The Commissioner Of Income Tax-2 v. Kochi Refineries Ltd.(Now Merged Withbharat Petroleum Corporation Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL LODGING NO.2017 OF 2012 The Commissioner of Income Tax-2. v. Kochi Refineries Ltd.(now merged withBharat Petroleum Corporation Ltd.) ..Appellant. ..Respondent. Mr.Suresh Kumar for the Appellant.Mr. Girish Dave with Mr. A.K.Jasani for the Respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATE : 1st March, 2013 PC: In this appeal by the revenue for assessment year 1999-01 following questions of law have been raised for our consideration. a)Whether on the facts and in the circumstances of the case and in law the Tribunal was correct in holding that the expenses of Rs.53,90,835/- were incurred towards current repairs merely by following the principles in the assessee's case for earlier years ignoring that the assessee itself had capitalized the said amount in the books of account and these expenses had resulted in creation of an asset of a capital nature and the department has not accepted the decision of the Tribunal in earlier years and appeal u/s.260A has been filed before the Kerala High Court? b)Whether on the facts and in the circumstances of the case and in law the Tribunal was correct in allowing the expenses claimed by the assessee on feasibility studies by relying on the decision of the Tribunal in assessee's case for A.Y 1994-95 to1998-99 ignoring that the expenditure was not related to the study on various aspects of operations carried out by the assessee company i.e. beginning from the purchase of crude oil till the disposal of the petroleum products, and the department has not accepted the decision of the Tribunal in earlier years and appeal u/s.260A has been filed before the Kerala High Court? 2)So far as question (a) is concerned, the Tribunal by the impugned order has held that the respondent assessee being Petroleum refinery has to carry out routine inspection as a safety measure and expenses incurred on the basis of the inspection report on replacing some parts of the machinery is not an expenditure of capital nature but has to be allowed as revenue expenditure. In this case the Tribunal records a finding of fact that the repairs carried out by it on the existing plant and machinery did not result into any new assets coming into existence. Further, the repairs carried out to Tank 90 was also necessary for the functioning of the plant and was only a replacement of a part of the machinery and not the whole machinery. Further, the Tribunal relied upon its decision in the earlier assessment year 1997-98 wherein similar expenditure was allowed as revenue expenditure. As the decision of the Tribunal is based on a finding of fact, we see no reason to entertain question (a). 3)So far as question (b)is concerned the Counsel for the parties state that the Tribunal has followed its order for the earlier assessment years 1994-95 to 1998-99. Moreover, the appeal against the order of the Tribunal for earlier assessment years on this issue was dismissed by the Kerala High Court by its order dated 10/11/2009 in ITA No.210/2009. In view of the above, we see no reason to entertain question (b). 4)Accordingly, the appeal is dismissed. No order as to costs. (M.S.SANKLECHA, J.) (J.P. DEVADHAR, J.)