| |
| The Tax Publishers2019 TaxPub(DT) 7871 (Mum-Trib) INCOME TAX ACT, 1961
Section 37(1)
Electricity meters have to be replaced periodically on account of obsolescence, meters burning out or becoming faulty, etc. Thus, expenses on replacement of old meters were necessarily required to be incurred for business purpose. Further, as the replacement of meters did not increase the generation and/or distribution capacity of electricity, AO was not justified in disallowing said expenditure by treating them as capital in nature.
|
Capital or revenue expenditure - Replacement of electricity meters - Nature of expenditure -
Assessee claimed the deduction of cost on replacement of old meters. However, AO disallowed the assessee's claim for deduction by treating it as capital expenditure and granted depreciation thereon while completing the assessment. Held: Electricity meters have to be replaced periodically on account of obsolescence, meters burning out or becoming faulty, etc. Thus, expenses on replacement of old meters were necessarily required to be incurred for the purposes of carrying out business operations more efficiently and more profitably. Further, as the replacement of meters did not increase the generation and/or distribution capacity of electricity, AO was not justified in disallowing said expenditure by treating them as capital in nature because the expenditure were of revenue nature.
Followed:CIT v. M/s. Reliance Energy Ltd. [Income Tax Appeal No.277 OF 2009, dt. 1-7-2013]
REFERRED : Empire Jute Company Limited v. CIT (1980) 124 ITR 1 (SC) : 1980 TaxPub(DT) 1083 (SC)
FAVOUR : In assessee's favour
A.Y. : 2013-14
INCOME TAX ACT, 1961
Section 80IA
 SUBSCRIBE FOR FULL CONTENT
|