Law:

Section:

Income-tax-- ----Capital or revenue expenditure---Machinery---Replacement of wooden trolley parts by steel trolley parts---Is revenue expenditure---Indian Income Tax Act, 1961. Whether, in the given facts and circumstances of the case, the replacement of a part of machinery would amount to revenue expenditure or capital expenditure is primarily a question of fact: Held accordingly, that the Tribunal, in arriving at the finding that expenditure on replacement of wooden trolley parts by stainless steel trolley parts was revenue in nature, had correctly understood and applied the legal principle for determining the character of an expenditure to find whether it was revenue or capital to the facts of the case. JUDGMENT R. BALIA, J.---The Income-tax Appellate Tribunal, Ahmedabad Bench "B", has referred the following question of law arising out of Cross­ Objection No. 15/(Ahd) of 1982 in I. T. A. No. 2087/(Ahd) of 1981: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the expenditure of Rs.23,323 which was for the replacement of wooden trolleys by stainless steel trolleys was not in the nature of capital expenditure?" The facts relevant for the consideration of the above case is that during the assessment year in question parts of wooden trolleys were replaced by stainless steel parts. He claimed the cost of such replacement of parts as deduction as revenue expenditure. It was also the case of the assessee that during the earlier years, while the entire trolley was being replaced, the Income-tax Officer has allowed such replacement as part of the revenue expenditure. However, the Income-tax Officer did not agree with the assessee and…

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