DCIT, New Delhi V. M/s. Quippo Oil & Gas Infrastructure Ltd., New Delhi

ITA 3886/DEL/2015

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7393 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 11-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 12; 43; 72; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F” DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No. 3886/DEL/2015 Assessment Year 2010-11 Deputy Commissioner of Income Tax, Circle-20(2), New Delhi. v. M/s. Quippo Oil and Gas Infrastructure Ltd., D-2, 5 th Floor, Southern Park, Saket, New Delhi. TAN/PAN: AAACQ1278P (Appellant) (Respondent) Appellant by: Smt. Alka Arren, Adv. Respondent by: Shri T. Kipgen, CIT-DR Date of hearing: 17 02 2022 Date of pronouncement: 08 03 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The c apt io ne d ap p eal ha s be en f i le d at th e i ns ta nc e o f the Re ven ue ag ai ns t the or de r of C o mmi s si on er of I n co me Tax (Ap pe al s) -V II, D el hi (‘ CI T( A)’ i n sh ort ) da ted 1 7. 03 .2 01 5 a ri si ng f ro m th e as se ss me n t ord er d at ed 2 8. 02 . 20 13 p as sed by t he Ass es si ng Of f icer ( AO ) u nd er Sec ti on 1 43 (3 ) of t he I nc o me Ta x A ct , 196 1 (t he Act ) c on ce rn in g A Y 2 01 0- 11 . T he gr ou nd s of ap pe al ra ise d b y t he Re ven ue r ea d a s un der : “ 1 . ( a ) O n t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c a s e , t h e L d . C I T ( A ) h a s e r r e d i n d e l e t i n g t h e d i s a l l o w a n c e o f R s . 1 1 , 8 5, 1 9 , 8 0 1 / - m a d e o n a c c o u n t o f d e p r e c i a t i o n c l a i m e d b y t h e a s s e s s e e a t a h i g h e r r a t e b y n o t c o r r e c t l y i n t e r p r e t i n g t h e p r o v i s i o n s o f s e c t i on 3 2 o f t h e I n c o m e T a x A c t , 1 9 6 1 n t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c a s e . I.T.A. No. 3886/DEL/2015 2 ( b ) b y n o t c o r r e c t l y a p p r e c i a t i n g t h e f a c t s t h a t t he a s s e s s e e i s n o t i n t h e b u s i n e s s o f d r i l l i n g o p e r a t i o n i n o i l f i e l d o f m i n e r a l o i l , b u t a c t u a l l y i s i n t h e b u s i n e s s o f p r o v i d i n g p l a n t a n d m a c h i n e r y o n h i r e o n l y ( c ) b y i n c o r r e c t l y r e l y i n g o n t h e d e c i s i o n o f C I T Vs . H L S I n d i a L t d . T h e f a c t s o f w h i c h a r e n o t s q u a r e l y a p p l i c a b l e i n th e i n s t a n t c a s e o f t h e a s s e s s e e c o m p a n y . 2 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c as e , t h e L d . C I T ( A ) h a s e r r e d i n d e l e t i n g t h e a d d i t i o n o f R s . 2 , 4 0 , 7 2 , 89 8 / - o n a c c o u n t o f r e p a i r a n d m a i n t e n a n c e c h a r g e s c a p i t a l i z a t i o n w i t h ou t a p p r e c i a t i n g t h e f a c t t h a t e x p e n d i t u r e i n c u r r e d w a s f o r i m p r o v i ng t h e c a p a c i t y o f a s s e t s w h i c h b e s t o w e d u p o n t h e a s s e s s e e a b e n e f i t of e n d u r i n g n a t u r e . ” 2. W h en th e ma tt er w as ca lle d f o r he ari n g, ld . co unsel f or t he Re ven ue d ef en de d the ac ti on of th e As ses si ng Of f icer an d su b mitt ed th at ld . CI T( A) pro ce ed e d o n a mi st ake n bel ief of f acts a nd la w. I t was co nt en ded th a t th e as se ss ee has bee n mer el y p ro vi di ng ser vi ce s to oi l a nd g as in du st r y for t he pur po se s of ex pl o rat io n a nd e xt ra cti on of min er al oil whi ch can no t be e qua te d wit h pl an t an d ma c hin er y u s ed i n mi n era l oi l exp lo ra ti on as pe r ent r y at Pa rt A- III -(8 )( xi i) of Ap pe n dix -I of the In co me Ta x R u les , 1 96 2. It was t hu s su b mit te d tha t the ld . CI T( A) ha s wro ng l y ap pl ied t he pr i nci pl es la id d ow n b y t he Ho n’ ble Ju ri sd ict io nal Hi gh Co ur t i n CI T vs . H L S In di a L td. (20 11 ) 33 5 I TR 2 9 2 (De l ). I t was t hu s s ub mi tt ed th at A sse ss in g Of f icer ha s r ig htl y su bs tit ut ed th e a c cel er ate d depre ci at ion ra te f ro m 60 % as c la i med to a n or ma l de pr eci at io n of 15% a s eli gi bl e to as se ss ee. 3. The ld. co un sel f or the a ss es se e, o n th e oth er han d, p oi nte d out t ha t th e a ss es se e i s a pu bl ic li mi te d c o mpa n y eng ag e d, in te r I.T.A. No. 3886/DEL/2015 3 ali a, i n t he b us i nes s of re nd er in g se rv ice s to min era l oil con ce rn s f or d ril li ng op er ati on s on c har te r h ir e bas is b y u si ng ow n o il ri gs f or t he pu rp os e of ex p lor at io n a nd e xtrac tio n of mi ner al o il. I t w as su b mit te d t ha t bo th t he co nd it ion s f or ow ner sh ip of as set as we ll a s us er f o r t he pu rp os es of bu si nes s as con te mp la te d u nde r Se ct io n 3 2 ha s b een f u ll y sa ti sfie d. It w as su b mitt ed th at , i n t he i ns ta nt ca se , t he oi l ri gs use d b ei n g p la nt of sp ec if ic ca te go r y ar e ow ne d b y the a ss es se e a nd use d in dri ll in g ope ra ti on s f or t he pu rp os e of exp lo ra ti on an d ex t rac ti on of min er al o il in t h e f ield of mi ne ral o il c on cer ns, a nd t he ref or e, the ca se of t he a ss ess ee is f ul l y co ver ed b y t he d ec is io n of HLS Ind ia (s up ra ). I t wa s al so p oin te d o ut t hat C o-o rd in at e B e nch of Tri bu na l i n As se ss me nt Ye ar 20 08 -0 9 in its o wn ca se ha s app li ed the p ri nci pl es l ai d do wn in H L S I nd ia an d th ere b eing i d ent ic al f acts , t he re is n o r e aso n to de pa rt f r o m th e v ie w alr ea d y t ake n in thi s re gar d. L d. c o un sel t hu s co nte n de d t ha t no i nte rf er en ce wi th the o rd er of t he l d. CI T( A) is c all ed f o r. 4. W e ha ve ca ref u ll y co ns id ere d th e r i val s ub mi ss ions . L d. CI T( A) h as adj ud i cat ed the is su e i n f avou r of th e ass es see f o r wh ich r el eva nt o pe r ati ve p ara gr ap h is r epr od uc ed h ere in : “ 6 . 