Lipi Specific Family Trust, Ahmedabad V. The DCIT,Circle-3(2), Ahmedabad

ITA 688/AHD/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8470 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 18-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Revenue expenditure; Capital expenditure
• Section: 201

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ITA NO. 688/AHD/2019 ( /ASSESSMENT YEAR : 2014-15) LIPI SPECIFIC FAMILY TRUST PROP.OF NANDISHWARI PACKAGING PLOT NO.1 & 2, GIDC PHASE-I, VATVA AHMEDABAD-382 445 / VS. THE DY.CIT CIRCLE-3(2) AHMEDABAD ./ ./PAN/GIR NO. : AAATL 1302 N ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.N. SOPARKAR, SR.ADV. WITH SHRI HIMANSHU SHAH, AR / RESPONDENT BY: SHRI VIDHYUT TRIVEDI, SR.DR / DATE OF HEARING 04/12/2019 / DATE OF PRONOUNCEMENT 20/01/2020 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS)3, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-3 /3(2)/308/2016-17 DATED ARISING IN THE ASSESSMENT ORDER PASSED UNDE R S.143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'THE ACT') DATED29/12/2016 RELEVANT TO ASSESSMENT YEAR (AY) 2014-15. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPEL LANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN THE POINTS OF L AW AND FACTS. ITA NO.688/AHD/2019 LIPI SPECIFIC FAMILY TRUST VS. DCIT ASST.YEAR - 201 4-15 - 2 - 2) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELL ANTS CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AHS GROSSLY ER RED IN CONFIRMING DISALLOWANCE OF FACTORY SHED EXPENSES OF RS.1,70,72 ,202/-. 3) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELL ANTS CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS GROSSLY ER RED IN CONFIRMING ALLOWANCE OF DEPRECIATION @ 10% OF RS.17,07,220 INS TEAD OF DEPRECIATION @ 15% AND INITIAL DEPRECIATION @ 20% AVAILABLE TO B LOCK OF PLANT & MACHINERY. 4) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELL ANTS CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS GROSSLY ER RED IN CONFIRMING DISALLOWANCE OF INTEREST PAID ON LATE PAYMENT OF TA X DEDUCTED AT SOURCE FOR RS.2,976/-. 5) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELL ANTS CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS GROSSLY ER RED IN CONFIRMING ADDITION ON DELAYED PAYMENT OF EMPLOYEES CONTRIBUTI ON OF PF AND ESIC FOR RS.4,890/-. 6) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELL ANTS CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS GROSSLY ER RED IN HOLDING THAT CHARGING OF INTEREST U/S.234B & 234C OF I.T.ACT IS CONSEQUENTIAL IN NATURE. 