Commissioner Of Income Taxappellant Inchennai-Ltu... All Tcas v. M/S.neyveli Lignite Corporation Ltd.,Corporate Office, P.o.neyveli-607 801.Respondent Incuddalore District...all Tcas

IN THE HIGH COURT OF JUDICATURE AT MADRAS Reserved on: 31.8.2015 & Pronounced on: 12.4.2016 Coram: The Honourable Mr.Justice V.RAMASUBRAMANIANand The Honourable Mr.Justice T.MATHIVANAN Tax Case (Appeal) Nos.279 to 285 of 2015 Commissioner of Income TaxAppellant inChennai-LTU... all TCAs. Vs. M/s.Neyveli Lignite Corporation Ltd.,Corporate Office, P.O.Neyveli-607 801.Respondent inCuddalore District...all TCAs. -----Appeals filed under Section 260 A of the Income Tax Act,against the order of the Income Tax Appellate Tribunal Madras'A' Bench dated 18th July 2012 in ITA Nos.219/Mds/2009,220/Mds/2009,221/Mds/2009,981/Mds/2009,982/Mds/2009,1458/Mds/2011 and 1459/Mds/2011 respectively preferred againstthe Common Order of the Commissioner of Income Tax Appeals,Large Tax Payer Unit, Annanagar West (Extn.) Chennai 101 dated29.08.2008 made in ITA Nos.18,19,20/07-08/LTU (tCA Nos.279 to281/15) and Common order dated 30.01.2009 made in ItA Nos.21 &22/07-08/LTU(A) (TCA Nos.282 & 283/15) and order dated23.06.2011 made in ITA No.38/09-10/LTU(A) (TCA Nos.284 & 285/15preferred against the Assessment order of the a)Assistant Commissioner of Income tAx Circle IV(4),Chennai 34, dated 24.10.2007, 24.10.2007, 20.12.2007respectively made in PAN No.AACN/121C (in TCA No.279, 282,283/15) b)Joint Commissioner of Income Tax Special range VII,Chennai 34 dated 21.10.1998, 09.03.2000 respectively made in PANNo.AACN 1121C(in TCA 280,281/15) c)Deputy Commissioner of Income Tax, Large Tax PayerUnit, Anna Nagar West, Chennai 101, dated 14.12.2009, made inPAN No.AACN 1121C/in TCA Nos.284 & 285/15) for the Assessmentyear 1995-96 (TCA 279/15), 1996-97 (TCA 280/15), 1997-98 (TCA https://hcservices.ecourts.gov.in/hcservices/ 281/15), 1998-99 (TCA 282/15), 1999-00 (TCA 283/15), 1993-94(TCA 284/15), 1994-95 (TCA 285/15) respectively. -----For Appellant: Mr.T.RavikumarFor Respondent : Mr.R.Vijayaraghavan For M/s. Subbaraya Aiyar COMMON JUDGMENT These appeals are by the Revenue, filed under Section 260Aof Income Tax Act, 1961, raising the following questions of law:"(1) A.Y(s).: 1993-94 & 1994-95: Whether onthe facts and in the circumstances of the case theAppellate Tribunal was right in allowing the claimof Expenses incurred on Life Extension Program(LEP) of Thermal Power Station (TPS-1), as RevenueExpenditure ?(2) A.Y(s).: 1995-96 to 1999-2000: Whether onthe facts and in the circumstances of the case theAppellate Tribunal was right in allowing the claimof Expenses incurred on Life Extension Program(LEP) of Thermal Power Station (TPS-1) andexpenditure on rejuvenation of Bucket WheelExcavators (BWE) as Revenue Expenditure?(3) Whether on the facts and in thecircumstances of the case, the Appellate Tribunalis correct in concluding that each machine inThermal Power Station is not capable of generatingpower independently and hence to be viewed as acomposite asset, in contrary to the decision ofSupreme Court in the case of Mangayarkarasi Mills(P) Ltd. [315 ITR 114], wherein, it is held thateach machine should be treated independently assuch and not as mere part of an entire compositemachinery of the spinning Mill?" 2. We have heard Mr.T.Ravikumar, learned Standing Counselfor the Department and Mr.R.Vijayaraghavan, learned counsel forthe assessee. 3. The facts leading to the filing of the above appeals areas follows: (a) The assessee is a Public Sector Undertaking engaged inthe business of generation of electricity and mining of lignite. (b) During the previous years relevant to the assessmentyears 1993-94 to 1999-2000, the assessee incurred expenditure tothe tune of about Rs.252 Crores towards what was termed by themas ''Life Extension Program of Thermal Power Station-I''. https://hcservices.ecourts.gov.in/hcservices/ (c) From assessment years 1995-96 to 1999-2000, theassessee also incurred huge expenditure on rejuvenation ofBucket Wheel Excavator (BWE). 2. We have heard Mr.T.Ravikumar, learned Standing Counselfor the Department and Mr.R.Vijayaraghavan, learned counsel forthe assessee. 