1 . T h e a p p e l l a n t i s a c o m p a n y e n g a g e d i n g i v i n g p l a n t &. m a c h i n e r y o n h i r e . T h e p l a n t & m a c h i n e r y i s o i l r i gs o w n e d b y t h e a p p e l l a n t a n d g i v e n o n h i r e t o v a r i o u s m i n e r a l o i l c o n c e r n s l i k e R e l i a n c e I n d u s t r i e s L t d . , O i l e x L t d . a n d O N G C L t d . 6 . 2 . T h e a p p e l l a n t c l a i m e d d e p r e c i a t i o n a t t h e r a te o f 6 0 % o n t h e o i l r i g s w h i c h w e r e g i v e n b y l e a s e s t a t i n g t h a t a s p e r d e p r e c i a t i o n r a t e s , d e p r e c i a t i o n a t t h e r a t e o f 6 0 % w a s a l l o w a b l e o n t h e o i l r i g s w h i c h w e r e g i v e n o n l e a s e t o t h e v ar i o u s o i l c o n c e r n s . 6 . 3 . T h e A O h o w e v e r s t a t e d t h a t d e p r e c i a t i o n w o u l d b e a l l o w a b l e I.T.A. No. 3886/DEL/2015 4 a t t h e r a t e o f n o t 6 0 % b u t 1 5 %. T h e A O s t a t e d t h a t t h e a p p e l l a n t w a s c l a i m i n g h i g h e r r a t e o f d e p r e c i a t i o n o n t h e b a s i s o f c l a u s e 8 ( x i i ) o f p a r t A - I I I o f d e p r e c i a t i o n t a b l e . A s p e r t h i s c l a u s e t h e a p p e l l a n t : 1 . s h o u l d b e a m i n e r a l o i l c o n c e r n a n d 2 . t h e p l a n t & m a c h i n e r y m u s t b e o f a s p e c i f i c c a t eg o r y . 6 . 4 . T h e A O d i d n o t d i s c u s s t h e i s s u e o f t h e s p e c if i c p l a n t & m a c h i n e r y . H o w e v e r , t h e A O d i s c u s s e d t h e i s s u e w h e th e r t h e a p p e l l a n t w a s m i n e r a l o i l c o n c e r n o r n o t . T h e A O s ta t e d t h a t t h e b u s i n e s s o f t h e a p p e l l a n t w a s o n l y t o g i v e o n h i r e p l a n t & m a c h i n e r y . T h e a p p e l l a n t w a s b y i t s e l f n o t a m i n e r al o i l c o n c e r n . T h e A O c i t e d s e v e r a l c a s e l a w s w h i c h d e f i n e d w h a t wa s a m i n e r a l o i i c o n c e r n . T h e A O f i n a l l y c o n c l u d e d t h a t t h e a p p el l a n t w a s n o t a m i n e r a l o i l c o n c e r n . T h e r e f o r e t h e a p p e l l a n t d i d n ot f u l f i l l o n e o f t h e b a s i c c o n d i t i o n s w h i c h e n t i t l e d i t t o c l a i m d e pr e c i a t i o n a t 6 0 % . 6 . 5 . T h e A O a l s o h e l d t h a t t h e a p p e l l a n t h a d q u o t ed t h e d e c i s i o n o f t h e H o n ' b l e D e l h i H i g h C o u r t i n t h e c a s e o f C I T v s . H L S I n d i a L t d . B u t t h e A O w a s n o t f o l l o w i n g t h e d e c i s i o n a s th e S L P h a d b e e n f i l e d b e f o r e t h e H o n ' b l e S u p r e m e C o u r t . 6 . 6 . T h e a p p e l l a n t c l a i m e d t h a t t h e r e w a s n o d o u b t t h a t t h e a p p e l l a n t w a s e l i g i b l e t o c l a i m d e p r e c i a t i o n o n t h e a s s e t s a s i t o w n e d t h e a s s e t s a n d t h e a s s e t s w e r e u s e d f o r t h e pu r p o s e s o f i t s b u s i n e s s a n d p r o f e s s i o n . T h e A O h a s a l s o n o t d o u b t ed t h i s c o n t e n t i o n o f t h e a p p e l l a n t . 6 . 7 . T h e d i s p u t e i s a t w h a t r a t e d e p r e c i a t i o n w o u ld b e a l l o w e d t o t h e a p p e l l a n t . T h e a p p e l l a n t h a s q u o t e d t h e d e c i s i on o f t h e H o n ' b l e H i g h C o u r t o f D e l h i i n t h i s r e s p e c t i n t h e c a s e o f C I T v s . H L S I n d i a L t d . w h i c h c l e a r l y s t a t e d t h a t d e p r e c i a t i o n o f 6 0 % w o u l d b e g i v e n t o c o n c e r n s o t h e r t h a n m i n e r a l o i l c o n c e r n s w h i c h ar e p r o v i d i n g o i l r i g s o n l e a s e . 6 . 8 . I s h a l l n o w c o n s i d e r t h e i s s u e a s t o w h e t h e r d e p r e c i a t i o n I.T.A. No. 3886/DEL/2015 5 w o u l d b e a l l o w e d a t 6 0 % o r 1 5 %. 6 . 9 A s p e r s e c t i o n 3 2 : “ 3 2 . ( 1 ) I n r e s p e c t o f d e p r e c i a t i o n o f - - ( i i ) k n o w - h o w , p a t e n t s , c o p y r i g h t s , t r a d e m a r k s , l i ce n s e s , f r a n c h i s e s o r a n y o t h e r b u s i n e s s o r c o m m e r c i a l r i g h t s o f s i m i la r n a t u r e , b e i n g i n t a n g i b l e a s s e t s a c q u i r e d o n o r a f t e r t h e 1 s t d a y o f A p r i l , 1 9 9 8 , o w n e d , w h o l l y o r p a r t l y , b y t h e a s s e s s e e a n d u s e d fo r t h e p u r p o s e s o f t h e b u s i n e s s o r p r o f e s s i o n , t h e f o l l o w i n g d e d u c ti o n s s h a l l b e a l l o w e d — ] " 6 . 1 0 . T h e r e f o r e , t h e a s s e t s o r t h e o i l r i g s a r e w ho l l y o w n e d b y t h e a p p e l l a n t a n d a r e u s e d f o r t h e p u r p o s e o f t h e b u s i ne s s o f t h e a p p e l l a n t w h i c h i s t o g i v e o n l e a s e t h e a s s e t s . T h e f a c t t h a t t h e a p p e l l a n t i s e n t i t l e d f o r d e p r e c i a t i o n o n t h e o i l ri g s i s a l s o n o t d i s p u t e d b y t h e A O . 6 . 1 1 . T h e a p p e l l a n t h a d c l a i m e d d e p r e c i a t i o n o n t he o i l r i g s a t 6 0 % a s p e r 8 ( x i i ) o f t h e d e p r e c i a t i o n t a b l e . T h i s sp e c i f i e d t h a t i n t h e c a s e o f m i n e r a l o i l c o n c e r n s i n r e s p e c t o f ( a ) p l a n t u s e d i n f i e l d o p e r a t i o n s d i s t r i b u t i o n . Re t u r n a b l e p a c k a g e s ( b ) p l a n t u s e d i n f i l e d o p e r a t i o n s ( b e l o w g r o u n d ) b u t n o t i n c l u d i n g k e r b s i d e p u m p s i n c l u d i n g u n d e r g r o u n d t a n ks a n d f i t t i n g s u s e d i n f i e l d o p e r a t i o n s ( d i s t r i b u t i o n ) b y m i n e r a l o i l c o n c e r n s d e p r e c i a t i o n w o u l d b e 6 0 %. 6 . 1 2 . A s p e r t h e d e f i n i t i o n o f r i g s : " A l a r g e s t r u c t u r e w i t h e q u i p m e n t f o r r e m o v i n g o i l f r o m u n d e r t h e g r o u n d , e s p e c i a l l y f r o m u n d e r t h e s e a . A s t r u c t u r e a n d a s s o c i a t e d m a c h i n e r y u s e d i n d r i l l in g f o r o i l o r g a s . I t i s u s u a l l y i n t h e f o r m o f a t o w e r . C o n s i s t s o f a n o f f s h o r e p l a t f o r m f l o a t i n g o r f i x e d t o t h e s e a b e d f r o m w h i ch m a n y o i l I.T.A. No. 3886/DEL/2015 6 w e l l s c a n b e b o r e d r a d i c a l l y . ” 6 . 1 3 . T h u s t h e r e i s n o d o u b t t h a t t h e o i l r i g s a r e p l a n t s s p e c i f i e d i n 8 ( x i i ) . H o w e v e r , t h e A O d i s a l l o w e d t h e a p p e l l a n t t h e b e n e f i t o f h i g h e r d e p r e c i a t i o n s t a t i n g t h a t i t w a s n o t a c o n c er n a n d w a s o n l y g i v i n g t h e o i l r i g s o n l e a s e . 6 . 1 4 I h a v e b e e n s h o w n t h e d e c i s i o n o f t h e H o n ' b l e D e l h i H i g h C o u r t i n t h e c a s e o f C I T v s . H L S I n d i a L t d . b y t h e a p p e l l a n t . T h e o b s e r v a t i o n s o f t h e H o n ' b l e c o u r t a r e a s u n d e r : " 4 3 . N o w t h e q u e s t i o n b e f o r e u s i n t h i s r e g a r d i s as t o w h e t h e r t h e a s s e s s e e c a n b e t e r m e d a s a — m i n e r a l o i l c o n c e r n s o a s t o p u t i t i n a p o s i t i o n f r o m w h e r e i t c a n b e e n t i t l e d t o c l a i m de p r e c i a t i o n & 1 0 0 % u n d e r t h e I t e m I I I ( 3 ) ( i x ) ( b ) i n A p p e n d i x - I t o t h e I n c o m e T a x R u l e s , 1 9 6 2 ; a n d f u r t h e r , e v e n i f t h e a s s e s s e e i s no t a m i n e r a l o i l c o n c e r n , c a n i t b e g i v e n b e n e f i t o f t h e a f o r e s a i d pr o v i s i o n o n t h e b a s i s o f n a t u r e o f o p e r a t i o n o f i t s h i g h - t e c h w i r e li n e l o g g i n g a n d p e r f o r a t i o n e q u i p m e n t s . 4 4 . A t t h i s p o i n t , i t w o u l d b e i n t e r e s t i n g t o n o t e t h a t w h i l e t h e a p p e a l a g a i n s t t h e o r d e r o f t h e I T A T d a t e d 1 0 . 0 1 . 20 0 2 , w h e r e b y i t h a s u p h e l d t h e a c t i o n o f t h e C I T ( A ) t o r e v e r s e t h e f r e s h a s s e s s m e n t o r d e r p a s s e d b y t h e A O i n p u r s u a n c e o f t h e d i r e c t i on o f t h e I T A T d a t e d 1 0 . 1 0 . 1 9 9 8 t o d o s o i s f i l e d i n t h i s c o u r t i n t h e y e a r 2 0 0 2 [ l i s t e d b e f o r e u s a s I T A 2 0 8 / 2 0 0 2 ] , h o w e v e r , t h e a pp e a l a g a i n s t t h e o r i g i n a l o r d e r o f t h e I T A T d a t e d 1 0 . 1 0 . 1 9 9 8 w h e r e b y i t h a d r e v e r t e d t h e m a t t e r b a c k t o t h e t a b l e o f t h e A O w a s f i l e d b y t h e r e v e n u e i n t h e y e a r 2 0 0 5 o n l y [ l i s t e d b e f o r e u s a s I T A 1 9 4 / 2 0 0 5 ] . I t i s n o t h a r d t o u n d e r s t a n d t h a t f i l i n g o f t h e a p p e a l, t h o u g h a t a d e l a y e d s t a g e o f t h e c a s e , a g a i n s t t h e o r i g i n a l o r de r o f t h e I T A T i s a n a c t o f p r u d e n c e o n t h e p a r t o f t h e D e p a r t m e n t . Th e r e a s o n b e i n g i s t h a t h a d n o t t h e r e b e e n t h i s a p p e a l a g a i n s t t h e o r d e r d a t e d 1 0 . 1 0 . 9 8 a s p a s s e d b y t h e I T A T , i t w o u l d h a v e b e e n t a k e n b y a s s e s s e e a s a c c e p t a n c e o f t h e a p p r o a c h , a s a d o p t e d b y t h e I T A T , o n t h e p a r t o f t h e r e v e n u e t h a t i f t h e p u b l i c O i l g i a nt s a r e a b l e t o g i v e a t e c h n i c a l c e r t i f i c a t e t o t h e a s s e s s e e r e g a r d i n g th e s i m i l a r i t y o f I.T.A. No. 3886/DEL/2015 7 t h e e q u i p m e n t s a n d t h e n a t u r e o f o p e r a t i o n s t h e n t he m a t t e r w o u l d b e c o m e a s u b j e c t o f t e c h n i c a l i n t e r p r e t a t i o n o f t h e r e a l w o r l d o p e r a t i o n s o f t h e e q u i p m e n t s i n q u e s t i o n r a t h e r a qu e s t i o n w h i c h i s t o b e d e t e r m i n e d b y w a y o f g i v i n g j u d i c i a l i n t e r p r et a t i o n t o t h e s t a t u t o r y p r o v i s i o n s a n d i n c a s e i f t h e c e r t i f i c a t io n t h i n g c o m e s i n f a v o u r o f t h e a s s e s s e e t h e n t h e e n t i r e g e n e s i s o f th e a r g u m e n t s a s b u i l d b y t h e r e v e n u e i n o r d e r t o p u s h f o r w a r d i t s ca s e , w o u l d s t a r t c r u m b l i n g o n i t s f e e t . 4 5 . T h i s t a k e s u s t o t h e o r d e r o f t h e I T A T d a t e d 10 . 