Commissioner of Income Tax vs Malhotra Industrial Corporation

Jawahar Lal Gupta, J.—In this appeal u/s 260A of the Income Tax Act, 1961, the Revenue maintains that the following substantial question of law arises for the consideration of this court :

"Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in treating the expenses incurred on the purchase of rolls as a revenue expenditure particularly when such rolls have been termed as capital assets of the concern on which depreciation is allowable under the Income Tax Act itself at the prescribed rates ?"

We have heard Mr. R. P. Sawhney, learned counsel for the Revenue. He submits that the Tribunal has erred in treating the deduction claimed by the assessee as revenue expenditure.

The assessee is running a steel rolling mill. In para. 4 of the petition of appeal, it has been admitted that "in the absence of rolls, it is difficult to prepare the finished products in the case under reference." Yet the Revenue alleges that the rolls cannot be treated as an integral part of that machinery or plant.

The Tribunal has found as a fact that "the nature of the assessee''s business is such that it requires frequent replacement of rolls. The expenditure incurred thereon would certainly fall in the nature of current repairs, as the same does not result in creating of capital asset or benefit of enduring nature."

We find that in the circumstances of the case, the view taken by the Tribunal is just and reasonable. It is not shown to be contrary to any provision of law. In fact, it is the Revenue''s own case that the frequent change of rolls is essential for preparing the finished products. Thus, no substantial question of law arises.

Mr. Sawhney submits that the rolls were purchased after October 1, during the relevant period. Thus, only 50 per cent, depreciation should have been granted.

No such question has been raised in the memorandum of appeal. Thus, the plea cannot be considered.

No other point has been raised.

In view of the above, we find no merit in the appeal. It is accordingly dismissed in limine.