DCIT, Baroda Vs Liberty Phosphate (ITAT Ahemdabad)- It was not in dispute that in respect of an another building at Udaipur, this assessee itself has capitalised the expenditure. However, the impugned repairs were in respect of an another factory building situated at F-227, Mewar Industrial Area Udaipur, wherein the company has carried out manufacturing of Fertiliser; namely, Single Super Phosphate. One of the ingredients of the said fertiliser is stated to be sulphuric acid.
Due to acidic fumes the corrosion was high. The acidic fumes have harmed the civil structure. Repairs were preventive in nature to check the corrosion or decay of the building. Repairs were also needed for safety reasons. Facts of the case thus have revealed that the assessee being owner of the property has considered necessary to maintain the property in good condition, therefore, incurred repairs which were nothing but in the nature of current repairs. Repairs were incurred to preserve and maintain an existing asset. The object of the expenditure was not bringing into existence an another new asset. By the incurring of the said expenditure, the assessee.
When the interest free loan is given to various parties out of own funds, no dis-allowance can be made u/s 36(1)(vii) for interest on borrowed funds.
Case law Details
DCIT, Baroda Vs Liberty Phosphate
1. ITA No. 160/AHD/2009 – A.Y. 2004- 05
2. ITA No. 503/AHD/2009 – A.Y. 2005- 06
Dated 17 th June, 2011