3. The facts leading to the filing of the above appeals areas follows: (a) The assessee is a Public Sector Undertaking engaged inthe business of generation of electricity and mining of lignite. (b) During the previous years relevant to the assessmentyears 1993-94 to 1999-2000, the assessee incurred expenditure tothe tune of about Rs.252 Crores towards what was termed by themas ''Life Extension Program of Thermal Power Station-I''. https://hcservices.ecourts.gov.in/hcservices/ (c) From assessment years 1995-96 to 1999-2000, theassessee also incurred huge expenditure on rejuvenation ofBucket Wheel Excavator (BWE). (d) The assessee claimed the expenditure to be Revenueexpenditure allowable under Section 37 or as current repairsunder Section 31(i) of the Income Tax Act. (e) The Assessing Officer, while completing scrutinyassessment under Section 143(3) for the assessment years 1993-94to 1999-2000, held these expenses to be capital in nature, onthe ground that these expenses were incurred after the life spanof the machinery, giving the assessee an enduring advantage andhence, covered by the decision of Hon'ble Supreme Court inBallimal Naval Kishore v. Commissioner of Income Tax [224 ITR414]. (f) The assessee took the matter on appeal, but theCommissioner of Income Tax (Appeals) confirmed the disallowancemade by the Assessing Officer. On the second appeal filed by theassessee, the Tribunal remanded the matter back to the AssessingOfficer to consider the issue de novo. Primarily the Tribunalwas of the view that the admissibility of the claim has to beexamined on the principles laid down by the jurisdictional courtin Janakiram Mills v. Commissioner of Income Tax [275 ITR 403]. (g) The Assessing Officer went into the issue afresh andonce again disallowed the expenditure incurred on Life ExtensionProgram of TPS-I and rejuvenation of Bucket Wheel Excavator(BWE), treating the same as capital expenditure. (h) As against the orders of the Assessing Officer, theassessee preferred an appeal. The Commissioner of Income Tax(Appeals) allowed the assessee's claim, holding that there wasno increase in the production or generation of power capacity,even after the life extension program was carried out and thattherefore, the same could not be treated as capital expenditure.4. The Revenue filed appeals before the Tribunal. But, theTribunal dismissed the appeals, holding that the expenditure onreplacement and overhauling parts of the boilers/BWEs wasincurred for preserving and maintaining the already existingassets and that the object of such expenditure was not to bringa new asset into existence. The Tribunal relied upon thedecision of the Allahabad High Court in Commissioner of IncomeTax v. Renu Sugar Power Co. Ltd. [298 ITR 94] and the decisionof the Supreme Court in Commissioner of Income Tax v. SaravanaSpinning Mills (P) Ltd., [293 ITR 201], to come to the saidconclusion. Aggrieved by the decision of the Income TaxAppellate Tribunal, the Revenue has come up with the aboveappeals, raising the questions of law indicated in paragraph 1above. 5. Though, the Revenue has raised three substantialquestions of law, we think that all of them revolve only aroundone most fundamental question namely as to whether the expenditure incurred by an assessee after the expiry of the lifespan of a machinery, for the purpose of expanding its life span,could be treated as a revenue expenditure or capital expenditure? 5. Though, the Revenue has raised three substantialquestions of law, we think that all of them revolve only aroundone most fundamental question namely as to whether the expenditure incurred by an assessee after the expiry of the lifespan of a machinery, for the purpose of expanding its life span,could be treated as a revenue expenditure or capital expenditure? 6. Though Section 2 of the Income Tax Act definesexpressions such as ''Capital Asset'', "Income'', etc., it doesnot define the expression "expenditure". But, almost all typesof expenditure that one could conceive of, are dealt with in thechapter relating to ''Computation of Total Income'' under theheading ''Profits and gains of business or profession''. 7. Section 31(i) entitles an assessee to a deduction on theamount paid on account of current repairs, in respect of plantor furniture used for the purpose of business or profession. TheExplanation to Section 31 makes it clear that the amount paid onaccount of current repairs shall not include any expenditure inthe nature of capital expenditure. 8. After providing for deduction on various types ofexpenditure, the Act also contains a residuary provision inSection 37(1) which reads as follows:- "Any expenditure (not being expenditure ofthe nature described in sections 30 to 36 and notbeing in the nature of capital expenditure orpersonal expenses of the assessee), laid out orexpended wholly and exclusively for the purposesof the business or profession shall be allowed incomputing the income chargeable under the head''Profits and gains of business or profession''. 