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| The Tax Publishers2020 TaxPub(DT) 1457 (Guj-HC) : (2020) 424 ITR 0130 : (2020) 272 TAXMAN 0042 INCOME TAX ACT, 1961
Section 37(1)
By repairing plant and machinery, no new asset had come into existence, therefore, treatment given by AO was not correct and expenditure incurred on replacement of damaged parts of plant and machinery was allowable as revenue expenditure.
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Capital or revenue expenditure - Expenditure incurred on replacement of damaged parts of plant and machinery - -
In one of the units of assessee, fire broke out on account of which lot of damage was caused to plant and machinery in factory premises. In order to make good those damages, repair work was carried out in plant and machinery by replacement of damaged parts and expenses incurred was claimed as deductible under section 37(1). AO disallowed deduction holding the same to be capital expenditure.Held: By repairing plant and machinery, no new asset had come into existence, therefore, treatment given by AO was not correct and expenditure incurred on replacement of damaged parts of plant and machinery was allowable as revenue expenditure.
Followed:Addl. CIT v. Desai Brothers (1977) 108 ITR 14 (Guj) : 1977 TaxPub(DT) 281 (Guj-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 1997-98
INCOME TAX ACT, 1961
Section 37(1)
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