2. THE 1 ST ISSUE RAISED BY THE ASSESSEE IS GENERAL IN NATURE. THEREFORE WE DO NOT FIND ANY REASON TO ADJUDICATE THE SAME. ACCO RDINGLY, WE DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 3. AT THE OUTSET, THE LD. AR AT THE TIME OF HEARI NG BEFORE US SUBMITTED THAT HE HAS BEEN INSTRUCTED NOT TO PRESS 3 RD GROUND OF APPEAL. THEREFORE WE DISMISS THE SAME AS NOT PRESSED. 3.1. AT THE OUTSET, THE LD. AR AT THE TIME OF HEA RING BEFORE US ALSO SUBMITTED THAT HE HAS BEEN INSTRUCTED NOT TO PRESS 4 TH AND 5 TH GROUND OF APPEAL DUE TO SMALLNESS OF AMOUNT. THEREFORE WE DIS MISS THE SAME AS NOT PRESSED. ITA NO.688/AHD/2019 LIPI SPECIFIC FAMILY TRUST VS. DCIT ASST.YEAR - 201 4-15 - 3 - 4. THE 2 ND ISSUE RAISED BY THE ASSESSEE IS THAT THE LD. CIT-A ERRED IN UPHOLDING THE ORDER OF THE AO ON ACCOUNT OF DISALLO WANCE FACTORY SHED EXPENSES FOR THE SUM RS. 1,70,72,202.00 5. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST AND ENGAGED IN THE MANUFACTURING OF HDPE/PP BAGS & FABR ICS UNDER THE NAME AND STYLE OF M/S NANDEISHWARI PACKAGING. 6. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION H AD INCURRED TOTAL EXPENDITURE AMOUNTING TO RS. 1,70,72,202.00 TOWARDS THE REPAIR AND MAINTENANCE OF FACTORY SHED WHERE MANUFACTURING OPE RATION HAD BEEN CONDUCTING. THE ASSESSEE DEBITED THE EXPENDITURE OF RS. 1,70,72,202.00 IN ITS PROFIT AND LOSS ACCOUNT BY TREATING IT AS REVENUE E XPENDITURE. THE ASSESSEE IN SUPPORT OF ITS CLAIM SUBMITTED THAT THE FACTORY IS LOCATED IN SUBURBS OF THE AHMEDABAD WHERE OTHER DIFFERENT TYPES OF FACTORIES ARE ALSO SITUATED. THE OTHER FACTORIES SITUATED ERRE ENGAGED IN MANUFACTUR ING OF ITEMS OF STEEL, CHEMICALS, RUBBER, PHARMA ETC. THE AREA OFTEN RECEI VES DIFFERENTIAL ATMOSPHERE SUCH AS HEAVY RAIN, STORMS FROM TIME TO TIME DUE TO WHICH ROOF OF THE FACTORY PREMISE HAD BEEN AFFECTED. FOR THAT REASON THE MANUFACTURING PLACE BECAME VERY BAD THEREFORE IT REQUIRED IMMEDIA TE REPAIRING OF THE ROOF. 6.1. THE ASSESSEE FURTHER SUBMITTED THAT DUE TO R EPAIRS OF THE ROOF OF THE FACTORY NO ADDITIONAL ASSETS BROUGHT INTO EXISTENCE AS WELL AS NO ADDITIONAL CONSTRUCTION HAD ALSO BEEN CONDUCTED IN THE FACTORY PREMISE. 6.2. THE ASSESSEE ALSO SUBMITTED THAT THE REPAIR OF FACTORY SHED DID NOT INCREASE ITS MANUFACTURING CAPACITY OF THE WOVEN SA CKS. THE ASSESSEE IN ITA NO.688/AHD/2019 LIPI SPECIFIC FAMILY TRUST VS. DCIT ASST.YEAR - 201 4-15 - 4 - SUPPORT OF ITS CONTENTION FURNISHED ALL THE NECESSA RY DOCUMENTS LEDGER COPY, COPY OF INVOICES BEFORE THE AO. 6.3. HOWEVER, THE AO OBSERVED THAT THE EXPENDITUR E INCURRED ON FACTORY SHED WAS VERY HUGE AND IT WAS ALSO NOT A ROUTINE EX PENDITURE OF THE ASSESSEE. THE AO ALSO NOTED THAT THE EXPENDITURE IN CURRED FOR THE SUM OF RS. 1,70,72,202 ON THE FACTORY AREA 22,000 SQ.FT. WAS J UST EQUIVALENT TO THE MARKET RATE OF THE FACTORY PREMISE AS ON DATE. 6.4. THUS, THE AO IN VIEW OF THE ABOVE WAS OF THE OPINION THAT THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS REPAIR S OF THE FACTORY SHED WAS CAPITAL IN NATURE. THE AO ACCORDINGLY DISALLOWED TH E EXPENDITURE BY TREATING THE SAME AS CAPITAL IN NATURE. HOWEVER THE AO ALLOW ED THE DEPRECIATION OF RS. 17,07,220.00 BEING 10% OF RS. 1,70,72,202.00 TO THE TOTAL INCOME OF THE ASSESSEE. 6.5. AGGRIEVED ASSESSEE, PREFERRED AN APPEAL TO THE LD. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) REITERATED THE SUBMI SSION AS BEFORE THE AO. THE ASSESSEE FURTHER SUBMITS THAT THE PRESUMPTION O F AO THAT THE EXPENDITURE INCURRED WAS EQUIVALENT TO THE MARKET P RICE OF THE FACTORY WAS TOTALLY DESTITUTE. THE ASSESSEE ALSO SUBMITS THAT T HE EXPENDITURE WAS INCURRED FOR RUNNING THE BUSINESS SMOOTHLY AND NOT FOR OBTAI NING THE ENDURING BENEFIT. 6.6. HOWEVER, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE IN ITSELF ADMITTED THAT THE EXPENDITURE WAS INCURRED TOWARDS REPAIR AN D MAINTENANCE OF THE ROOF OF THE FACTORY WHICH WAS DAMAGED DUE TO UNWARR ANTED ATMOSPHERE. THEREFORE IT IS EVIDENT THAT THE USEFUL LIFE OF THE FACTORY PREMISES SUBSTANTIALLY INCREASED DUE TO INCURRING SUCH HUGE AMOUNT OF REPA IR EXPENSES. ITA NO.688/AHD/2019 LIPI SPECIFIC FAMILY TRUST VS. DCIT ASST.YEAR - 201 4-15 - 5 - 6.7. THE LD. CIT(A) ALSO NOTED THAT THE ASSESSE E DID NOT DEMONSTRATE THAT THE EXPENDITURE INCURRED TOWARDS REPAIR OF THE ROOF WAS NOTHING BUT ONLY REPLACEMENT OF OLD STRUCTURE. 6.8. THUS, THE LD. CIT(A) WAS OF THE VIEW THAT T HE EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT IN THE NATURE OF REPAIRS AS DE FINED UNDER SECTION 30 OF THE INCOME TAX ACT. 6.9. THEREFORE, THE LD. CIT(A) IN VIEW OF THE ABO VE TREATED THE EXPENDITURE INCURRED BY THE ASSESSEE AS CAPITAL EXPENDITURE AND ACCORDINGLY UPHELD THE ORDER OF THE AO. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSES SEE IS IN APPEAL BEFORE US. 7. THE LD. AR FOR THE ASSESSEE BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 35 AND REITERATED THE SUBMISSION AS MADE BEFORE THE AUTHORITIES BELOW. 8. ON THE OTHER HAND, THE LD. DR VEHEMENTLY SUPP ORTED ORDER OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE ON HAND RELATES TO THE EXPENDI TURE INCURRED BY THE ASSESSEE TOWARDS THE REPAIR OF FACTORY SHED WHETHER THE SAME IS REVENUE IN NATURE OR CAPITAL IN NATURE. ANY EXPENDITURE INCURR ED BY THE ASSESSEE TOWARDS THE CURRENT REPAIR AND MAINTENANCE IS AN ALLOWABLE EXPENDITURE UNDER THE PROVISIONS OF SECTION 30 OF THE ACT. THE RELEVANT P ROVISION OF THIS SECTION READS UNDER: ITA NO.688/AHD/2019 LIPI SPECIFIC FAMILY TRUST VS. DCIT ASST.YEAR - 201 4-15 - 6 - RENT, RATES, TAXES, REPAIRS AND INSURANCE FOR BUILD INGS. 30. IN RESPECT OF RENT, RATES, TAXES, REPAIRS AND INSUR ANCE FOR PREMISES, USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOLLOWI NG DEDUCTIONS SHALL BE ALLOWED ( A ) WHERE THE PREMISES ARE OCCUPIED BY THE ASSESSEE ( I ) AS A TENANT, THE RENT PAID FOR SUCH PREMISES ; AND FURTHER IF HE HAS UNDERTAKEN TO BEAR THE COST OF REPAIRS TO THE PREMISES, THE AMOUNT PAID ON ACCOUNT OF SUCH REPAIRS ; ( II ) OTHERWISE THAN AS A TENANT, THE AMOUNT PAID BY HIM ON ACCOUNT OF CURRENT REPAIRS TO THE PREMISES ; ( B ) ANY SUMS PAID ON ACCOUNT OF LAND REVENUE, LOCAL RAT ES OR MUNICIPAL TAXES ; ( C ) THE AMOUNT OF ANY PREMIUM PAID IN RESPECT OF INSURA NCE AGAINST RISK OF DAMAGE OR DESTRUCTION OF THE PREMISES. [EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE AMOUNT PAID ON ACCOUNT OF THE COST OF REPAIRS REFERRED TO IN SUB-CLAUSE (I), AND THE AMOUNT PAID ON ACCOUNT OF CURRENT REPAIRS REFERRED TO IN S UB-CLAUSE (II), OF CLAUSE (A), SHALL NOT INCLUDE ANY EXPENDITURE IN THE NATURE OF CAPITA L EXPENDITURE.] 9.1. FURTHER, THE ABOVE PROVISION STIPULATES THE D EDUCTION ONLY FOR CURRENT. THEREFORE TO QUALIFY EXPENDITURE AS CURRENT REPAIR, IT HAS TO PASS CERTAIN TESTS AS DETAILED UNDER: I. WHETHER THE REPAIR EXPENDITURE WAS INCURRED TO PRES ERVE THE EXISTING ASSETS II. WHETHER THERE WAS ANY EXTENSION IN THE EXISTING ASS ESSEE OUT OF SUCH REPAIRING EXPENSES. III. WHETHER THERE WAS ANY INCREMENT IN THE PRODUCTION C APACITY 9.2. NOW, WE PROCEED TO APPLY THE ABOVE CASE IN T HE CASE ON HAND TO FIND OUT WHETHER THE ALLEGED EXPENDITURE INCURRED BY THE ASSESSEE FOR THE REPLACEMENT OF THE FACTORY SHED REPRESENTS THE CURR ENT REPAIRS. 9.3. IN THIS REGARD, WE NOTE THAT THE ASSESSEE BE FORE THE AUTHORITIES BELOW HAS SUBMITTED THAT THE CONDITION OF THE ROOFTOP OF THE FACTORY BUILDING WAS ITA NO.688/AHD/2019 LIPI SPECIFIC FAMILY TRUST VS. DCIT ASST.YEAR - 201 4-15 - 7 - DETERIORATING ON ACCOUNT OF HEAVY RAIN, STORM ETC. THE RELEVANT PART OF THE SUBMISSION OF THE ASSESSEE BEFORE THE AO STANDS AS UNDER: THE ASSESSEE TRUST WAS MANUFACTURING WOVEN SACKS FOR LAST SEVERAL YEARS. THE FACTORY PREMISE IS SITUATED IN THE AREA OF AROU ND 22,000 SQ.FT. DUE TO DIFFERENT ATMOSPHERIAL EFFECTS DUE TO HEAVY RAIN, S TORMS FROM TIME TO TIME, CORROSION OCCURRED ON THE ROOF OF THE FACTORY PREMI SE. THE POLLUTED AIR IN THE INDUSTRIAL ESTATE IS ALSO ONE OF THE REASONS FOR CO RROSION IN THE RECTORY PREMISE. THIS HAS LEAD TO POOR AND DEFECTIVE MANUF ACTURING PLACE, WHICH REQUIRES IMMEDIATE REPAIRING OF THE ROOF. THIS WAS ALSO TO KEEP THE WELFARE MEASURE FOR THE WORKERS CARRYING OUT THE MANUFACTUR ING PROCESS. ALL THESE FACTORS LEAD THE ASSESSEE TRUST TO CARRY OUT REPAIRS ON THE ROOF IN THE FACTORY PREMISES OF AROUND 22,000 SQ. FT. THERE IS NO ADDITIONAL CONSTRUCTION CONDUCTED IN THE PREMISES, WHICH IS IN THE NATURE O F CAPITAL EXPENDITURE. MOREOVER, THE MANUFACTURING CAPACITY OF THE WOVEN S ACKS WAS ALSO INCREASED DUE TO REPAIRS AND MAINTENANCE CARRIED OUT BY THE A SSESSEE TRUST. THE TRUST HAD INCURRED EXPENSES OF RS.1,70,72,202/- TOWARDS R EPAIRING OF THE SHED WHICH IS REVENUE EXPENDITURE. NO NEW CAPITAL ASSET WAS FABRICATED. 9.4. THUS, FROM THE SUBMISSION OF THE ASSESSEE, I T IS TRANSPIRED THAT THE SOLE OBJECT OF THE ASSESSEE TO INCUR SUCH EXPENSES WAS T O PRESERVE THE EXISTING ASSET. THE CONTENTIONS OF THE ASSESSEE BEFORE THE L OWER AUTHORITIES HAVE NOT BEEN CONTROVERTED BY THEM. 9.5. AS SUCH, THE REASON OF TREATING SUCH EXPENDI TURE AS CAPITAL IN NATURE BY THE AO WAS BASED ON THE VOLUME OF THE EXPENSES WHIC H WAS EQUIVALENT TO THE MARKET PRICE OF THE AREA OF THE FACTORY. THE RE LEVANT FINDING OF THE AO IN DETAILS AS UNDER: 4.(II) THE ABOVE REPLY OF THE ASSESSEE IS CAREFUL LY CONSIDERED. HOWEVER, THE SAME IS NOT FOUND ACCEPTABLE. THIS IS IN VIEW OF FACT THAT THE ASSESSEE HAS INCURRED HUGE EXPENDITURE ON THE FACTORY AND TH E SHADE ON ITS GIDC PLOT. FROM THE NARRATION AND THE LEDGER ACCOUNT, IT IS OB SERVE THAT THE SAID EXPENDITURE IS NOT OF ROUTINE NATURE WHICH CAN BE A LLOWED AS REVENUE EXPENDITURE. FURTHER, IT IS SEEN THAT THE AREA OF THE FACTORY PREMISES OF THE ASSESSEE IS 22000 SQ.FT. AND THE TOTAL EXPENDITURE IS MADE TOWARDS ITS MAINTENANCE IS OF RS.1,70,72,202/-, WHICH IS ABSOLU TELY UNREASONABLE ITA NO.688/AHD/2019 LIPI SPECIFIC FAMILY TRUST VS. DCIT ASST.YEAR - 201 4-15 - 8 - BECAUSE THIS EXPENDITURE IS ALMOST EQUIVALENT TO TH E PRESENT MARKET PRICE OF THE FACTORY PREMISE OF THE ASSESSEE, I.E. COST OF R S.776 PER SQ.FT. THEREFORE, THE CLAIM OF THE ASSESSEE THAT THE EXPENDITURE WAS INCURRED TOWARDS THE MAINTENANCE OF FACTORY WHICH HAS GOT DAMAGE BY VARI OUS ENVIRONMENTAL FACTORS HAS NO BASE AND IS NOT ACCEPTED. 9.6. SIMILARLY, THE LD. CIT (A) CONFIRMED THE OR DER OF THE AO BY OBSERVING THAT THE IMPUGNED EXPENDITURE REPRESENTS THE REPLAC EMENT OF THE ENTIRE FACTORY SHED. AS SUCH A NEW FACTORY SHED WAS CONSTR UCTED BY THE ASSESSEE. THE RELEVANT FINDING OF THE LEARNED CIT (A) STANDS AS UNDER: 3.4. .. THE APPELLANT HAS NOT BROUGHT ANY E VIDENCE TO PROVE THAT EXPENDITURE INCURRED HAS BROUGHT ORIGINAL SHED INTO ORIGINAL SHAPE BUT EXPENDITURE HAS BEEN INCURRED FOR MAKING NEW SHED O N ENTIRE STRUCTURE WHICH IS NOTHING BUT REPLACEMENT OF OLD STRUCTURE. THE EXPENDITURE INCURRED BY THE APPELLANT IS NOT IN THE NATURE OF CURRENT RE PAIRS AS DEFINED IN SECTION 30 OF INCOME TAX ACT HENCE SUCH EXPENDITURE IS REQU IRED TO BE CLASSIFIED AS CAPITAL EXPENDITURE ENTITLED FOR DEPRECIATION. 9.7. THUS, FROM THE ABOVE, DISCUSSION THERE REMA INS NO AMBIGUITY THAT THE CONTENTION OF THE ASSESSEE HAS NOT BEEN CONTROVERTE D BY THE AUTHORITIES BELOW. IN VIEW OF THE ABOVE WE HOLD THAT THE ALLEGE D EXPENDITURE INCURRED BY THE ASSESSEE FALLS WITHIN THE CATEGORY OF CURRENT R EPAIRS AS ENVISAGED UNDER THE PROVISIONS OF SECTION 30 OF THE ACT AND IN THE LIGHT OF THE TEST APPLIED FOR HOLDING THAT EXPENDITURE AS REVENUE IN NATURE AS EL ABORATED IN THE PRECEDING PARAGRAPH. IN THIS CONNECTION, WE FIND SUPPORT AND GUIDANCE FROM JUDGMENT OF HONBLE APEX COURT IN THE CASE OF BALLIMAL NAVAL KISHORE V/S CIT REPORTED IN 224 ITR 414 WHEREIN IT WAS HELD AS UNDER: THE EXPRESSION USED IN SECTION 10(2)(V) IS 'CURRENT REPAIRS' AND NOT MERE 'REPAIRS'. THE SAME EXPRESSION OCCURS IN SECTION 30 (A)(II) AND IN SECTION 31(I) OF THE INCOME-TAX ACT, 1961. THE QUESTION IS WHAT I S THE MEANING OF THE SAID EXPRESSION IN THE CONTEXT OF SECTION 10(2). IN NEW SHORROCK SPG. & MFG. CO. LTD.'S CASE (SUPRA), IT WAS OBSERVED THAT THE EXPRE SSION 'CURRENT REPAIRS' MEANS EXPENDITURE ON BUILDINGS, MACHINERY, PLANT OR FURNITURE WHICH IS NOT FOR THE PURPOSE OF RENEWAL OR RESTORATION BUT WHICH IS ONLY FOR THE PURPOSE OF ITA NO.688/AHD/2019 LIPI SPECIFIC FAMILY TRUST VS. DCIT ASST.YEAR - 201 4-15 - 9 - PRESERVING OR MAINTAINING AN ALREADY EXISTING ASSET AND WHICH DOES NOT BRING A NEW ASSET INTO EXISTENCE OR DOES NOT GIVE TO THE ASSESSEE A NEW OR DIFFERENT ADVANTAGE. THEY ARE SUCH REPAIRS AS ARE A TTENDED TO AS AND WHEN NEED ARISES AND THAT THE QUESTION WHEN A BUILDING, MACHINERY, ETC., REQUIRES REPAIRS AND WHEN THE NEED ARISES MUST BE DECIDED NO T BY ANY ACADEMIC OR THEORETICAL TEST BUT BY THE TEST OF COMMERCIAL EXPE DIENCY. THE TEST EVOLVED IN NEW SHORROCK SPG. & MFG. CO. LTD.'S CASE (SUPRA) IS THE MOST APPROPRIATE, ONE HAVING REGARD TO THE CONTEXT IN WHICH THE SAID EXPRESSION OCCURS. 