INCOME TAX ACT, 1961

Section 37(1)

Capital or revenue expenditure - Expenses on account of repairs and maintenance expenses consisting of replacement of Primary Adaptive Display and replacement of Tail Rotor Blade Assembly - AO taking note of quantum treated expenses as capital in nature -

Assessee company engaged in providing aircrafts on charter basis claimed deduction on account of repairs and maintenance expenses consisting of replacement of Primary Adaptive Display and replacement of Tail Rotor Blade Assembly. AO disallowed deduction on the ground that replacement was in the nature of major repairs which added to the lfie of asset and, therefore, expenses were of capital in nature.Held: Quantum of expenditure could not determine whether a particular expenditure is capital or revenue in nature. Replacement of Primary Adaptive Display and Tail Rotor Blade was essential to keep aircraft in a running usable condition and replacements did not enhance useful life of the aircraft. Thus, impugned repairs would fall under current repairs and, therefore, deduction was to be allowed under section 37(1).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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