1 0 . 9 8 t o r e v e r t t h e m a t t e r b a c k t o t h e t a b l e o f t h e A O t o r e- e x a m i n e t h e m a t t e r a f t e r v e r i f i c a t i o n a s r e q u i r e d u n d e r t h e s a id o r d e r . T h e a r g u m e n t s , w h i c h M s . B a n s a l , t h e l e a r n e d s e n i o r c o un s e l f o r r e v e n u e h a s a d v a n c e d t o d e s t r o y t h e c a s e o f t h e a s se s s e e h a v e b e e n , m o r e o r l e s s , s i m i l a r t h r o u g h - o u t t h e p r o l o n g h i s t or y o f t h e i n s t a n t d i s p u t e . T h e s e a r g u m e n t s h a v e b e e n e v o l v i n g a n d r e vo l v i n g a r o u n d t h e d e p a r t m e n t ' s p o s i t i o n t h a t t h e d e p r e c i a t i o n u n de r I t e m - I I I ( 3 ) , ( I X ) ( a ) a n d ( b ) , i n t h e s c h e d u l e o f r a t e s o f d e p r ec i a t i o n i n A p p e n d i x I t o t h e I T R u l e s , 1 9 6 2 i s a l l o w a b l e t o t he m i n e r a l o i l c o n c e r n s o n l y a s t h e w o r d s ' p l a n t u s e d i n f i e l d o p er a t i o n ( b e l o w g r o u n d ) ' i s r e q u i r e d t o q u a l i f y t h e t e r m — m in e r a l o i l c o n c e r n s a s f o u n d i n t h e a f o r e s a i d p r o v i s i o n a n d t he r e f o r e t h e a s s e s s e e , h a v i n g n o t b e i n g e n g a g e d i n d r i l l i n g o r oi l p r o d u c t i o n , c a n n o t b e g i v e n a s t a t u s o f a m i n e r a l o i l c o n c e r n . T h e l e a r n e d s e n i o r c o u n s e l M s . B a n s a l h a s v e h e m e n t l y c o n t e n d e d b e f o r e u s t h a t t h e b u s i n e s s o f t h e a s s e s s e e i s t h a t o f l e a s i n g a n d t h e e q u i p m e n t s s o l e a s e d b y t h e a s s e s s e e , o n l y s u p p l i e s t h e d a t a t o OI L a n d O N 6 C w h i c h a r e m i n e r a l o i l c o n c e r n . I t i s a l s o s u b m i t t e d b y h e r t h a t t h e n a t u r e o f t h e a s s e s s e e ' s e q u i p m e n t s i s d i f f e r e n t f ro m t h o s e u s e d b y s t a t e r u n m i n e r a l o i l c o n c e r n s a s t h e a s s e s s e e ' s e qu i p m e n t s a r e m o b i l e i n n a t u r e w h i l e t h e e q u i p m e n t s u s e d b y O N G C a n d O I L a r e p e r m a n e n t l y a f f i x e d d o w n t h e h o l e . H e n c e , i t i s n o t e n t i t l e d t o 1 0 0 p e r c e n t d e p r e c i a t i o n . A s o p p o s e d t o t h i s M r . V o h r a, t h o u g h a d m i t t i n g t h a t a s s e s s e e i s n o t a m i n e r a l o i l c o n c e rn , h a s s u b m i t t e d t h a t e v e n i f i t i s n o t p r o d u c i n g a n y o i l n o r h a s b ee n e n g a g e d i n t h e I T A N o s . 1 9 4 / 2 0 0 5 , 2 0 8 / 2 0 0 2 & O r s . C o n n e c t e d M a t t e rs P a g e 4 7 o f I.T.A. No. 3886/DEL/2015 8 5 2 a c t i v i t y o f o i l d r i l l i n g , e v e n t h e n i t i s l a w f u ll y e n t i t l e d t o d e p r e c i a t i o n a l l o w a n c e i n r e s p e c t o f t h e p l a n t a n d e q u i p m e n t o w n e d a n d u s e d b y i t i n c a r r y i n g o u t w i r e - l i n e l o g g i n g o pe r a t i o n s b e l o w t h e g r o u n d i n t h e o i l w e l l s o f m i n e r a l o i l c o n c e r n s a t t h e r a t e o f 1 0 0 p e r c e n t o f t h e a c t u a l c o s t / w r i t t e n d o w n v a l u e t h e r e o f a s p r e s c r i b e d i n i t e m I I I ( 3 ) ( i x ) ( b ) o f t h e t a b l e o f r at e s o f d e p r e c i a t i o n i n A p p e n d i x - I t o t h e I T R u l e s , 1 9 6 2 . 4 6 . A f t e r h e a r i n g l e a r n e d c o u n s e l s f o r t h e p a r t i e s a t l e n g t h o n t h i s i s s u e , w e a r e o f t h e o p i n i o n t h a t t h e R e v e n u e ' s s t an d o n t h i s i s s u e l a c k s s u b s t a n c e . S e c . 3 2 ( 1 ) o f t h e A c t p r o v i d e s f o r a d e d u c t i o n i n t h e c o m p u t a t i o n o f b u s i n e s s i n c o m e , o n a c c o u n t o f de p r e c i a t i o n o f b u i l d i n g s , m a c h i n e r y , p l a n t o r f u r n i t u r e o w n e d b y th e a s s e s s e e a n d u s e d f o r t h e p u r p o s e s o f t h e b u s i n e s s o r p r o f e s s i o n. T h i s p r o v i s i o n r e a d s a s u n d e r : D e p r e c i a t i o n . 3 2 . ( 1 ) [ I n r e s p e c t o f d e p r e c i a t i o n o f — ( i ) b u i l d i n g s , m a c h i n e r y , p l a n t o r f u r n i t u r e , b e i n g t a n g i b l e a s s e t s ; ( i i ) k n o w - h o w , p a t e n t s , c o p y r i g h t s , t r a d e m a r k s , l i ce n s e s , f r a n c h i s e s o r a n y o t h e r b u s i n e s s o r c o m m e r c i a l r i g h t s o f s i m i la r n a t u r e , b e i n g i n t a n g i b l e a s s e t s a c q u i r e d o n o r a f t e r t h e 1 s t d a y o f A p r i l , 1 9 9 8 , o w n e d , w h o l l y o r p a r t l y , b y t h e a s s e s s e e a n d u s e d fo r t h e p u r p o s e s o f t h e b u s i n e s s o r p r o f e s s i o n , t h e f o l l o w i n g d e d u c ti o n s s h a l l b e a l l o w e d — ] [ ( i ) i n t h e c a s e o f a s s e t s o f a n u n d e r t a k i n g e n g a g ed i n g e n e r a t i o n o r g e n e r a t i o n a n d d i s t r i b u t i o n o f p o w e r , s u c h p e r c en t a g e o n t h e a c t u a l c o s t t h e r e o f t o t h e a s s e s s e e a s m a y b e p r e s cr i b e d ; ] ( i i ) [ i n t h e c a s e o f a n y b l o c k o f a s s e t s , s u c h p e r ce n t a g e o n t h e w r i t t e n d o w n v a l u e m a y b e p r e s c r i b e d : ] 4 7 . R u l e 5 o f t h e I T R u l e s , 1 9 6 2 p r o v i d e s t h a t t h e d e p r e c i a t i o n a l l o w a b l e u n d e r s . 