1997 PLP (Trib (PTD)

443,476 7-5-91 Spindle with bolster ring 185,805 9-5-91 -do- 185,850 30-6-91 Sofa set Bed Newari Chair Table 11,500 11,400 1,600 11,631 50,531 19-6-91 Electronic scale 40,000 21-8-91 Conveyor belt 554,000 29-8-91 -do- 233,000 From the above description it is clear that the above detail includes spare parts of Generator ring cups, Cone winding drum, spindle with booster ruin and conveyor belt etc. All these items are of the kind which have a life of normally one year or so. We have already declared purchase of these items to be of revenue nature in the earlier part of this order after relying upon various judgments. Moreover, the details given by the I.T.O. does not give complete picture of the whole amount of the claim. He has only narrated those items which. in his opinion are of capital nature from the total claim of Rs.7,245,

892. It is also not his case that the claim is unverifiable. There is a, however, little exception to the extent of furniture etc. The addition in which has separately been made. We, therefore, cannot agree with learned CIT(A) on this point and direct for deletion of all these expenditures spent for the purpose of repair and maintenance. We need not repeat here that while deleting this amount, we are relying upon various judgments of the Income Tax Appellate Tribunal already discussed above. The other add backs being fair and reasonable does not call for any interference by us. The same have rightly confirmed by learned CIT(A). Coming to the departmental appeal following two grounds have been taken up:

"That the learned CIT(A) was not justified two allow T.S.A. Depreciation on capitalized repair of machinery. That the deletion of financial expenses at Rs.6,14,859 representing interest on borrowed capital and ad anteed undertaking is unjustified. " The claim of the department that the learned CIT(A) was not justified to allow Triple Shift Allowance on capitalization of machinery, becomes redundant in view of allowance of repair and maintenance expenditure as revenue expenditure. The question of depreciation on this amount shall automatically be waved of. Regarding capitalization of the amount of repair of machinery on account of exchange fluctuation representing interest on borrowed capital, the deletion of add backs by learned CIT(A) was after rebutting, I.T.O's. claim that the borrowed amount on which this interest was paid has been transferred to sister concern. The learned A.R. established before CIT(A) that the amount taken as loan has been used by the impugned company and learned CIT(A) after relying upon a judgment of Supreme Court of Pakistan cited as 1992 (66) Tax 136 deleted this amount. In this regard the department has not been able to establish a different fact then the one given by learned CIT(A) in his order as such we maintain the same. Assessment Year 1993-94: The claim of the assessee is the same as in the assessment year 1992-93. The learned CIT(A) has allowed partial relief in machinery maintenance expenses while the learned I.T.O. had capitalized the whole of it. The assessee has informed that all these expenditures being the same and having been spent for replacement of worn out boosters and spindles on which the Tribunal has already given its judgments, the whole amount was allowable as a revenue expenditure. We agree with the learned A.R. on the basis of earlier orders, hence the whole amount is hereby deleted. The add-backs are the same and have been made on that of same facts and circumstances as in the earlier years. Hence assessee's case in respect thereof is hereby rejected for the impugned year. An additional point has also been taken in respect of application of provision of sections 80-C and 80-D with the arguments that the matter is subjoined in the honourable Supreme Court of Pakistan. Since this issue is not within the jurisdiction of the Income Tax Appellate Tribunal, we do not comment on the same. The departmental appeal is against partial relief allowed for capitalization of the repair and maintenance expenses. We have already decided this issue in favour of the assessee by fully allowing expenditure. Similarly, the other ground which relates to deletion of the addition made on account of capital borrowed and amount advanced to the sister concern is also now settled. The loan having been used by the impugned company from amount other than borrowed by him, there was no question of disallowance of interest thereon. Assessment Year 1994-95: In the impugned appeal the assessee have a different claim then that of the earlier year. The learned CIT(A) has disallowed extra shift depreciation of Rs.7,86,126 on electric generator. While add backs in various heads have also been challenged. The A.R. has argued that the generator was not used as a stand by generator and that the same is an additional arrangement and is being regularly used simultaneously alongwith electric connection of the WAPDA. He said that in the sister concerns of this textile unit, the expenditure of the generator being less than the WAPDA electricity on average, WAPDA line has been disconnected by option. We, however, consider it more appropriate to set aside the case for determination of the facts that whether the generators have been used as an additional facility alongwith the regular power supply or the same is a stand by in case of electric shut down for the purposes of load shedding. The I.T.O. shall allow the same if the same is regularly used and only refuse if it is not used as substitute on shut down of the electricity. The issue of add backs does not need any modification. The assessee appeal shall fail on this issue. In case of department the claims are the same. For example deletion on account of interest of borrowed capital capitalization of machinery account from store and repair and loss of fixed asset etc. The first two issues already stand settled in the earlier years, hence we do not interfere in the order of the learned CIT(A) for the reasons given in our earlier judgment for the assessment year 1989-90. The issue regarding loss of fixed asset has been settled by learned CIT(A) in the following manner:

"The appellant argued that while filing the returns this had been ignored and income under this head was declared at Rs.850,086 for tax purposes. The declared computation of income filed with the return is reproduced as under:

Loss as per audited accounts Rs.1,29,14,410 Less: (i) Dep. charges in A/C. (ii) Loss on sale of fixed assets Rs.60,29,395 4,85,433 65,14,825 Loss prior to depreciation Rs. 63,99,582 Add: (i)Dep. as per I. T. Rules LOSS Rs.1,34,57,744 Less: Gain on sale of fixed assets Loss as Returned Rs.1,34,07,658 In view of the factual position as reproduced above it is clear that the loss of Rs.485,433 has been added twice. The addition made by the assessing officer is deleted." From the above details, it is clear that the amount has already been reduced from loss by adding Rs.50,086 as gain. We, therefore, hold that the order of the learned CIT(A) does not call for any modification. The departmental appeal fails on this point also. Appeal in all the years as such is disposed of in the manner and to the extent as mentioned above. C.M.S./374/Trib. Order accordingly.