The Commissioner Of Income Tax-V v. The Indian Card Clothing Co. Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.2053 OF 2012 The Commissioner of Income Tax-V. v. The Indian Card Clothing Co. Ltd. ..Appellant. ..Respondent. Mr. Tejveer Singh for the Appellant.None for the Respopndent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATE : 1st March, 2013 PC: In this appeal by the revenue following questions have been raised for our consideration. a)Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in allowing the certain part of claim of repairs to plant and machinery disallowed by A.O. as current repairs, when the expenditure incurred therein were meant for improving the quality of the products thus giving an enduring benefit to the assessee and also obtained a new advantage by installing equipments of latest technology in place of old machines? b)Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in not invoking the provisions contained in Explanation to Section 31 of the Income Tax Act, 1961 in the present assessee's case to disallow the expenditure of Rs.1,14,71,685/- being of capital in nature? 2)The basic dispute in the present appeal is whether the the Tribunal was justified in allowing the expenditure on repairs of plant and machinery as current repairs as against the revenue's contention that they are in the nature of capital expenditure. 3) The Tribunal in the impugned order while upholding the order of CIT(A) has recorded a finding of fact that the respondent had only replaced old parts of the machinery. The revenue's grievance before us is that the Tribunal in the impugned order has incorrectly relied upon a decision of the Supreme Court in the matter of CIT v. Saravana Spinning Mills Pvt. Ltd. reported in 163 Taxman 201 as the same is inapplicable to the present facts. However, without going into the applicability of the decision of the Supreme court in the matter of Saravana Spinning Mills Ltd. (supra) on facts the Tribunal has come to a finding that there was no replacement of complete machinery but only some parts of the machinery which were defective are replaced, thus allowable as an expenditure on repairs of plant and machinery. Further, the Tribunal has also held in line with the decision of this court in the matter of CIT v. Chougale & Co. Pvt. Ltd. reported in 214 ITR 523 that quantum of amount spent on repairs is not decisive to decide whether the expenditure is on capital account or revenue account but the test is the nature of repairs. In this case the expenditure was only to replace parts of machinery and not to purchase new machinery. ASN 4)Since the decision of the Tribunal is based on a finding of fact, we see no reason to entertain the proposed question of law. 5)Accordingly, the appeal is dismissed. No order as to costs. (M.S.SANKLECHA, J.) (J.P. DEVADHAR, J.)