3 2 ( l ) ( i i ) o f t h e A c t i n r e s p e c t o f a n y b l o c k o f a s s e t s s h a l l b e c a l c u l a t e d a t t h e p e r c e n t a g e s s p e c if i e d i n t h e I.T.A. No. 3886/DEL/2015 9 I I c o l u m n o f t h e t a b l e o f r a t e s o f d e p r e c i a t i o n i n A p p e n d i x I t o t h e R u l e s , o n t h e w r i t t e n d o w n v a l u e o f s u c h b l o c k o f a s s e t s a s a r e u s e d f o r t h e p u r p o s e o f t h e b u s i n e s s o r p r o f e s s i o n o f t h e a s s e s s e e a t a n y t i m e d u r i n g t h e p r e v i o u s y e a r . T h e c o n c e r n e d e nt r y i n t h e A p p e n d i x I i s P a r t 1 , I I I ( i x ) . T h i s e n t r y r e a d s a s u n d e r : " ( i x ) M i n e r a l o i l c o n c e r n s : a . P l a n t u s e d i n f i e l d o p e r a t i o n s ( a b o v e g r o u n d ) di s t r i b u t i o n r e t u r n a b l e p a c k a g e s . b . P l a n t u s e d i n f i e l d o p e r a t i o n s ( b e l o w g r o u n d ) , b u t n o t i n c l u d i n g k e r b s i d e p u m p s i n c l u d i n g u n d e r - g r o u n d t a nk s a n d f i t t i n g s u s e d i n f i e l d o p e r a t i o n s ( d i s t r i b u t i o n ) b y m i n e r a l o i l c o n c e r n s . " C o l u m n 2 c o r r e s p o n d i n g t o t h e a b o v e e n t r y p r o v i d e s d e p r e c i a t i o n & 1 0 0 % f o r t h e i t e m s d e s c r i b e d i n t h e s a i d e n t r y . 4 8 . T h e t a b l e o f r a t e s o f d e p r e c i a t i o n i n A p p e n d i x I t o t h e R u l e s p r e s c r i b e s a s i n g l e r a t e o f d e p r e c i a t i o n f o r t h e a ss e t s f a l l i n g w i t h i n a p a r t i c u l a r b l o c k o f a s s e t s . I t d o e s n o t p r e s c r i b e d e f e r e n t i a l r a t e s o f d e p r e c i a t i o n w i t h r e f e r e n c e t o t h e o w n e r s h i p o f t h e a s s e t I t w o u l d b e p e r t i n e n t t o n o t e h e r e t h a t t h e s p e c i a l r at e o f d e p r e c i a t i o n f o r t h e m a i n i t e m ' ' I I I - M a c h i n e r y a n d P l a n t " h a v e b e e n p r e s c r i b e d w i t h r e f e r e n c e t o t h e n a t u r e o f t h e p a r t i c u l a r a s s et a n d t h e c h a r a c t e r o f i t s u s e r i n c l u d i n g t h e t y p e s o f b u s i n es s a n d t h e e n v i r o n m e n t a l c o n d i t i o n s i n w h i c h i t i s u s e d . Wh e n t h e O I L h a s c e r t i f i e d i n t h i s r e g a r d , t h a t t h e w i r e l i n e l o g g i n g d p e r f o r a t i o n e q u i p m e n t s / t o o l s w h i c h a r e u s e d b y t h e a s s e s s e e a r e s i m i l a r t o t h o s e e q u i p m e n t s / t o o l s o w n e d a n d u s e d b y m i n e r a l oi l c o n c e r n s a n d w h e n t h e r e i s n o s h a d o w i s c a s t e d o v e r t h e f a c t t h a t t h e s i m i l a r a s s e t s w o u l d q u a l i f y f o r a d e p r e c i a t i o n & 1 0 0 % u n d er t h e s a i d e n t r y i f t h e s e a r e o w n e d b y a m i n e r a l o i l c o n c e r n li k e O I L , w e d o n o t f i n d a n y s u b s t a n c e i n t h e d e p a r t m e n t ' s a p p r o a c h t o d e n y t h e s a m e t o t h e a s s e s s e e o n t h e g r o u n d t h a t t h e o w n e r of t h e s i m i l a r a s s e t s , w e a r e c o n c e r n e d w i t h , w i l l n o t b e s o e n t i tl e d . M e n t i o n i n g o f I.T.A. No. 3886/DEL/2015 10 t h e f a c t , i n t h e l e t t e r o f O I L d a t e d 1 3 N o v 1 9 9 8 t ha t t h e s e e q u i p m e n t s / t o o l s a r e m e a n t o n l y f o r u s e i n u n d e r g r ou n d o i l f i e l d o p e r a t i o n s f o r w i r e l i n e l o g g i n g d p e r f o r a t i o n l e a v es n o i o t a o f d o u b t t h a t t h e n a t u r e o f a s s e s s e e " s e q u i p m e n t s a n d i t s u s e r i s s i m i l a r t o t h o s e e q u i p m e n t s w h i c h a r e o w n e d b y t h e m i n e r a l o i l c o n c e r n s a n d e l i g i b l e f o r d e p r e c i a t i o n u n d e r t h e a fo r e s a i d e n t r y . T h e a r t i f i c i a l d i s t i n c t i o n r e g a r d i n g t h e m o b i l e n a tu r e o f t h e a s s e s s e e ' s e q u i p m e n t s , w h i c h h a s b e e n c r e a t e d a n d re l i e d u p o n b y t h e d e p a r t m e n t , i s o f n o u s e b e c a u s e e v e n i f s u c h a d i s t i n c t i o n e x i s t s i t w o u l d n e i t h e r a l t e r t h e n a t u r e o f t h e a s se s s e e ' s e q u i p m e n t s n o r t h e c h a r a c t e r o f i t s u s e r . We , t h e r e f o r e , a r e of t h e c o n s i d e r e d o p i n i o n t h a t t h e a s s e s s e e ' s w i r e l i n e l o g g i n g a n d p er f o r a t i o n e q u i p m e n t s a r e e l i g i b l e f o r a h i g h e r d e p r e c i a t i o n @ 1 0 0 % u n d e r c l ( i i ) o f s . 3 2 ( 1 ) o f t h e A c t , r / w i t e m I I I ( 3 ) ( i x ) ( b ) o f t h e s c h e d u l e o f r a t e s o f d e p r e c i a t i o n i n A p p e n d i x I t o t h e I n c o m e Ta x R u l e s , 4 9 . H a v i n g d e c i d e d t h e i s s u e i n t h e a f o r e s a i d t e r ms , w e m a y t a k e l i b e r t y t o l o o k i n t o t h i s i s s u e f r o m a d i f f e r en t p o i n t o f v i e w . D e p r e c i a t i o n a l l o w a n c e i s a k i n d o f t a x b e n e f i t w h ic h i s g i v e n t o t h e b u s i n e s s c o n c e r n s f o r p r o m o t i o n o f b u s i n e s s a c t i v i ti e s i n a n y p a r t i c u l a r f i e l d o f b u s i n e s s . I n t h e i n s t a n t c a s e de p r e c i a t i o n i s a l l o w a b l e t o m i n e r a l o i l c o n c e r n s @ 1 0 0 % o n t h e e q ui p m e n t s u s e d b e l o w t h e e a r t h s u r f a c e . I f t h e s a m e d e p r e c i a t i o n is n o t a l l o w e d t o o t h e r b u s i n e s s c o n c e r n s o n t h e g r o u n d t h a t t h e o w n er o f t h e s e e q u i p m e n t s i s n o t a m i n e r a l o i l c o n c e r n b u t i t i s ju s t p r o v i d i n g a n a s s i s t a n c e o r l e a s i n g t h e s e e q u i p m e n t s t o a m i n e r a l o i l c o n c e r n t h e n d e f i n i t e l y t h i s p o t h e r c o n c e r n ' w i l l c h a r g e m or e f o r t h e s e s e r v i c e s a n d c o n s e q u e n t l y t h e m i n e r a l o i l c o n c e r n s w i l l b e c o m m e r c i a l l y f o r c e d n o t t o o u t s o u r c e w i r e l i n e l o g g in g a c t i v i t i e s t o o t h e r c o m p a n i e s b u t t o / : d o i t t h e m s e l v e s . H o w e v e r, p r a c t i c a l l y t h i s i s n o t a v i a b l e o p t i o n b e c a u s e o i l c o m p a n i e s ar e f a c i n g i m m e n s e p r e s s u r e t o i n c r e a s e t h e o u t p u t t o m e e t t h e e n e r g y n e e d s o f o u r g r o w i n g e c o n o m y a n d t h i s h a s r e s u l t e d i n e x t r a w o r k l o a d . 5 0 . F r o m t h e a b o v e d i s c u s s i o n , b o t h t h e l e g a l i s s ue s , a s f o r m u l a t e d b y u s i n p a r a ( 7 ) a b o v e a r e f o u n d t o b e i n f a v o u r o f t h e I.T.A. No. 3886/DEL/2015 11 a s s e s s e e . A c c o r d i n g l y , a l l s u b s t a n t i a l q u e s t i o n o f l a w i n v o l v e d i n t h e i n s t a n t b a t c h o f a p p e a l s a r e d e c i d e d i n t h e f a vo u r o f t h e a s s e s s e e a n d a g a i n s t t h e r e v e n u e . C o n s e q u e n t l y , a l l t h e a p p e a l s a r e d i s m i s s e d . 6 . 1 5 I n v i e w o f t h e a b o v e i t i s c l e a r t h a t t h e a p p el l a n t w o u l d b e e n t i t l e d t o c l a i m d e p r e c i a t i o n a t t h e r a t e o f 6 0 %. T h e a d d i t i o n o f R s . 1 1 , 8 5 , 1 9 , 8 0 1 / - i s t h u s d e l e t e d . T h e g r o u n d o f a pp e a l i s r u l e d i n f a v o u r o f t h e a p p e l l a n t . " 5. W e s tra ig ht aw a y not ic e th at t he C o-o rd in at e Be nch of IT AT in I TA No .5 71 0/ Del /2 01 4 or de r date d 3 r d Ap ril , 2 01 9 has agr ee d w it h t he ple a of the a ss e sse e f or e nti tl e ment of acc el era te d r at e of de pr eci at io n @ 6 0% on o il ri gs wh ich h as bee n use d f or d ril l ing o per at io ns in t he oil f iel d of mi n era l o il con ce rn s in th e f o ll ow in g t er ms . “ 1 9 . We h a v e h e a r d b o t h t h e p a r t i e s a n d p e r u s e d t h e m a t e r i a l a v a i l a b l e o n r e c o r d . I n t h e i n s t a n t c a s e o f t h e a s se s s e e , b o t h t h e c o n d i t i o n s a r e d u l y s a t i s f i e d s i n c e t h e o i l r i gs b e i n g p l a n t o f ‘ s p e c i f i c c a t e g o r y ’ a r e o w n e d b y t h e a s s e s s e e a nd f u r t h e r i t i s u s e d i n d r i l l i n g o p e r a t i o n s f o r t h e p u r p o s e o f ex p l o r a t i o n 8 s e x t r a c t i o n o f m i n e r a l o i l i n t h e f i e l d o f m i n e r a l oi l c o n c e r n s . T h e a s s e s s e e c l a i m e d d e p r e c i a t i o n @ 6 0 % o n O i l r i g s w h i c h h a s b e e n u s e d f o r d r i l l i n g o p e r a t i o n s i n t h e o i l f ie l d o f m i n e r a l o i l c o n c e r n s a s p e r e n t r y a t P a r t A - I I I - ( 8 ) ( x i i ) of N e w A p p e n d i x I , a p p l i c a b l e f r o m A s s e s s m e n t Y e a r 2 0 0 6 - 0 7 o n w a r d s . T h e s a m e i s e v i d e n t f r o m A n n e x u r e B t o t h e T a x A u d i t R e p o r t f o r r e l e v a n t a s s e s s m e n t y e a r . T h e H o n ' b l e j u r i s d i c t i o n a l H i g h C o u r t i n c a s e o f C I T v s . H L S I nd i a L t d . ( 2 0 1 1 ) 3 3 5 I T R 2 9 2 h e l d t h a t : " D e p r e c i a t i o n a l l o w a n c e i s a k i n d o f t a x b e n e f i t w hi c h i s g i v e n t o t h e b u s i n e s s c o n c e r n s f o r p r o m o t i o n o f b u si n e s s a c t i v i t i e s i n a n y p a r t i c u l a r f i e l d o f b u s i n e s s . I n t h e I.T.A. No. 3886/DEL/2015 12 i n s t a n t c a s e d e p r e c i a t i o n i s a l l o w a b l e t o m i n e r a l oi l c o n c e r n s @ 1 0 0 % o n t h e e q u i p m e n t s u s e d b e l o w t h e e a r t h s u r f a c e . I f t h e s a m e d e p r e c i a t i o n i s n o t a l l ow e d t o o t h e r b u s i n e s s c o n c e r n s o n t h e g r o u n d t h a t t i r e o w ne r o f t h e s e e q u i p m e n t s i s n o t a m i n e r a l o i l c o n c e r n b u t it i s j u s t p r o v i d i n g a n a s s i s t a n c e o r l e a s i n g t h e s e e q u i pm e n t s t o a m i n e r a l o i l c o n c e r n t h e n d e f i n i t e l y t h i s " o t h er c o n c e r n ” w i l l c h a r g e m o r e f o r t h e s e s e r v i c e s a n d c o n s e q u e n t l y t h e m i n e r a l o i l c o n c e r n s w i l l b e c o m m e r c i a l l y f o r c e d n o t t o o u t s o u r c e w i r e l i n e l o g g in g a c t i v i t i e s t o o t h e r c o m p a n i e s b u t t o d o i t t h e m s e l ve s " . F u r t h e r , t h e S p e c i a l L e a v e P e t i t i o n f i l e d b y r e v e n ue a g a i n s t t h e d e c i s i o n o f t h e H o n ’ b l e D e l h i H i g h C o u r t i n c a se o f H L S I n d i a L t d ( S u p r a ) h a s b e e n d i s m i s s e d b y t h e H o n ’ b l e A p e x C o u r t [ S L P N o . 2 7 2 3 / 2 0 1 2 1 a n d h e n c e t h e d e c i s i o n h as a t t a i n e d f i n a l i t y . T h e i s s u e i n p r e s e n t c a s e i s a l so s q u a r e l y c o v e r e d . H e n c e a p p e a l o f t h e r e v e n u e i s d i s m i s s e d . ” 6. In vi ew of t he j ud g ment of Ho n’ bl e Del hi H ig h Cour t i n the c as e of HLS I n dia ( su pr a) i n con ju nct io n wi th the d ec isi on of the Co -o rdi na te Be nch wh ic h ha s en do rse d t he c on clusi on dra wn b y th e Ld . CI T( A), we se e no re as on t o in te rf ere . 7. Gro u nd N o.1 of th e Re ve nu e’ s ap pea l i s d is mi ss ed. 8. Gro u nd N o. 2 co nce rn s di sa ll ow an ce of re pa ir a n d mai nt en an ce c ha r ges a mou nt in g t o R s.2 ,4 0, 72 ,8 98 / -. T he rel ev an t f act s c on c ern in g t he is su e ar e th at th e a ss es see int er ali a cl ai me d a s u m of Rs .2 ,7 7, 85 ,7 75/ - un de r t he h ea d Rep ai r and Mai nt en an ce ( Eq uip me nt ) ch ar ge s. Th e as se ss ee cl ai me d the af ore sa id e xp en di tu re t ow ar ds re pai r a nd ma int en an ce as rev en ue exp en di tu re. I n th e cou rs e of scr uti n y pro ce ed in gs , the As ses si ng I.T.A. No. 3886/DEL/2015 13 Of f icer ma de d is al lo wan ce ( net of d e pre ci ati on ) on th e gro un d tha t t he a ss es se e h as g iv en th e pl an t and ma ch in er y o n hir e, an d the ref o re, su ch ex pen di tu re are n ot war ra nt ed an d dev oid of co mme rc ia l e x ped i enc y. I t w as f ur the r ob se rv ed th at t he i te ms of exp en di tu re ar e ca pit al i n na tur e an d the a mo un t incu rre d is qui te su bs ta nt ia l a nd gi ve s e nd uri ng ad van ta ge . O n t hi s b roa d par a met er s, t he d is all ow an ce of R s. 2, 40, 72 ,8 98 /- was ca r rie d o ut hol di ng t he s a me t o be c ap ita l ex pe nd it ure . 9. In th e f ir st a ppe al , th e CI T( A) ex a mi ned t he co nt ra ct wi th Ju bil an t O il & Ga s Pv t. Ltd . a nd O NG C an d h as d el e ted th e dis al lo wa nc e on t h e gr ou nd t hat the e xpe nd it ur e is of re cur ri ng nat ur e an d n o as set s of end ur in g na tu r e ca me i nt o ex is ten ce. T he rel ev an t o pe ra ti ve por ti on of t he C IT (A) ’s o rd er in th is re ga r d are r epr od uc ed h ere un der : 8 . G r o u n d N o . 4 i s i n r e s p e c t o f d i s a l l o w a n c e o f R s . 2 , 4 0 , 7 2 , 8 9 8 / - o n a c c o u n t o f r e p a i r s & m a i n t e n a n ce . 8 . 1 T h e A O h a s t r e a t e d R s . 2 , 4 0 , 7 2 , 8 9 8 / - o u t o f R s . 2 , 7 7 , 8 5 , 7 7 5 / - a s c a p i t a l e x p e n d i t u r e . H o w e v e r , th e A O h a s n o t g i v e n d e t a i l s o f w h i c h i t e m s w e r e c o n s i d e r e d t o b e c a p i t a l i n n a t u r e . 8 . 2 . T h e a p p e l l a n t s t a t e d t h a t t h e e x p e n d i t u r e w a s i n c u r r e d f o r b u y i n g M S P l a t e s S p a r e s , S t e e l w i r e s , o v e r h a u l i n g ch a r g e s a n d l a b o u r c h a r g e s . I s h a l l n o w d i s c u s s w h e t h e r t h e e x p e n s e s a r e o f c a pi t a l o r r e v e n u e n a t u r e . 8.3. The main issue here is that by incurring the expenditure the appellant is not able to gain a benefit of an enduring nature. The expenditure would not bring an advantage for the enduring benefit of trade. The expenditure is also of a recurring nature. The expenditure incurred is not of a capital nature but it is revenue in I.T.A. No. 3886/DEL/2015 14 nature. 8.5 The observation of the Hon. ITAT, Delhi in the case of ITO, Ward-33(2) vs. M/s. Gokal Chand Hari Chand are as under: “7. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that Ld. Commissioner of Income Tax (Appeals) has given a finding that the said expenditure ITA NO. 5031/bel/2011 7 is a revenue and not a capital in nature. Such expenditure has been incurred by the assessee in the past also and also allowed. The examples in this regard are as under:- Asstt. Year Amount of expenses (in Rs.) Sales 2006-07 24,86,057.00 2,90,99,633.00 2007-08 42,41,219.00 3,98,51,062.00 2008-09 44,76,290.00 4,06,23,623.00 7.1 It was further found that incurring of the expenditure did not result any increase in the earning of the assessee. The item were purely on repair and maintenance in nature and were like brackets, bearing, belts, chain, loader, electrical motor rewinding, face plates, gas cutter pipe, nuts and bolts, washers, champs, PVC pipes, pulley, MS plates, wire mesh, welding rods, wooden gatka, ruti, shafts, lever pin etc. A perusal of the maintenance expenditure pertaining to the earlier years show that a full benefit was consumed in that period only because such expenditure was incurred in the subsequent year also and claimed by the assessee year after year. By incurring such expenditure assessee did not gain new advantage which increased the sales during the year. Ld. Commissioner of Income Tax (Appeals) also gave a finding that large number of parts get worn out and are replaced by new parts frequently within a year. In other words, Ld. Commissioner of Income Tax (Appeals) gave a finding that no single part that the assessee has purchased lasted for one year or more. It was further seen that no part of the machinery can be independently used and constituted separate machine or which constitute substitution of an old asset by a new asset to categorize it as capital expenditure. In the background of the aforesaid discussion ITA NO. 5031/Del/2011 8 and precedent, we find that Ld. I.T.A. No. 3886/DEL/2015 15 Commissioner of Income Tax (Appeals) has passed a reasonable order, which does not need any interference on our part, accordingly, we uphold the same. 8. In the result, the appeal filed by the Revenue stands dismissed." 