9. Though Sections 31 and 37 use the expressions ''Capitalexpenditure'' and ''current repairs'', both these terms are alsonot defined anywhere in the Act. Therefore, Courts haverepeatedly battled with these expressions, to find out whetheran assessee is entitled to deduction or not. 10. In Commissioner of Income Tax v. Mahalakshmi TextileMills Ltd. [66 ITR 710], the Supreme Court was concerned with aquestion as to whether the introduction of a conversion systemin the spinning plant, by replacing certain roller stands andfluted rollers fitted with rubber aprons, constituted revenueexpenditure or not. Since the Tribunal inspected the spinningfactory and recorded a finding of fact that the assessee hadmerely replaced certain old parts, without actually putting inplace a new machinery, the expenditure was revenue in nature.This finding was affirmed by the High Court and the SupremeCourt. But in this case, there was a factual finding to theeffect that certain moving parts of the machinery, due to wearand tear, had to be periodically replaced. However, the old typeof replacement parts were not available in the market and hence,the assessee was compelled to introduce a new system to make theold machinery work. Therefore, this decision of the Supreme Court would have only a limited application. 11. In Commissioner of Income Tax v. Chowgule & Co. Pvt.Ltd. [214 ITR 523], a Division Bench of the High Court ofBombay, was concerned with an interesting situation, where anassessee, who was engaged in the business of marine transport,incurred an expenditure towards the repair of a ship, which,together with the written down value of the ship, exceeded theoriginal cost, but the assessee claimed the expenditure to berevenue in nature. After discussing the scope of the expression''current repairs'' in the popular or commercial sense, theBombay High Court came to the conclusion that the quantum ofexpenditure, high or low, cannot determine its nature.Eventually, the Bombay High Court elicited certain principles inpara 10 of the report, which read as follows:- (i) The amount should be paid on account ofcurrent repairs.(ii) ''Current repairs'' means repairsundertaken in the normal course of user for thepurpose of preservation, maintenance or properutilisation or for restoring it to its originalcondition. (i) The amount should be paid on account ofcurrent repairs.(ii) ''Current repairs'' means repairsundertaken in the normal course of user for thepurpose of preservation, maintenance or properutilisation or for restoring it to its originalcondition. (iii) ''Current repairs'' do not mean onlypetty repairs or repairs necessitated by wear andtear during the particular year.(iv) Such repairs should not bring intoexistence nor obtain a new or different advantage.(v) The quantum of expenditure nor the factthat in the process of repairs, there wassubstantial replacement of the parts of machineor ship, is decisive of the true nature of theexpenditure. (vi) The original cost of the asset is not atall relevant for ascertainment of the true natureof the expenditure on repairs. (vii) The replacement cost of the asset may,however, at times may be used as indicator of thetrue character of the expenditure. If theexpenditure on repairs added to the written downvalue or disposal value exceeds the replacementcost of the asset, a presumption is possible thatit is not a revenue expenditure but expenditure ofcapital nature. Such presumption, of course, wouldbe rebuttable. (viii) The expression ''current'' preceding'repairs' appears to have been used by thelegislature with a view to restricting theallowance to expenditure incurred for preservationand maintenance thereof in its current state incontradiction to that incurred on any improvement or an addition thereto''. 12. In Commissioner of Income Tax v. Renu Sagar Power Co.Ltd. [298 ITR 94], the Allahabad High Court was concerned withthe question as to whether the cost incurred on replacement of aTurbine Rotor, constituted a revenue expenditure or not. Uponfinding that the Turbine Rotor is an essential part of Turbogenerator set and that it is not an independent machinerycapable of generating electricity by itself, the High Court heldthe expenditure so incurred was on account of current repairsand hence, revenue in nature. 