.11,59,720/-. It is seen out of the above expenses of Rs.9,23,396/- was claimed as revenue expenses but is worth capitalization. Hence, the same is not allowed as revenue expenditure.
4. Repair to building: It is seen that out of the repair work expenses, Rs.101393/- was capitalized. But it is seen that further Rs.3,21,192/- was claimed as revenue expenses but is worth capitalization. Hence, the same is not allowed as revenue expenditure. From the documents filed, it is seen that Rs.29,840/- has been claimed as revenue expenditure which is worth capitalization. Hence, the same is capitalized.”
2 & CO No. 40/K/2013 Marsons Ltd. AY 2008-09 Aggrieved, assessee preferred appeal before CIT(A), who deleted the addition by observing in para 4.3 as under: “4.3. I have considered the submission of the Ld. A/R and also gone through the assessment order. On perusal of the ledger account of repairs and plants and other repairs, it is found that all the expenses have been incurred for regular repairs and maintenance of the Plants. In the present case, all the expenses have be3en incurred for the repairs to the Plant and I am of the opinion that the AO has wrongly treated the repairs to the Plant and other repairs as capital expenditure. Considering the nature of the business, the AO is directed to delete (i) the disallowance of Rs.9,23,396/- out of repairs to plants and (ii) the disallowance of Rs.29,840/- on account of other repairs. These grounds of appeal are allowed.”
Aggrieved, now revenue is in appeal before us.
We find that the assessee has incurred these expenses on repair of plant and machinery as well as repair of building in regular course and no new plant and machinery has been added. The AO has no where discussed how these are capital expenditure despite the fact that these are regular repairs as observed by CIT(A) from the bills and vouchers as well as ledger account. We find no infirmity in the order of CIT(A) and hence, the same is hereby confirmed. Appeal of revenue is dismissed.
In the result, the appeal of revenue is dismissed.
Order is pronounced in the open court on 12.11.2015 Sd/- Sd/- (Waseem Ahmed) (Mahavir Singh) Accountant Member Judicial Member
Dated :12th November, 2015 Jd. Sr. P.S Copy of the order forwarded to: