Expense on routine replacement of spare parts is Revenue Expenditure

Angalakshmi Spinning Mill Vs ITO (ITAT Chennai)

In the present case before us also the fact is that the assessee has replaced the spare parts which are regular repairs and maintenance because it is a routine replacement of spare parts. Even the Revenue has not administered how the replacement will bring enduring benefit to the assessee. Hence, respectfully following the Co-ordinate Bench decision in the case of Prabhu Spinning Mills, supra and the decision of Hon’ble Madras High Court in the case of Super Spinning Mills Ltd., supra, we allow the claim of assessee and reverse the orders of lower authorities.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Appeal No.CIT(A), Coimbatore-3/10640/2019-20 dated 24.09.2021. The assessment was framed by the Income Tax Officer, Non-Corporate Ward – 4(1), Coimbatore for the assessment year 2017-18 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 21.08.2018.

2. The only issue in this appeal of assessee is as regards to the order of CITA() not allowing the replacement of spare parts as revenue expenditure and treated the same as capital expenditure. Without prejudice, the assessee has also raised allowance of claim of deduction u/s. 80IA of the Act and computed levy of taxes u/s.115JC of the Act. For this, assessee has raised the following effective grounds:-

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