Appeal details
Counselvise Citation
[2017] 130 COUNSELVISE.COM (IT) 8019 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
11 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-01-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
18-01-2017
Assessment Year
2006-2007
Appeal Filed On
22-01-2016
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI [ CAMP: COIMBATORE ] . . . , ! .#$#%, ' !( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ./ ITA NOS.1655, 1656, 1657, 1658, 1559, 1660 & 1661/MDS/2016 % *% / ASSESSMENT YEARS : 1993-94, 1994-95, 1998-99 & 2005-06 TO 2008-09 M/S SUPER SPINNING MILLS LTD., ELGI TOWERS PB 7113, GREEN FIELDS, PULIAKULAM ROAD, COIMBATORE 641 045. PAN : AADCS 0672 G V. THE ASSISTANT / DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(2), COIMBATORE. (,-/ APPELLANT) (./,-/ RESPONDENT) ./ ITA NO.132/MDS/2016 % *% / ASSESSMENT YEAR : 2006-907 M/S PRECOT MERIDIAN LTD., SUPREM, 7161, GREEN FIELDS, PULIAKULAM ROAD, COIMBATORE 641 045. PAN : AABCP 3038 K V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(2), COIMBATORE. (,-/ APPELLANT) (./,-/ RESPONDENT) ,- 0 1 / APPELLANTS BY : SHRI K. RAVI, ADVOCATE ./,- 0 1 / RESPONDENT BY : SHRI PATHLAVATH PEERYA, CIT & SHRI SUNDER RAO, CIT 2 0 3' / DATE OF HEARING : 18.01.2017 45* 0 3' / DATE OF PRONOUNCEMENT : 18.01.2017 2 I.T.A. NOS.1655 TO 1661/MDS/16 / O R D E R PER BENCH: ALL THE APPEALS FILED BY THE DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER O F INCOME TAX (APPEALS)-1, COIMBATORE. IN THE CASE OF FIRST ASSE SSEE, THE APPEALS ARE FILED FOR THE ASSESSMENT YEARS 1993-94, 1994-95 , 1998-99, 2005-06, 2006-07, 2007-08 AND 2008-09 AND IN THE CA SE OF SECOND ASSESSEE, THE APPEAL IS FOR THE ASSESSMENT YEAR 200 6-07. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THESE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOSING OF THE S AME BY THIS COMMON ORDER. 2. THE ISSUE ARISES FOR CONSIDERATION IS WITH REGAR D TO COST OF REPLACEMENT OF MACHINERIES IN THE SPINNING MILLS. 3. SHRI K. RAVI, THE LD.COUNSEL FOR THE ASSESSEES, SUBMITTED THAT MADRAS HIGH COURT IN ITS JUDGMENT DATED 24.07. 2013 IN THE ASSESSEE'S OWN CASE, DIRECTED THE CIT(APPEALS) TO C ONSIDER WHETHER THERE WAS ANY INCREASE IN THE PRODUCTION CA PACITY AFTER REPLACEMENT OF MACHINERIES. INSPITE OF THIS SPECIF IC DIRECTION OF THE HIGH COURT, ACCORDING TO THE LD. COUNSEL, THE CIT(A PPEALS) HAS NOT 3 I.T.A. NOS.1655 TO 1661/MDS/16 CONSIDERED THE INCREASE IN THE CAPACITY AFTER REPLA CEMENT OF MACHINERIES. THE LD.COUNSEL SUBMITTED THAT THE MAT TER MAY BE REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. 4. ON THE CONTRARY, SH. PATHLAVATH PEERYA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE HIG H COURT AT PARA 17 OF ITS JUDGMENT, DIRECTED THE CIT(APPEALS) TO CO NSIDER THE JUDGMENTS OF APEX COURT IN CIT V. RAMARAJI SURGICAL COTTON MILLS (2007) 294 ITR 328 AND IN CIT V. SRI MANGAYARKARASI MILLS PVT. LTD. 2009-TIOL-86-SC-II AND TO CONSIDER THE CASE ON MERI T, THEREFORE, IT NEED NOT BE REMANDED BACK TO THE FILE OF THE ASSESS ING OFFICER. THE LD. D.R. HAS ALSO PLACED HIS RELIANCE ON THE JUDGME NT OF MADRAS HIGH COURT IN CIT V. MADURA COATS (2012) 19 TAXMANN .COM 74. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN THE EARLIER ROUND OF LITIGATION, THE MADRAS HIGH COURT SPECIFIC ALLY CONSIDERED THE JUDGMENTS OF APEX COURT IN THE CASE OF CIT V. RAMAR AJU SURGICAL COTTON MILLS (2007) 294 ITR 328. AT PARA 14 OF ITS JUDGMENT, THE MADRAS HIGH COURT OBSERVED AS FOLLOWS:- 4 I.T.A. NOS.1655 TO 1661/MDS/16 14. KEEPING THE DECISIONS REFERRED TO ABOVE, ONE CAN DETECT THAT IN CONSIDERING THE CLAIM OF THE ASSESSE E, THE DECISION MUST BE GUIDED BY BUSINESS PRUDENCY OF THE NECESSITY OR EXPEDIENCY WHICH COMPEL THE ASSESSEE TO CARRY ON SUCH REPAIRS/ REPLACEMENT AND IF THIS REPA IR ULTIMATELY HAS GONE IN FOR BETTERING ITS BUSINESS P ROFITS IN THE NATURE OF INCREASING ITS PROFITS, AS HELD BY TH E SUPREME COURT IN THE CASE OF CIT V. RAMARAJU SURGIC AL COTTON MILLS REPORTED IN (2007) 294 ITR 328 (SC) THROUGH INCREASE IN THE PRODUCTION CAPACITY, THEN T HE OUTLAY, NOT BEING JUST TO CARRY ON THE BUSINESS TO EARN PROFIT OUT OF ITS EXISTENCE, BUT TO ENLARGE ITS PRO FIT- EARNING CAPACITY, THE EXPENDITURE MAY FALL FOR CONSIDERATION UNDER THE HEAD OF CAPITAL EXPENDITURE . BUT, WHETHER THE EXPENDITURE IN QUESTION HAS NO SUCH INGREDIENT OF INCREASING ITS PRODUCTION CAPACITY, EXPENDITURE WOULD NECESSARILY FALL UNDER THE HEAD OF REVENUE EXPENDITURE. 6. SUBSEQUENTLY AT PARA 17, THE MADRAS HIGH COURT H AS ALSO CONSIDERED THE JUDGMENT OF APEX COURT IN RAMARAJU S URGICAL COTTON MILLS (SUPRA) AND IN SRI MANGAYARKARASI MILLS PVT. LTD. (SUPRA). THEREAFTER THE MATTER WAS REMANDED BACK TO THE FILE OF THE CIT(APPEALS) TO CONSIDER THE CASE ON MERIT. IN VIE W OF SPECIFIC FINDING OF THE MADRAS HIGH COURT AT PARA 14, THIS T RIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) IS BOUND T O RECORD HIS FINDING WHETHER THERE WAS INCREASE IN PRODUCTION CA PACITY AFTER REPLACEMENT OF MACHINERIES. SINCE THE CIT(APPEALS) HAS NOT CONSIDERED THE DIRECTION OF THE MADRAS HIGH COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER HAS TO BE RE MANDED BACK TO 5 I.T.A. NOS.1655 TO 1661/MDS/16 THE FILE OF THE CIT(APPEALS) AND NOT TO THE FILE OF THE ASSESSING OFFICER. ACCORDINGLY, THE ORDER OF THE CIT(APPEALS ) IS SET ASIDE AND THE ISSUE OF COST OF REPLACEMENT OF MACHINERIES IS REMITTED BACK TO THE FILE OF THE CIT(APPEALS). THE CIT(APPEALS) SHA LL CONSIDER THE MATTER AFRESH IN THE LIGHT OF THE JUDGMENT OF THE M ADRAS HIGH COURT IN THE ASSESSEES OWN CASE (SUPRA) AND THEREAFTER D ECIDE THE ISSUE IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE O PPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSE SSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED AND DICTATED IN THE OPEN COURT ON 18 TH JANUARY, 2017 AT COIMBATORE. SD/- SD/- ( ! .#$#% ) ( . . . ) (ABRAHAM P. GEORGE) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER COIMBATORE, 7 /DATED, THE 18 TH JANUARY, 2017. KRI. 6 I.T.A. NOS.1655 TO 1661/MDS/16 0 .389 :9*3 /COPY TO: 1. ,- /APPELLANTS 2. ./,- /RESPONDENT 3. 2 ;3 () /CIT(A)-1, COIMBATORE 4. PRINCIPAL CIT-1, COIMBATORE 5. 9< .3 /DR 6. =% > /GF.