9.8. WE ALSO FIND THAT THE EXPENDITURE WAS NOT IN CURRED FOR RENOVATION OR REPLACEMENT OF THE FACTORY. THE EXPENDITURE INCURRE D TOWARDS REPAIRS OF FACTORY SHED IMPLIED THAT THERE WAS NO EXTENSION OF THE EXISTING ASSET OUT OF SUCH EXPENDITURE AND SIMILARLY THERE WAS NO EXTENSI ON IN THE BUSINESS OF THE ASSESSEE. IN THIS REGARD WE FURTHER PLACE OUR RELIA NCE ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE B AND A PLANTATIONS & INDUSTRIES LTD V/S CIT REPORTED IN 117 TAXMAN 323 WHEREIN IT WAS HELD AS U NDER: IN THE CASE OF CIT V. MADRAS AUTO SERVICE (P.) LTD. [1998] 233 ITR 468/ 99 TAXMAN 575 , THE APEX COURT HELD THAT THE GENERAL PRINCIPLES A PPLICABLE IN DETERMINING WHETHER A PARTICULAR EXPENDITURE IS CAP ITAL OR REVENUE EXPENDITURE ARE AS FOLLOWS : (1) OUTLAY IS DEEMED T O BE CAPITAL WHEN IT IS MADE FOR THE INITIATION OF A BUSINESS, FOR EXTENSIO N OF A BUSINESS, OR FOR A SUBSTANTIAL REPLACEMENT OF EQUIPMENT; (2) EXPENDITU RE MAY BE TREATED AS PROPERLY ATTRIBUTABLE TO CAPITAL WHEN IT IS MADE NO T ONLY ONCE AND FOR ALL, BUT WITH A VIEW TO BRINGING INTO EXISTENCE AN ASSET OR AN ADVANTAGE FOR THE ENDURING BENEFIT OF A TRADE; (3) WHETHER FOR THE PU RPOSE OF THE EXPENDITURE, ANY CAPITAL WAS WITHDRAWN, OR, IN OTHER WORDS, WHET HER THE OBJECT OF INCURRING THE EXPENDITURE WAS TO EMPLOY WHAT WAS TA KEN IN AS CAPITAL OF THE BUSINESS. AGAIN, IT IS TO BE SEEN WHETHER THE EXPEN DITURE INCURRED WAS PART OF THE FIXED CAPITAL OF THE BUSINESS OR PART OF ITS CIRCULATING CAPITAL. 9.9. IN VIEW OF THE ABOVE AND AFTER CONSIDERING T HE FACTS IN DETAIL AS DISCUSSED ABOVE, WE ARE NOT INCLINED TO UPHOLD THE FINDING OF THE AUTHORITIES BELOW. ACCORDINGLY, WE CONCLUDE THAT THE ABOVE EXPE NDITURE INCURRED BY THE ASSESSEE REPRESENTS THE CURRENT REPAIR AS PROVIDED UNDER SECTION 30 OF THE ACT. THEREFORE, THE SAME IS ELIGIBLE FOR DEDUCTION. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.688/AHD/2019 LIPI SPECIFIC FAMILY TRUST VS. DCIT ASST.YEAR - 201 4-15 - 10 - 10. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 20/01/2020 SD/- SD/- ( RAJPAL YADAV ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 20/01/2020 # . . , . $ . . / T.C. NAIR, SR. PS !' #' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. %&' ( / CONCERNED CIT 4. ( ( ) / THE CIT(A)-3, AHMEDABAD 5. )*+ $$&' , &' , % / DR, ITAT, AHMEDABAD 6. +./ / GUARD FILE. / BY ORDER, ) $ //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 13.1.2020 ( WORD PROCESSED BY HONBLE AM IN HIS COMPUTER BY DRA GON ) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.1.2020 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S21.1.2020 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.1.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER