M/S. Ballimal Naval Kishore & Anr vs Commissioner Of Income Tax on 10 January, 1997
The reliance of the AO on the decision of Hon'ble ITAT, Delhi in
the case of Punj Hospitality Pvt. Ltd. which in turn has relied upon
the decision of the Hon'ble Supreme Court in the case of Ballimal
Navalkishore vs. CIT 224 ITR 414 on the contrary supports the
case of the assessee. If as per the test laid down by the Hon'ble
Court as noted in the Page 13 of the Assessment order is "the
expression current repairs means - expenditure for the purpose of
preserving or maintaining an already existing asset and which
does not bring new asset into existence" This test is fulfilled as no
new asset has come into existence but the expenses incurred are
ITA No.333/Ahd/2011
Landmark Automobils Pvt Ltd
For AY 2007-08
6
only for preserving or maintaining an already existing asset.
Another test noted in the said decision is that "they are such
repairs as are attended to as & when need arises which must be
by test of commercial expediency." Here also, this test is
complied with. The expenses are incurred on the basis of Dealer
Development Guide set-up by Honda Company and since the
assessee being in the sole business of dealing in Cars / Spares of
Honda Company can legitimately think it expedient to prepare its
show room, workshop in accordance with such standards
The Hon'ble Supreme Court in the case of Alembic Chemical
Works Co. Ltd. V/s. CIT 177 ITR 377 held,
"It would, in our opinion, be unrealistic to ignore the rapid
advances in researches in antibiotic medical microbiology and to
attribute a degree of endurability and permanence to the technical
know-how at any particular stage in this fast changing area of
medical science. The state of the Art in some of these areas of
high priority research is constantly updated so that the know-how
cannot be said to be the element of the requisite degree of
durability and non-phemerality to share the requirements and
qualifications of an enduring capital asset. The rapid strides and
science and technology in the field should make us a little slow
and circumspect in too readily pigeonholing an outlay, such as
this as capital."