ACIT, Trivandrum V. Travancore Healthcare p.Ltd, Trivandrum

ITA 56/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61500 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 17-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: C B M WARRIER
• Keywords: Capital expenditure

Judgement Text

1 ITA NO. 56/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 56/COCH/2011 (ASSESSMENT YEAR 2007-08) THE A.C.I.T., CIR.1(1) VS M/S TRAVANCORE HEALTH CARE (P) LTD TRIVANDRUM TC 1/418-14, MEDIPLAZA NEAR HOTEL MOON STAR MEDICAL COLLEGE PO TRIVANDRUM PAN : AACCT05020D (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. S VIJAYAPRABHA RESPONDENT BY : SHRI CBM WARRIER DATE OF HEARING : 29-05-2012 DATE OF PRONOUNCEMENT : 01-06-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM DATED 14-10-2010 AND PE RTAINS TO ASSESSMENT YEAR 2007- 08. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WHETH ER THE REPLACEMENT OF THE PICTURE TUBE IN THE SCANNING MACHINE IS A REVENUE EXPENDITU RE OR CAPITAL EXPENDITURE. 3. SMT. S. VIJAYAPRABHA, THE LD.DR, SUBMITTED THAT REPLACING OF PICTURE TUBE IN THE SCANNING MACHINE PROVIDES ENDURING BENEFIT TO THE A SSESSEE, THEREFORE, THE REPLACEMENT OF THE PICTURE TUBE IN THE SCANNING MAC HINE CANNOT BE TREATED AS CURRENT 2 ITA NO. 56/COCH/2011 REPAIRS. THE LD.DR PLACED HER RELIANCE ON THE JUDG MENT OF THE RAJASTHAN HIGH COURT IN COMMISSIONER OF INCOME-TAX VS JAIPUR MINERAL SYNDIC ATE (1995) 216 ITR 469 (RAJ) AND THE JUDGMENT OF THE MADRAS HIGH COURT IN COMMISSION ER OF INCOME-TAX VS MADRAS CEMENTS LTD 255 ITR 213 (MAD). 4. ON THE CONTRARY, SHRI CBM WARRIER, THE LD.REPRES ENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE PICTURE TUBE CANNOT HAVE ANY IND EPENDENT FUNCTION. THE PICTURE TUBE CAN PERFORM ITS FUNCTION WHEN IT IS FIXED WITH SCANNING MACHINE. THEREFORE, REPLACEMENT OF PICTURE TUBE AMOUNTS TO REPLACEMENT OF PART OF THE SCANNING MACHINE AND AS SUCH, IT IS CURRENT REPAIR. THE LD.REPRESEN TATIVE PLACED HIS RELIANCE ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF COMMISSIO NER OF INCOME-TAX VS SARAVANA SPINNING MILLS P. LTD (2007) 293 ITR 201 (SC). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL ON RECORD. THE QUESTION ARISES FOR CONSID ERATION IS WHETHER THE COST OF REPLACEMENT OF THE PICTURE TUBE IN THE SCANNING MAC HINE IS CURRENT REPAIR OR CAPITAL EXPENDITURE. THIS ISSUE WAS CONSIDERED BY THE APEX COURT IN THE CASE OF SARAVANA SPINNING MILLS P. LTD (SUPRA). THE APEX COURT, AFT ER CONSIDERING VARIOUS JUDGMENTS ON THE SUBJECT FOUND THAT WHEN A PART OF THE MACHINERY WAS REPLACED FOR MAINTENANCE OF THE MACHINE, THEN IT HAS TO BE CONSIDERED AS CURREN T REPAIR AND THE EXPENDITURE HAS TO BE ALLOWED U/S 31(I) OF THE INCOME-TAX ACT. IN FAC T, THE APEX COURT AT PAGE 208 HAS OBSERVED AS FOLLOWS: TO GIVE AN EXAMPLE, A COMPRESSOR IS AN IMPORTANT PART OF AN AIR CONDITION MACHINE. REPAIR OF THE COMPRESSOR WILL C OME IN THE CONNOTATION OF THE WORD CURRENT REPAIRS IN SECTIO N 31(I) OF THE SAID ACT BECAUSE THE ASSESSEE DOES NOT REPLACE THE AIR-CONDI TION MACHINE. AT THE HIGHEST, HE REPLACES A PART OF THE AIR-CONDITION MA CHINE. SO IS THE CASE OF THE PICTURE TUBE IN A TELEVISION SET, WHEN THE PICT URE TUBE IS REPLACED THE TELEVISION SET IS NOT REPLACED, THEREFORE, SUCH REP AIRS ALONE CAN COME WITHIN THE CONNOTATION OF THE WORD CURRENT REPAIRS IN SECTION 31(I) OF THE SAID ACT AS IT STOOD AT THE MATERIAL TIME. 3 ITA NO. 56/COCH/2011 IN THIS CASE WHAT WAS REPLACED IS A PICTURE TUBE IN THE SCANNING MACHINE. LIKE A TELEVISION SET, CANNING MACHINE ALSO REQUIRES A PIC TURE TUBE. IF THE PICTURE TUBE IS REPLACED IT HAS TO BE CONSIDERED AS CURRENT REPAIR WITHIN THE MEANING OF SECTION 31(I) AS OBSERVED BY THE APEX COURT. BY RESPECTFULLY FOLLOW ING THE JUDGMENT OF THE APEX COURT IN THE CASE OF SARAVANA SPINNING MILLS P. LTD (SUPR A), THIS TRIBUNAL UPHOLD THE ORDER OF THE LOWER AUTHORITY. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 01 ST JUNE, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 01 ST JUNE, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH