AIT-2011--HC-Allindiantaxes.docVIP

AIT-2011-302-HC IN THE HIGH COURT OF DELHI AT NEW DELHI ITA No.14/2005, 1600 1670/2010 RESERVED ON: 20.05.2011 PRONOUNCED On: 03.06.2011 ITA No.14/2005 M/s. Bharat Gears Limited …..Appellant through : Mr. O.S. Bajpai, Sr. Advocate with Mr. V.N. Jha VERSUS Commissioner of Income-Tax, Central I New Delhi …..Respondent through: Ms. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anand ITA Nos.1600/2010 and 1670/2010 Commissioner of Income-Tax, Central I New Delhi …..Appellant through: Ms. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anand VERSUS M/s. Bharat Gears Limited …..Respondent through : Mr. O.S. Bajpai, Sr. Advocate with Mr. V.N. Jha Coram:Mr. Justice A.K. SIKRI and Mr. Justice M.L. MEHTA AIT Head Note: the assessee had claimed an expenditure of Rs.83,79,134/- as revenue expenditure on the ground that this was incurred by repairs and reconditioning of Fent Gear Machine and was in the nature of “current repairs”. the expenditure in question incurred is capital in nature and cannot be treated as on account of “current repairs?. It has come on record that the machine in question which was purchased in the year 1981 had broken down completely. It remained idle from 5th December, 1991. The negotiations for reconditioning and repair were held with HMT Limited as a result of which purchase order dated 20th June, 1992 was placed with HMT Limited. Total reconditioning and overhauling of the machinery was undertaken. The machinery had, thus, outlived its utility and huge expenditure was incurred by replacing many vital parts in order to make the same functional. Expenditure was of such a nature that it brought into existence altogether new machinery. In any case, the expenditure was for the purpose of securing a benefit of enduring nature. Even if technically new asset had not come into existence or the capacity of the overhauled machine after reconditioning was not enhanced, fact remains that after prolonged use this machinery was lying idle in a broken down cond