The Commissioner Of Income Tax, Patiala v. M/S Vishal Paper Industries

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH Date of decision: 16.1.2013ITA No. 203 of 2012 The Commissioner of Income Tax, Patiala ......Appellant. vs. M/s Vishal paper Industries.....Respondent CORAM: - HON’BLE MR. JUSTICE HEMANT GUPTA HON’BLE MR. JUSTICE RITU BAHRI Present: -Ms. Savita Saxena, Advocate for the appellant. ..... Present appeal under Section 260A of the Income TaxAct, 1961 (for short the 'Act') is arising out of an order passed bythe Income Tax Appellate Tribunal (for short the 'Tribunal') on26.3.2012, whereby the expenses claimed by the assessee onaccount of repair & maintenance were allowed though, earlier suchexpenses were disallowed for the reason that such expenses arecapital expenditure in nature. The appellant has claimed thefollowing substantial question of law:- “In the facts and circumstances of the case, whether the ITAT isjustified in deleting the addition of Rs. 45,22,172/- sustained bythe CIT (A) out of Rs. 95,00,109/- on account of disallowance ofexpenditure incurred on purchase of new items ignoring the factthat most of the items purchased by the appellant were new identifiable assets brought into existence and could not be termed ascurrent repairs.” The Commissioner of Income Tax (Appeals) has found that theexpenses under the repair and maintenance account has led to (1) newidentifiable assets (2) their installation had increased life of the existingassets beyond their original estimated economic life and (iii) profitability ofthe concern had substantially increased. Such order was set aside by theTribunal treating such items as capital expenses by the Commissioner ofIncome Tax (Appeals). The learned Tribunal held that the issue whether theexpenditure is capital or revenue in nature, depends on several tests. Nosingle test is universally applicable and infallible in nature. Each item ofsuch expenses is to be seen and considered in the light of facts of each caseand its use. In view of the said fact, the findings recorded by theCommissioner of Income Tax (Appeals) were set aside. Learned Commissioner of Income Tax (Appeals) has found that manyitems were purchased by the assessee which led to the conclusions asmentioned above. We find that the increase of life by repair andmaintenance of the existing assets beyond their original estimated economiclife cannot be a ground to return a finding that it was not a case of repair.Repair and maintenance is in fact necessary not only for achieving theoptimum utilization of machinery but also if possible to extend its economiclife. Therefore, the fact that such installation has increased life beyond theiroriginal economic life cannot be a ground to return a finding that theexpenses incurred were not for repair and maintenance. Similarly, theground of increase in the profitability of concern is again a totally alien todetermine the nature of the repair and maintenance. Increase in profit wouldlead to increase in income, which would be separately taxable but could not be a ground for declining the expenses incurred by the assessee for repairand maintenance. Though the findings returned is that new identifiableassets have been created but the Tribunal has returned a finding that thougheach of the item is useable independently but that such items have beenused for repair and maintenance. With such finding, the expenditure wasallowed. In view of the said fact, we find that the findings recorded bythe Tribunal are the findings of fact. We do not find any substantialquestion of law arises for consideration. Dismissed. (HEMANT GUPTA)JUDGE 16.1.2013preeti (RITU BAHRI)JUDGE