13. As a matter of fact the Allahabad High Court followedin Renu Sagar, the decision of the Supreme Court in Commissionerof Income Tax v. Saravana Spinning Mills (P) Ltd. [293 ITR 201].In Saravana Spinning Mills, the Supreme Court was concerned withthe scope and extent of Section 31(i) of the Act as it stoodduring the accounting years ending 31.03.1993 and 31.03.1994.After pointing out the test formulated in New Shorrock Spinning& Manufacturing Co. Ltd., v. Commissioner of Income Tax [(1956)30 ITR 338 (Bom)], which was also approved in Ballimal NavalKishore v. Commissioner of Income Tax [(1997) 138 CTR (SC) 284],to the effect that if the object of the expenditure is not tobring a new asset into existence, nor to gain a fresh advantage,such expenditure could only be revenue, the Supreme Court heldthat an answer to the question whether an expenditure is revenueor capital in nature would depend upon the facts of each caseand upon several factors. But, the Supreme Court limited itsdiscussion in Saravana Spinning Mills, only to the import ofSection 31(i) and did not express any opinion on Section 37(1). 14. In Commissioner of Income Tax v. Sri MangayarkarasiMills (P) Ltd. [315 ITR 114], the Supreme Court was concernedwith the question whether expenditure incurred on replacement ofmachinery amounted to revenue expenditure deductible underSection 37 or current repairs deductible under Section 31.Placing reliance upon the decision in Saravana Spinning Mills,the Court held even in this case that the entire textile millmachinery cannot be regarded as a single asset, replacement ofparts of which can be considered to be for mere purpose ofpreserving or maintaining this asset. Since each machine is anindependent entity, the Supreme Court held that the replacementof an old machine with a new one would constitute the bringinginto existence of a new asset in the place of the old one. TheCourt also pointed out two exceptions formulated in SaravanaSpinning Mills, where replacement could amount to currentrepairs. These exceptions are "(i) where old parts are notavailable in the market (as seen in the case of Commissioner ofIncome Tax v. Mahalakshmi Textile Mills Ltd. ,or (ii) where old parts have worked for 50-60 years". 15. After holding that Section 31 has no application to thecase of replacement, the Court took up for consideration the question whether the expenditure incurred would be deductible atleast under Section 37. Even to find an answer to this question,the Court applied a four way test indicated in Saravana SpinningMills, wherein it was held that expenditure is deductible underSection 37 only if it (a) is not deductible under Sections 30 to36, (b) is of a revenue nature, (c) is incurred during thecurrent accounting year, and (d) is incurred wholly andexclusively for the purpose of the business. 16. A question arose in Commissioner of Income Tax v. M/s.Machado Sons [Tax Case Appeal No.1011 of 2005 decided on27.04.2012] as to whether the expenditure incurred for thereplacement and renovation of a boat is to be treated as revenueexpenditure even though the expenditure was incurred prior tothe user of the asset. In para 14 of the unreported decision,this Court held as follows:- ''As far as the first issue raised by theRevenue that the expenditure was incurred afterthe boat was purchased is concerned, the issuewould have taken a different turn if the assesseehad replaced the entire boat with such amechanism that the repair had brought in atotally new machinery in the place of the oldone. Admittedly, such repair had not resulted ineither in increase in capacity or totally a newoutlook to the machinery so as to bring in aenduring benefit to the assessee. The secondaspect of the matter is that if the repairs weredone at the instance of the assessee by thevendor even before the sale was concluded,certainly, the expenditure is of capital innature. On the admitted fact that the expenditurewere incurred after the purchase by the assessee,the only hurdle that the assessee may have inthis case is that the boat was not put into usebefore the repairs were made to it. But if oneapplies the decision of this Court reported in(1981) 128 ITR 675 (Commissioner of Income Tax,Tamil Nadu-I v. Vayithri Plantations Ltd.), tothe phrase 'used for the purpose of business'used under Section 31 of the Income Tax Act, wedo not think that there should be any hesitancyon our part to accept the plea of the assesseethat the expenditure merits to be consideredunder Section 31 of the Income Tax Act''. 17. A careful look at the above decisions would show thatthough different tests had been formulated by Courts, theapplication of those tests had posed lot of difficulties,depending upon the facts and circumstances of each case. This is https://hcservices.ecourts.gov.in/hcservices/ 17. A careful look at the above decisions would show thatthough different tests had been formulated by Courts, theapplication of those tests had posed lot of difficulties,depending upon the facts and circumstances of each case. This is https://hcservices.ecourts.gov.in/hcservices/ why the Supreme Court pointed out in Saravana Spinning Millsthat the answer to the question would depend upon the facts andcircumstances of each case. Therefore, we shall now get back tothe facts of the case. 18. In a Note submitted by the learned counsel for therespondent/ assessee, the following are indicated as the stepstaken in so far as the boiler is concerned:- (a) Electricity is generated in Thermal Power Station-I, Neyvelifrom the units consisting of boilers, turbines, generator andtransformer. Steam generated in the boiler drives steam turbinethat is coupled to the generator which generates electric power.(b) The high-pressure parts of boiler namely, super heaters andMain Steam line are subjected to creep damage and have a servicelife or around 1,80,000 hours. Pressure parts, namely waterwalls, economizer, air heaters and auxiliary equipment namelyfuel pulverizers, mills, draught fans etc. are subjected tocorrosion, erosion, wear and tear. Thus, the performance of theboiler and also the safe operating ability of critical pressureparts of the boiler got eroded. (c) The components subjected to creep damage namely superheaters, main steam line and high-pressure valve were replacedin full. Other high-pressure parts were inspected for damage,thinning out of tube wall thickness, etc., and were partiallyreplaced to the extent required.The following components were replaced completely in theBoilers:(1) Ceiling super heaters, connective super heater, screen superheater along with their headers and inter connecting pipe. (2) Boiler condenser and injection at temperator. (3) Rear side water wall.(4) Economiser and their transfer pipes. (5) Main steam line with valves and fittings.(6) High pressure valves.(7) Air and gas ducts compensators.The following components were replaced partially afterinspection. (1) Front and side water walls.(2) Boiler Drum internals.(3) Air Heaters(4) Air and Gas ducts(5) Feed water and injection pipe line(6) Boiler shield and hydraulic seal(7) Lignite pulversion mills Following equipments were overhauled.(1) Induced and forced draught fans(2) Belt Feeder(3) Slag conveyor and their systematic.(4) Ash handling system.Turbine, Generator and Transformer. (2) Boiler condenser and injection at temperator. (3) Rear side water wall.(4) Economiser and their transfer pipes. (5) Main steam line with valves and fittings.(6) High pressure valves.(7) Air and gas ducts compensators.The following components were replaced partially afterinspection. (1) Front and side water walls.(2) Boiler Drum internals.(3) Air Heaters(4) Air and Gas ducts(5) Feed water and injection pipe line(6) Boiler shield and hydraulic seal(7) Lignite pulversion mills Following equipments were overhauled.(1) Induced and forced draught fans(2) Belt Feeder(3) Slag conveyor and their systematic.(4) Ash handling system.Turbine, Generator and Transformer. These major components were overhauled with the replacement ofworn out parts. These expenditure are classifiable as currentrepairs, as they do not bring new asset into existence.19. In so far as BWE is concerned, the assessee claims tohave done the following:-Rejuvenation of Bucket Wheel Excavator (BWE) of Mine-1:The following critical items are replaced.(i) Crawler Pads(ii) All the six crawler frames with drivers assemblies (for 3tracks) including the mechanical components.(iii) Traverse box of self aligning track(iv) Tower frame complete including pully mast(v) Bucket Wheel boom completely(vi) Discharge Boom complete (vii) Main slewing ball race and main slewing gear box shell(viii) Bucket wheel Boom hoist winch drum (ix) All the hose winch ropesThe following non-critical items are replaced:(i) Secondary structures like walk way and stair case for undercarriage, turn table, Bucket Wheel boom, discharge boom,intermediate boom and counter weight boom.(ii) Motor foundation and Motor covers for all the drivers. (iii) Cabin and houses.The following components have been subjected to onlystrengthening/repair:(i) Steering tiller (FST and RST)(ii) Under carriage(iii) Turn table(iv) Counter weight boom and Box(v) Intermediate structure.20. On the basis of the nature of the repairs andreplacement carried out by the assessee to the boiler as well asto BWE, it is contended by Mr.Vijayaraghavan, learned counselfor the assessee that the expression "current repairs" denotesthe repairs for the purpose of preserving or maintaining analready existing asset. It does not bring about a new asset intoexistence, nor does it give a new or different advantage.Therefore, he contends that the test of improvement or advantageis not relevant to determine whether the repair was currentrepair or not. It is his further contention that the magnitudeof the expenditure cannot also determine whether something iscurrent repair or not.21. In order to test the correctness of the abovecontention, it is necessary to have a look at the provisions ofSections 31 and 37. 22. Under Section 31, the amount paid on account of currentrepairs to plant or furniture used for the purpose of businessor profession shall be allowed as deduction. But, theExplanation to Section 31 qualifies the general rule by stating https://hcservices.ecourts.gov.in/hcservices/ that the amount paid on account of current repairs shall notinclude any expenditure in the nature of capital expenditure.23. Though the Act defines the expression "income", it doesnot define either the expression "expenditure" or the expression"repairs or current repairs". However, several heads ofexpenditure are separately dealt with under Sections 35 and 35Ato 35E. 24. Section 37(1) states that any expenditure laid out orexpended wholly and exclusively for the purpose of business orprofession shall be allowed in computing the income chargeableunder the head "Profits and gains of business or profession".But, Section 37(1) excludes three items of expenditure. They are(i) expenditure of the nature described in Sections 30 to 36,(ii) expenditure in the nature of capital expenditure, and (iii)expenditure in the nature of personal expenses of the assessee. 24. Section 37(1) states that any expenditure laid out orexpended wholly and exclusively for the purpose of business orprofession shall be allowed in computing the income chargeableunder the head "Profits and gains of business or profession".But, Section 37(1) excludes three items of expenditure. They are(i) expenditure of the nature described in Sections 30 to 36,(ii) expenditure in the nature of capital expenditure, and (iii)expenditure in the nature of personal expenses of the assessee. 25. Therefore, if an item of expenditure falls within any ofthe categories indicated in Sections 30 to 36, the same isentitled to deduction as per the provisions of those Sections.But, any expenditure which does not fall within the scope ofSections 30 to 36, but which may still qualify while computingthe income chargeable under the head "Profits and gains ofbusiness or profession", will be covered by Section 37(1). 26. But, what is important to note is that under bothprovisions, namely Section 31 as well as Section 37(1), capitalexpenditure is excluded. If an amount paid on account of currentrepairs is in the nature of capital expenditure, Section 31cannot be invoked. Similarly, Section 37(1) cannot also beinvoked. 27. Keeping the above in mind, if we have a look at theorder of the Tribunal, it could be seen that admittedly theassessee's power generation plant was installed in the year1962-1970 comprising of 9 units. The power generation plantcumulatively accounted for 600 MW of capacity. The assessee'scase was that they had erected one boiler for each 50 MW ofpower generation and the boilers worked for 12 years. Eachboiler contained several parts, some of which were replaced. 28. During the assessment years 1993-94 to 1999-00, theassessee incurred the following expenditure towards replacementof various components in boilers and components of BWE. The yearwise break-up of the expenditure was as follows: 29. The Tribunal thought that so long as the assessee hadnot replaced the entire boiler/BWE and what were replaced wereonly part of the boiler, the expenditure incurred towards thesame was only to preserve and maintain the existing assetswithout any enduring advantage. In such a view, the Tribunalheld in favour of the assessee. The Tribunal also went on thefooting that if a new plant has to be commissioned, it wouldcost Rs.4.5 Crores per MW and that the total project cost for600 MW would run to Rs.2700 Crores. Hence, the Tribunal foundthat the amount of expenditure actually incurred by theassessee, could not be taken to be of such a huge nature as toproject it as capital expenditure. 