8.6. In my view there is no indication that the amount was spent on items which were of capital nature. No assets of enduring nature were created. The addition of Rs.2,40,72,898/- is deleted. The ground of appeal is ruled in favour of the appellant. 10. Ag gri ev ed , th e R eve nu e pr ef err ed appe al b ef or e t he Tri bu na l. 11. Ld. DR f o r th e Rev en ue e ss en ti all y re it er ate d th e ob ser va ti on s of t he As se ssi ng Of f ice r a nd pl ac ed rel ia nce the re up on . 12. Ld. co un se l f or the ass es se e, on the o the r h an d, su b mit te d tha t du ri ng th e f i n anc ia l ye a r re lev an t t o as se ss ment ye a r u nd er con si de ra tio n, th e ass es se e de bi te d a n a mou nt of Rs. 3. 65 c ro r e to war ds ‘ re pai r an d ma in te na nc e’ of mach in er y o ut of th e su m of Rs .2. 77 cr or e we r e in cu rre d t ow ar d s re pa ir a nd ma inten an ce (eq ui p men t) gi ve n on hi re b y th e as se sse e. T hes e expen s es we re inc ur re d to war ds p roc ur e men t of M .S . P la te s, ch an nels , ang le s, rep ai r k it , s pa re s a nd re pai r of dr il l p ipe te st in g, re pa ir of f ue l inj ec ti on pu mp s, re pai ri ng bu nk ho us e , et c. as ref le ct ed i n pa ge 76- 82 of pa pe r bo ok. I t wa s su b mit t ed th at t he as sess ee wa s eng ag ed i n th e b usi ne ss of pr ov id i ng mob ile dri ll ing rig s, equ ip me nt a nd o th er re lat ed s er vi ce s to oil a nd g as i n du str y. Det ai ls of c on tra ct s i n o pe ra ti on , a s pla ce d i n th e p ap e r b oo k, wo ul d s ho w t hat th e as se ss ee wa s u nd er c on tr act ua l o bl ig ati on to pro vi de at it s o wn cos t, an y i te ms o f equi p men t, spare par ts , su ppl ie s a nd mat er i als , et c. as r eq ui re d f or nor ma l o pe ra ti on s. I n the p ro ce ss , the a sse ss ee h as g en er ate d re ve nu e of Rs.3 4. 80 I.T.A. No. 3886/DEL/2015 16 cro re f ro m suc h o p era ti on s. The ex pe n ses in cu rr ed bor e n exu s of f irst de gr ee to pe r f or m the c on tra ct i n o rd ina r y cour se . It wa s thu s c o nte nd ed th at the e xpe nd it ur e i n cur re d t ow ar ds re p air s a nd mai nt en an ce in t he co ur se of c arr yi n g ou t th e c on tract ua l t er ms are or di nar y b u si nes s e xp en di tu re has ri gh tl y h el d b y t he CI T( A). Su ch e xp e ndi tu re nei th er i mp rov es cap ac it y of a sse t n or pro vi de s en dur in g be nef it of r ev e nue i n nat ur e. I t w as e mpha si ze d th at n o se par at e pa yme n ts w as e ith er c olle cte d or an y s or t of re i mb urs e men t wa s ma d e t o th e as ses se e b y th e con tr ac tor s. A r ef er enc e w as ma de to s eve ra l j ud icial pr ec ede nt s to bu tt re ss it s pl ea. 13. W e ha ve ca ref u ll y co ns id ere d th e r i val s ub mi ss io ns . T he ass es se e- co mp an y i s e ng ag ed i n pro vi d ing p la nt s an d mac hin er y, mo bil e d ril li ng rig s, e qu ip me nt a nd o the r re la te d se rv ic e s to oil and ga s i nd us tr y. The as se ss ee d ur in g th e ye ar ha s e nt e red in to con tr ac t wit h Ju bi l ant O il a nd G as P vt. L td . On p erusa l of th e ter ms of th e c on tr act , it wa s ob se rv ed th at w hi le th e pa yme nt ter ms a re cl ea rl y s pec if ie d a nd t he re doe s no t ap pear to be a n y rei mb ur se me nt of exp en se s rel at in g t o r ep air a nd mai nt ena nc e spe cif i ed th er ein . The re is n o dis p ut e t hat e xp en ses h a ve be en act ua ll y in cur re d to war ds r ep ai r an d ma in ten an ce . The o nl y dis pu te i s wh et her suc h ex pe nd it ure a r e e li gi ble f or d ed uc tio n or bei ng ca pit al in n at ure . A t th is ju nct ur e, w e ta ke no te of t he p le a of th e a ss es se e t ha t t her e is no r ei mb urs e men t of ex pe ns es an d suc h e xp en se s a re int eg ra l p art of th e exe cu ti on of th e c ont ra ct as de mo ns tr at ed. H enc e, t he ex pe nd it u re in cu rre d requ ire s t o be set of f a gai ns t th e rev en ue i nc o me a ri sin g f r o m c ontr act as pe r rud i men ta r y pr in ci ple s of a cc ou nt anc y. The as se ss ee ha s tak en a ple a t ha t n o n ew as set is cr eat ed or no ben ef it of en dur in g nat ur e has be en d er iv ed . W e d o n ot see an y reb ut ta l on th is s co re f ro m I.T.A. No. 3886/DEL/2015 17 the re ve nu e. Th e As ses si ng Of f ice r has mere l y pr oc ee ded o n a h yp ot he si s of su ch exp en dit ur e be in g capi ta l in na tur e wit ho ut sh ow in g a n y ju st if iab le gr ou nd s f or doi ng s o. Th e Ass ess in g Of f icer ha s ca pi ta l ize d s uc h e xp en di t ure wi th ou t s ho wi ng a n y rea so na bl e gr ou nd s. O n t he co nt rar y, w e f in d mer it in t he con cl us io n d ra wn b y t he CI T( A) hol di ng the sa me to be r eve nu e exp en di tu re o n th e f ace of suc h te ll -ta le f act s. I n th e ab s enc e of an y me rit s i n th e ple a of the re ven u e, w e de cli ne to i nte rf ere wit h th e or der of th e C IT (A ). 14. In t he re su lt , t he g rou nd n o.2 of th e Re ven ue ’s Ap pe al is dis mi ss ed . 15. As a re su lt, t he a pp eal of t he R ev en ue is di s mis se d. Order pronounced in the open Court on 08/03/2022. Sd/- Sd/- [AMIT SHUKLA] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 08/03/2022 Prabhat