The Tax Publishers2020 TaxPub(DT) 0915 (Del-Trib)

INCOME TAX ACT, 1961

Section 32(1)

Assessee failed to demonstrate whether spare parts which were used on machine malfunctions, brought into existence a new asset or given enduring benefit to assessee. In absence of satisfying the requirement for constituting a machinery spare as capital expenditure, expenditure incurred on machinery repairs could not be allowed as capital expenditure and consequent depreciation claimed also could not be allowed especially when AO himself allowed claim in respect of machinery spares actually consumed during the year under section 37(1).

Depreciation - Allowability - Machinery spares -

Assessee claimed depreciation on machinery spares. AO disallowed assessee's claim on the found that machinery spares being in stock were not put to use, though capitalised to plant and machinery. Held: Assessee failed to demonstrate whether spare parts which were used on machine malfunctions, brought into existence a new asset or given enduring benefit to assessee. In absence of satisfying the requirement for constituting a machinery spare as capital expenditure, expenditure incurred on machinery repairs could not be allowed as capital expenditure and consequent depreciation claimed also could not be allowed especially when AO himself allowed claim in respect of machinery spares actually consumed during the year under section 37(1).

REFERRED :

FAVOUR : Against the assesse

A.Y. : 2004-05 & 2005-06

INCOME TAX ACT, 1961

Section 14A

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