30. Assailing the order of the Tribunal, it is contended byMr.T.Ravikumar, learned Standing Counsel for the Department thatthe assessee originally capitalised the expenditure and claimeddepreciation, but reversed it later. The expenditure incurredwas not done within the life span, but done beyond. As per thestatute, the life span was about 25 years. But, the plant andmachinery had worked for 35 years only after which the mainparts were replaced. The expenditure was incurred as an one timeexpenditure and the same resulted in an increase in the powergeneration. Therefore, the learned Standing Counsel contendedthat the Tribunal was wrong in its conclusion. 30. Assailing the order of the Tribunal, it is contended byMr.T.Ravikumar, learned Standing Counsel for the Department thatthe assessee originally capitalised the expenditure and claimeddepreciation, but reversed it later. The expenditure incurredwas not done within the life span, but done beyond. As per thestatute, the life span was about 25 years. But, the plant andmachinery had worked for 35 years only after which the mainparts were replaced. The expenditure was incurred as an one timeexpenditure and the same resulted in an increase in the powergeneration. Therefore, the learned Standing Counsel contendedthat the Tribunal was wrong in its conclusion. 31. On the contention of Mr.T.Ravikumar, learned StandingCounsel that the assessee originally capitalised theexpenditure, but reversed the same later, we have to point outthat there cannot be any estoppel in such cases. The questionwhether a particular expenditure would fall within thedefinition of the expression "current repairs" under Section 31(i) or not, does not depend upon what the assessee did or didnot. After all if the expenditure is capitalised, the assesseetakes the benefit of depreciation. If the expenditure is treatedas revenue expenditure, it is either taken as an expenditureunder Section 37(1) for computing income chargeable under thehead "Profits and gains of business or profession" or treated as"current repairs" entitled to deduction under Section 31(i).Therefore, the contention of the learned Standing Counsel cannotbe accepted. 32. There was a clear finding in the order of assessmentthat the assessee had two options. The first option was toinstall a new plant which would have costed about Rs.4.5 Croresper MW with a longer gestation period. The second option was togo in for the life extension program at a cost of Rs.0.44 Croresper MW with a shorter gestation period. These findings of factrecorded by the Assessing Officer is accepted by the Revenue.Therefore, what follows out of these findings of fact, is thequestion to be addressed. 33. After having found that there were two options open tothe assessee and that the assessee had gone in for a cheaperoption (almost 1/10th of the cost of first option), theAssessing Officer fell into an error in treating both options tobe of the same nature. This error in the reasoning of theAssessing Officer was rejected by both the Appellate Authoritieson the basis of the principles of law enunciated in variouscases which we have discussed above. Therefore, we are of theconsidered view that the CIT (Appeals) as well as the Tribunalwere right in deciding the issue in favour of the assessee.Hence, the questions of law are answered against the Revenue andthe appeals are dismissed. No costs. Consequently, connectedM.Ps. are closed. //True Copy// Sd/-Assistant Registrar(CS-IV)Sub Assistant Registrar gr/kpl To 1. The Income Tax Appellate Tribunal,'A'Bench, Chennai. 2. The Commissioner of Income tax,Appeals (large Tax Payer Unit),Anna Nagar, Western Extension,Chennai 101. 3. The Joint Commissioner of Income Tax,Special Range VII, Chennai 34. 4. The Deputy Commissioner of Income TaxLarge Tax Payer Unit,Anna Nagar West, Chennai 101. https://hcservices.ecourts.gov.in/hcservices/ 5. The Assistant Commissioner of Income Tax Circle (IV)(4)Chennai 34. 1 cc to M/s.Subbaraya Aiyar, Advocate, sr.22966+2 ccs to Mr.T.Ravikumar, Advocate, sr.22661 TCA Nos.279 to 285 of 2015. msm cokra 25.04.2016