Case Law Details
Jaya Hind Industries Limited Vs DCIT (ITAT Pune)
which is used in the robotic arms forming part of high pressure die casting machines can be allowed as revenue expenditure. The factual submissions made on behalf of the appellant are that the expenditure was incurred on replacement of Gripper which is part of robotic arms forming part of high pressure die casting machines. There is no increase of productivity or capacity on account of incurring this expenditure. It is also submitted that this part namely Gripper cannot be machine itself i.e. it cannot perform any function independently. These facts remain uncontroverted by the Department. No doubt the Hon’ble Supreme Court in the case of Sarvana Spinning Mills Ltd. (supra) categorically held that the expenditure incurred by the assessee towards replacement of machinery with new machinery constitutes a capital expenditure. Even the Hon’ble Supreme Court in the case of CIT vs. Sri Mangayarkarasi Mills P. Ltd, 315 ITR 114 held that each machinery which functions independently should be treated as such not as a mere part of any composite machinery of the plant.
Undisputed the claim for deduction is not u/s 31 but u/s 37 of the Act. Therefore, the finding of the ld. CIT(A) replacement of part of machinery does not fall under current repairs is irrelevant. In the circumstances, the reasoning of the ld. CIT(A) cannot be sustained in the eyes of law. In the present case admittedly the claim for deduction was not u/s 31 but u/s 37 of the Act. Therefore, the test to be applied what is replaced is only part and the necessity of replacement had arisen on account of the part become old and there is no increase in productivity or capacity after the replacement. Admittedly, it is not the case of the Revenue that on account of replacement of this part of machinery in productivity or capacity of production had gone up and this machine can independently work and deliver the different output. In the circumstances, we hold that the expenditure can be allowed as revenue deduction. The expenditure incurred on the replacement of Gripper can be allowed as revenue deduction. Accordingly, we set-aside the orders of the lower authorities of both Assessing Officer and the ld. CIT(A) and direct the Assessing Officer to allow the same as revenue expenditure.
FULL TEXT OF THE ORDER OF ITAT PUNE
PER INTURI RAMA RAO, AM:
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