DCIT, CHENNAI V. M/s. Neyveli Lignite Corporation Ltd., Neyveli

ITA 1458/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61279 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-05-2012
• Assessment Year: 1993-1994
• Appeal Filed On: 24-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGAHAVAN
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Commercial expediency; Revenue expenditure; Capital expenditure
• Section: 143(3); 37(1); 37

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NOS. 219, 220 & 221, 981 AND 982/MDS/2009 ASSESSMENT YEARS : 1995-96, 96-97, 97-98, 98-99 AND 99-2000 & I.T.A. NOS. 1458 AND 1459/MDS/2011 ASSESSMENT YEARS: 1993-94 AND 94-95 THE ASSISTANT COMMISSIONER OF INCOME TAX/ THE DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT , CHENNAI - 600 101. VS. M/S. NEYVELI LIGNITE CORPORATION LTD., CORPORATE OFFICE, P.O. NEYVELI 607801 CUDDALORE DISTRICT. [PAN: AAACN1121C] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI R. VIJAYARAGAHAVAN, ADVOCATE DATE OF HEARING : 29.05.2012 DATE OF PRONOUNCEMENT : 18.07.2012 ORDER PER BENCH THESE SEVEN APPEALS OF THE REVENUE FOR THE ASSESSM ENT YEARS 1993- 94 TO 1999-2000 ARE DIRECTED AGAINST THREE DIFFEREN T CONSOLIDATED ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) LARGE TAXP AYER UNIT, CHENNAI DATED 29.08.2008, 30.01.2009 AND 23.06.2011 FOR DIF FERENT ASSESSMENT YEARS. SHRI SHAJI P. JACOB, ADDL. CIT REPRESENTED O N BEHALF OF THE REVENUE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 2 AND SHRI R. VIJAYARAGAHAVAN, ADVOCATE REPRESENTED O N BEHALF OF THE ASSESSEE. 2. THE COMMON GROUND IN ALL THESE REVENUES APPEAL S, EXCEPT IN THE APPEALS FOR THE ASSESSMENT YEARS 1993-94 AND 1994-9 5, IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDI NG THAT THE EXPENSES INCURRED ON LIFE EXTENSION PROGRAM (LEP) OF THERMAL POWER STATION I (TPS- I) AND EXPENDITURE ON REJUVENATION OF BUCKET WHEEL EXCAVATORS (BWE) ARE ALLOWABLE AS REVENUE EXPENDITURE. THE COMMON GROUND IN THE APPEALS OF THE REVENUE FOR THE ASSESSMENT YEARS 1993-94 AND 1994-9 5 IS ONLY IN RESPECT OF EXPENSES INCURRED ON LIFE EXTENSION PROGRAMME (L EP) OF THERMAL POWER STATION I (TPS-I). 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING ENGAGED IN THE BUSINESS OF GENERATION O F ELECTRICITY AND MINING OF LIGNITE. THE ASSESSEE INCURRED EXPENDITURE ON TP S-I AND REJUVENATION OF BWE DURING THESE ASSESSMENT YEARS AND CLAIMED SUCH EXPENDITURE AS REVENUE EXPENDITURE ALLOWABLE UNDER SECTION 37 OR A S CURRENT REPAIRS UNDER SECTION 31(I) OF THE INCOME TAX ACT. THE ASSESSING OFFICER WHILE COMPLETING THESE ASSESSMENTS UNDER SECTION 143(3) FOR ALL THE ASSESSMENT YEARS FROM 1993-94 TO 1999-2000 DISALLOWED THE SAID EXPENDITUR E INCURRED ON TPS I AND REJUVENATION OF BWE TREATING AS CAPITAL EXPENDI TURE AS AGAINST THE CLAIM I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 3 OF THE ASSESSEE AS REVENUE EXPENDITURE OR EXPENDITU RE ALLOWABLE AS CURRENT REPAIRS. 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) CONFIRMED THE ASSESSMENTS MADE BY THE ASSESSING OFFICER TREATING THE SAID EXPENDITURE AS CAPITAL EXPENDITURE AND ALLOWING DEPRECIATION. 5. ON FURTHER APPEAL TO THIS TRIBUNAL BY THE ASSES SEE, THIS TRIBUNAL BY ITS ORDER DATED 25.01.2007 IN I.T.A. NOS. 1836 & 1837/M DS/02 AND 658, 1109, 1368 & 1369/MDS/03 FOR THE ASSESSMENT YEARS 1995-96 TO 2000-01 RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER WIT H A DIRECTION TO DECIDE THE ISSUE DE NOVO IN ACCORDANCE WITH LAW AFTER PROVIDIN G ADEQUATE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. RELEVANT PORTION OF TH E ORDER IS AS UNDER: 2. I.T.A. NO.: 1836 & 1837/MDS/02 AND 658, 1109, 1368 & 1369/MDS/03: IN THE APPEALS FILED BY THE ASSESSEE THE FIRST COMM ON ISSUE RELATES TO HE ALLOWABILITY OF EXPENDITURE ON REPAIRS AND REPLACEM ENT. DURING THE RELEVANT ASSESSMENT YEARS ASSESSEE CARRIED OUT REPAIRS AND R EPLACEMENT OF THE PARTS AND CLAIMED THAT THE REPAIRS WERE IN THE NATURE OF REPLACEMENT OF PLANT AND MACHINERY. IT WAS ALSO STATED THAT THESE ITEMS WERE NOT NEW MACHINERY AND REPAIRS AND REPLACEMENTS DID NOT BRING INTO EXISTEN CE ANY ASSET OF ENDURING NATURE. THEREFORE, THE EXPENDITURE INCURRED TOWARDS THE REPAIRS AND REPLACEMENT BE ALLOWED AS A REVENUE EXPENDITURE. RE LIANCE WAS PLACED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT RENDE RED IN THE CASE OF CIT V. JANAKIRAM MILLS LTD. (275 ITR 403) (MAD.). IN THIS CASE HONBLE HIGH COURT HAS HELD AS UNDER: WHERE THERE HAS BEEN NO CAPACITY ADDITION AND THE REPLACEMENT HAS BEEN MADE ONLY TO RESTORE THE MACHINERY TO ITS ORIG INAL STATE OF EFFICIENCY SO THAT THE ENTIRE INTEGRATED MANUFACTUR ING UNIT WHICH IS CONSIDERED AS A PROFIT-MAKING APPARATUS FUNCTIONS E FFICIENTLY AND I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 4 PRODUCES QUALITY PRODUCTS, THE CONCEPTS OF CURRENT REPAIRS, MODERNIZATION AND EXPENDITURE LAID OUT OR EXPEND ED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS HAVE T O BE INTERPRETED FOLLOWING THE PRINCIPLE OF UPDATING CONSTRUCTION TA KING NOTE OF THE BUSINESS NEEDS AND COMMERCIAL EXPEDIENCY ESPECIALLY IN A COMPETITIVE BUSINESS ENVIRONMENT CREATED BY THE GLOBALIZATION A ND NOT BY APPLYING OLD CONCEPTS OF WHAT IS CAPITAL AND WHAT IS REVENUE . IN VIEW OF THE AFORESAID DECISION, IT IS NECESSARY TO SEE THE NATURE OF REPAIR UNDERTAKEN BY THE ASSESSEE, WHETHER THE EXPENDITURE WAS INCURRED IN THE CAPITAL FIELD OR IN THE REVENUE FIELD. WE FIND THAT THE REVENUE AUTHORITIES HAVE NOT EXAMINED THE ISSUE IN THE RIGHT PERSPECTIVE. TH E ADMISSIBILITY OF THE CLAIM IS TO BE EXAMINED ON THE TOUCHSTONE OF THE GUIDING PRINCIPLES LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF JA NAKIRAM MILLS LTD., SUPRA. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER ON THIS COUNT AND RESTORE IT TO THE FILE OF THE AO WITH DIRECTION TO DECIDE IT DE NOVO IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE OF B EING HEARD. SIMILAR DIRECTION IS GIVEN BY THIS TRIBUNAL IN ITS ORDER DATED 20.02.2008 IN I.T.A. NOS. 656 & 657/MDS/2003 FOR THE ASSESSMENT Y EARS 1993-94 AND 1994-95 ALSO. 6. PURSUANT TO THE ABOVE ORDER OF THIS TRIBUNAL, T HE ASSESSING OFFICER PASSED CONSEQUENTIAL ORDERS UNDER SECTION 154/143(3 ) READ WITH SECTION 254 OF THE INCOME TAX ACT FOR THE ASSESSMENT YEARS 1993 -94 TO 2000-01. 7. THE ASSESSING OFFICER WHILE COMPLETING THE ASSE SSMENTS, PURSUANT TO THE DIRECTIONS OF THIS TRIBUNAL, ONCE AGAIN DISALLO WED THE EXPENDITURE INCURRED ON REPAIRS TO MACHINERY I.E., TPS-I AND RE JUVENATION OF BWE TREATING IT AS CAPITAL EXPENDITURE ON THE GROUNDS T HAT THERE IS INCREASE IN PRODUCTION/POWER GENERATION CAPACITY OF THE UNITS D UE TO THIS EXPENDITURE INCURRED ON TPS-I/BWE. THE ASSESSING OFFICER OBSERV ED THAT IT IS A ONE-TIME I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 5 EXPENDITURE UNDERTAKEN AT THE END OF THE LIFE SPAN OF THE ASSET WITH A VIEW TO GIVE THE ASSET A NEW LIFE. THE ASSESSING OFFICER AL SO OBSERVED THAT IN THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT V. JANAKIRAM MILLS LTD. [275 ITR 403], THE HONBLE HIG H COURT CONSIDERED THE EXPENDITURE AS REVENUE IN NATURE ON THE GROUND THAT THERE IS NO INCREASE IN THE PRODUCTION CAPACITY. HOWEVER, IN THE CASE OF PR ESENT ASSESSEE, ACCORDING TO THE ASSESSING OFFICER THERE IS INCREAS E IN PRODUCTION/POWER GENERATION CAPACITY AND THEREFORE THE EXPENDITURE O F REPAIRS AND REPLACEMENT CLAIMED BY THE ASSESSEE IS CAPITAL IN N ATURE. THE ASSESSING OFFICER ALSO OBSERVED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE DID NOT FALL WITHIN THE MEANING OF CURRENT REPAIRS UNDER SE CTION 31(1). THE ASSESSING OFFICER PLACED RELIANCE ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT V. SARAVANA SPINNING MILLS (P) LTD. [29 3 ITR 201]. 8. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) HELD THAT THERE IS NO INCREASE IN PRODUCTION CAPACITY IN THE CASE O F THE ASSESSEE AND THE ASSESSING OFFICER WRONGLY PRESUMED THAT THERE IS IN CREASE IN PRODUCTION CAPACITY AND THERE WAS ONLY REPLACEMENT OF PARTS OF EQUIPMENTS AND OVERHAULING OF EQUIPMENTS, THERE WAS NO ENDURING AD VANTAGE TO THE ASSESSEE TO TREAT THE EXPENDITURE IN THE CAPITAL FI ELD. WHILE COMING TO THIS CONCLUSION, THE COMMISSIONER OF INCOME TAX (APPEALS ) CONSIDERED VARIOUS DECISIONS INCLUDING THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 6 CIT VS. SARAVANA SPINNING MILLS (P) LTD. [293 ITR 2 01] AND PASSED A DETAILED ORDER AS UNDER: 1) THE APPELLANT NEYVELI LIGNITE CORPORATION LTD I S A PUBLIC SECTOR UNDERTAKING CARRYING ON THE BUSINESS OF GENERATION OF ELECTRICITY. THE APPEALS RELATE TO ASSESSMENT YEARS 199596, 1996-97 AND 1997-98 AND INVOLVE COMMON ISSUES AND, HENCE, ARE PROPOSED TO BE DISPOSED OFF THROUGH A COMMON ORDER. 2) THE APPEALS HAVE BEEN FILED AGAINST THE ORDER PA SSED BY THE ASSESSING OFFICER PURSUANT TO DIRECTION OF THE HONOURABLE INC OME TAX APPELLATE TRIBUNAL VIDE ORDER IN ITA NOS.1836 & 1837/MDS/02 AND 658, 1109, 1368 & 1369/MDS/03 FOR ASSESSMENT YEARS 199596, 199697, 199798, 1998-99, 1999-2000 & 200001 DATED 25/01/07. 3) THE POINTS IN APPEAL RELATE TO THE CLAIM OF EXPE NSES INCURRED ON LIFE EXTENSION PROGRAM (LEP) OF THERMAL POWER STATION I (TPSI) AND EXPENDITURE ON REJUVENATION OF BUCKET WHEEL EXTRACT ORS AS REVENUE EXPENDITURE. 4) THE AMOUNTS WERE INITIALLY TREATED AS CAPITAL B Y THE APPELLANT, BUT CLAIMS FOR REVENUE EXPENDITURE WERE MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN REGARD TO ASSESSMENT YEAR 199596. IN REGARD TO ASSESSMENT YEAR 1996-97 AND 1997-98 T HE CLAIMS WERE MADE IN THE RETURN OF INCOME. THE CLAIM WAS DISALLO WED ON THE GROUND THAT THE EXPENDITURE IS CAPITAL IN NATURE BY THE LE ARNED ASSESSING OFFICER. THE REASON ADDUCED BY THE ASSESSING OFFICER WAS TH AT THE EXPENDITURE HAD RESULTED IN ENDURING ADVANTAGE TO THE APPELLANT AND THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF SUPREME COURT I N THE CASE OF BALLIAMMAL NAVAL KISHORE VS CIT (224 ITR 414). 5) THE APPELLANT WENT ON APPEAL FOR THE AY 95-96 & 9697 BEFORE THE LEARNED CIT (APPEALS) AND VIDE ORDERS DATED 25.09.2 002, THE LEARNED CIT (APPEALS) DISPOSED OF THE APPEAL REJECTING THE CLAIM OF THE APPELLANT. THE REASONS ADDUCED WERE :- A) THERE WAS CONSIDERABLE PLANNING AND EXECUTION IN VOLVED IN THE EXECUTION OF THE LEP I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 7 B) THE EXPENDITURE WAS A ONE TIME EXPENDITURE COVER ING THE PLANT I WHICH HAD OUTLIVED ITS UTILITY C) THERE WAS SUBSTANTIAL REPLACEMENT INVOLVED. D) THE EXPENDITURE HAD INCREASED THE PRODUCTION CAP ACITY AFTER THE PROGRAM OF REPAIRS. 6) THE LEARNED CIT (APPEALS) DISTINGUISHED THE CASE S RELIED UPON BY THE APPELLANT AS UNDER:- A) IN THE CASE OF CIT VS SERAIKELLA GLASS WORKS (P ) LTD 157 ITR 584 THE CASE WAS ONE THAT INVOLVED DEDUCTIBILITY OF EXPENDI TURE INCURRED YEAR AFTER YEAR. B) THE DECISION IN THE CULTURAL ENTERPRISE CORPORAT ION VS CIT 196 ITR 488 DEALT WITH A SITUATION OF REPAIRS TO HOUSE PROP ERTY. IN CIT VS RAM NAGAR SUGAR MILLS LTD 21 ITR 191 THE REPLACEMENT WA S A BOILER BY A NEW ONE WHICH WAS EXACTLY SIMILAR TO THE BOILER REP LACED. C) THERE WAS ALSO NO INCREASE IN PRODUCTION CAPACIT Y OF THE SUGAR MILLS. FURTHER BOILER OF A SUGAR MILLS CANNOT BE COMPARED TO BOILER OF A POWER PLANT D) THE LEARNED CN (APPEALS) DREW SUPPORT FROM THE D ECISION IN CIT VS DHARBANGA SUGAR CO LTD ,29 ITR 21 WHEREIN IT WAS HE LD THAT IF THERE IS REPLACEMENT OF ENTIRE OR SUBSTANTIALLY THE WHOLE MACHINERY THERE IS NO QUESTION OF REPAIR. IN THE CASE OF CIT VS NORTH OIL MILLS COMPANY LIMITED 140 ITR 173 THE KERALA HIGH COURT HAD HELD AS CAPITAL REPLACEMENT EXPENDITURE ON ENGINES WITH HIGHER HP A S THE EFFICIENCY OF THE BOATS WAS CONSIDERABLY ENHANCED. 7) THE APPELLANT PROCEEDED IN APPEAL TO THE HONORAB LE TRIBUNAL AND RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS JANAKIRAM MILLS LTD 275 ITR 403 WHERE IN IT WAS HELD THAT EXPENDITURE ON REPLACEMENT OF CARDING SYSTEM BY HIG H PRODUCTION CARDS WAS REVENUE IN NATURE. 8) THE HONOURABLE TRIBUNAL HOWEVER REMITTED THE ISS UE TO THE ASSESSING OFFICER WITH THE DIRECTION TO CONSIDER THE MATTER A FRESH IN THE LIGHT OF THE DECISION OF THE MADRAS HIGH COURT DECISION CITE D BY THE APPELLANT. WHILE RESTORING THE FILE TO THE ASSESSING OFFICER, THE HONORABLE. ITAT OBSERVED AS FOLLOWS:- I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 8 IN VIEW OF THE DECISION RENDERED BY THE JURISDICTI ONAL OF HIGH COURT IN THE CASE OF CIT VS JANKIRAM MILLS LTD. (275 ITR 403) IT IS NECESSARY TO SEE THE NATURE OF REPAIR UNDERTAKEN BY THE ASSES SES, WHETHER THE EXPENDITURE WAS INCURRED IN THE CAPITAL FIELD OR RE VENUE FIELD. WE FIND THAT THE REVENUE AUTHORITIES HAVE NOT EXAMINED THE' ' ISSUE IN THE RIGHT PERSPECTIVE. THE ADMISSIBILITY OF THE CLAIM IS TO B E- EXAMINED ON THE TOUCHSTONE OF THE GUIDING PRINCIPLES LAID DOWN BY T HE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF JANKIRAM MILLS LTD; SUPRA' . 9) THE LEARNED ASSESSING OFFICER IN HIS ORDERS PASS ED PURSUANT TO THE DIRECTION OF THE HONOURABLE TRIBUNAL HAS AGAIN DISALLOWED THE CLAIM HOLDING THAT THE EXPENDITURE IN QUESTION RESULTED I N ENDURING ADVANTAGE. THE REASONS ADDUCED WERE THAT THERE WAS INCREASE IN PRODUCTION CAPACITY. THE EXPENDITURE IS NOT CURRENT REPAIRS AND HENCE NOT COVERED BY SEC 31 (I) AND THE DECISION OF SUPRE ME COURT IN THE CASE OF CIT VS SARAVANA SPINNING MILLS LTD 293 ITR 201 WAS APPLICABLE. HENCE THE APPELLANT HAS FILED THE PRESENT APPEALS. 10) ON BEHALF OF THE APPELLANT IT IS FORCEFULLY SU BMITTED AS UNDER:- A) THE ADDITION MADE BY THE ASSESSING AUTHORITY WAS PRIMARILY ON THE BASIS THAT THERE HAS BEEN INCREASE IN PRODUCTION CA PACITY. THE APPELLANT SUBMITS THAT THERE WAS NO INCREASE IN PRO DUCTION CAPACITY DUE TO THE EXPENDITURE AS IS DEMONSTRATED BY THE FI GURES FOR GENERATION OF ELECTRICITY FROM THE PERIOD OF COMMENCEMENT OF T HE LEP AND THE YEAR OF COMPLETION THEREOF. B) THE PRODUCTION OF TPU I AND MINES DURING THE YEA RS WERE AS UNDER: S.NO. PARTICULARS OF YEAR PRODUCTION MINE- 1. LIGNITE (LAKH TONNES) T.P.S.-I GROSS (M.U.) T.P.S.-I NET (M.U.) 1 1990-91 75.45 3861.58 3449.03 2 1991-92 81.12 4027.07 3556.56 3 1992-93 65.05 2831.56 2493.17 4 1993-94 61.45 2371.3 2079.04 5 1994-95 67.08 3108.56 2709.34 6 1995-96 72.68 3190.82 2777.88 7 1996-97 72.81 3151.8 2764.84 8 1997-98 75.01 3447.29 3031.91 9 1998-99 75.42 3772.99 3312.36 I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 9 C) THE COPIES OF THE ANNUAL REPORTS FOR THE DECLARA TION OF THE ABOVE HAS BEEN SUBMITTED DURING THE HEARING. D) IT IS SUBMITTED FROM THE DETAILED STATEMENT STAT ED ABOVE IT WOULD BE SEEN THAT IN SO FAR AS TPU I IS CONCERNED THE GENER ATION OF ELECTRICITY WHICH WAS 3861.58 MILLION UNITS IN THE FINANCIAL YE AR 90-91 HAD BEEN REMAINED AT THE SAME LEVEL IN THE SUBSEQUENT FINANC IAL YEARS UPTO 1998-1999 (SUBJECT TO SHUT DOWN FOR REPAIRS). THE A R HAS SUBMITTED THE SET OF DIRECTOR'S REPORT'S COPY. E) IT WOULD ALSO BE SEEN THAT IN THE SUBSEQUENT YEA R THE PRODUCTION HAD NOT EXCEEDED THE SAME. IT WAS THEREFORE SUBMITTED T HAT THE BASIS OF THE DISALLOWANCE BY THE ASSESSING AUTHORITY REGARDING I NCREASE IN PRODUCTION CAPACITY WAS ILL-FOUNDED. F) IT IS FURTHER SUBMITTED THAT THE CAPACITY OF THE TPU I AS DECLARED IN THE ANNUAL ACCOUNTS, WHICH ALWAYS REMAINS AT 600 MW, TE STIFIES TO THE POINT. G) ALSO IT WOULD BE SEEN THAT EVEN IN REGARD TO MIN ES, THE PRODUCTION THAT WAS 75.45 LAKH TONS HAD ONLY BEEN SUSTAINED AT THE SAME LEVEL. H) IT WAS THEREFORE SUBMITTED THAT THE SUBSTRATUM F OR THE DISALLOWANCE STANDS DISLODGED. 11) IN SO FAR AS THE LEP EXPENDITURE IS CONCERNED, THE APPELLANT HAD ALSO FURNISHED A TECHNICAL REPORT FROM THEIR EXPERTS ACC ORDING TO WHICH THE FOLLOWING POINTS EMERGE: A) THE TPU I UNIT HAD OPERATED OVER 35 YEARS AND TH E PLANT HAD DEVELOPED PROBLEMS. B) A TEAM OF SOVIET EXPERTS WERE CALLED IN TO CONDU CT RESIDUAL LIFE STUDIES WHO HAD REPORTED THE REQUIREMENT OF REPAIRS AND REC OMMENDED ACTION FOR SAFE OPERATION OF THE PLANT. (COPY OF THE REPOR T WAS PLACED ON RECORD). THE FOLLOWING HAVE BEEN GIVEN AS THE OBJECTIVE OF THE STUDY: I) TO CARRY OUT 100% METAL CONTROL ( ANALYSIS OF ME TAL CONDITION) OF THOSE PARTS FAILURES WHICH ARE SYSTEMATICALLY OB SERVED IN I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 10 WORLD PRACTICE ON ANALOGOUS EQUIPMENT, AND, AS A RU LE LEAD TO GRAVE CONSEQUENCES. II) TO EVALUATE THE RELIABILITY OF THE BOILER DRUM S, MAIN STEAM PIPE LINES, PIPES OF WATER WALLS, STEAM SUPER HEATERS AN D ECONOMIZERS OF THE TURBINE EQUIPMENT. III) TO WORK OUT THE RECOMMENDATION. IV) THE RESULTS OF THE3 STUDY ON METAL CONTROL HAS BEEN REPORTED AS UNDER: 1. STEAM SUPER HEATER PIPES CUTTINGS WERE MADE FROM THE STEAM SUPERHEATER PIPES WHICH WERE SUBJECTED TO VISUAL INSPECTION AND METALLOGRAPHIC E XAMINATION. ALL THE CUTTINGS ON THE INNER SIDE WERE COVERED WIT H A LAYER OF SCALE, THE MAXIMUM THICKNESS OF WHICH (1 MM) WAS OBSERVED ON THE PIPES OF THE OUTLET STAGE OF THE CONVECTIVE SUPER HEATER. ON THE OUTER SIDE OF THE PIPES THERE WAS A LAYER OF DENSE DEPOSITS WITH THE THICKNESS UPTO 2.5 MM. THE WALL THICKNESS AND OUTER DIAMETERS OF THE P IPES DEVIATED FROM THE RATED DIMENSIONS NEGATIVELY UPTO 10-15%. IN ALL THE CUTTINGS THE STRUCTURE, CONSISTS OF FERRITE AND CARBIDES ARRANGE D BOTH AS A KIND OF CHAINS ON THE BOUNDARIES OF THE GRAINS AND INSIDE T HEM. THE ABOVE STATED MIOROSTRUCTURE CONDITION OF THE CUTTINGS AND AVAILABILITY OF THICK SCALE REVEAL DURABLE OVERHEAT OF THE PIPES ABOVE TH E RATED VALUE. THE AVAILABILITY OF DURABLE OVERHEAT IS ACCOMPANIED BY CONSEQUENT PIPE FAILURES WITH NON-SIGNIFICANT INCREASE OF THE DIAME TRE AND SMALL THINNING OF THE EDGE IN THE PLACE OF BREAKAGE. IT W AS OBSERVED MORE THAN ONCE ON BOILERS 8A, 8B, 4, 7 AND OTHERS. THE D ESCRIBED ABOVE MIOROSTRUCTURE FOR STEEL 12 XIM IS CHARACTERIZED BY REJECTING SIGNS WHICH REDUCE THE DURABLE STRENGTH LIMIT MORE THAN T WO TIMES COMPARED WITH THE INITIAL CONDITION. 2. SUPER HEATER HEADER OPERATION IT IS POSSIBLE TO LEAVE IN, OPERATION THE SUPERHEAT OR HEADERS OPERATING AT TEMPERATURE MORE THAN 450C UNDER THE FOLLOWING CONDITIONS; - WELDING BENCH MARKS FOR MEASURING RESIDUAL DEFORM ATION AND DIAMETERS OF EACH PIPE; I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 11 - THE MEASUREMENT SHOULD BE REPEATED AFTER 7000 HOU RS OF OPERATION AT RATED STEAM PARAMETERS; IF THE RATE OF CREEP MEASURED AFTER 7000 HOURS IS LESS THAN 1.5 X 10 % /HOUR THE FURTHER OPERATION OF THE HEADERS IS POSSI BLE WITH PERIODICAL CONTROL EVERY 25-30 THOUSAND HOURS. HOWEVER, IT IS PREFERABLE TO REPLACE THE HEADERS. I N THIS CASE SUPPLY OF STEAM SUPER HEATERS IN BLOCKS IS POSSIBLE. IT WILL ENSURE THEIR HIGH QUALITY MANUFACTURE AND RELIABLE OPERATION. 3. CONNECTING BOILER PIPES THE ABOVE STATED BOILER PIPES WERE SUBJECTED TO ANA LYSIS ACCORDING TO THE PRESENT STANDARDS. AS A RESULT, IT WAS DETERMINED. - TRANSFER PIPES OF 109 X 10 MM AND 133 X 10 MM COULD BE LEFT IN OPERATION. HOWEVER, ABSENCE OF RESIDUAL DEFORMATION MEASUREMENTS DOES NOT GIVE A DEFINITE PICTURE ABOUT THEIR RESIDU AL RESOURCES AND METAL CONDITION; MORE THAN 70% OF UPRISERS FROM STE EL 20O 135 AND 108 RAM DO NOT MEET STRENGTH REQUIREMENTS ON THEIR ACTUAL WALL THICKNESS; MORE THAN 90% OF WATER DOWN COMERS DO NO T MEET STRENGTH REQUIREMENTS. 4. DRUMS IN THE SHELLS, BOTTOMS, WELDING JOINTS, OPENINGS, I NVESTIGATED, SECTIONS OF THE DRUM OF BOILER 9B NON ACCEPTABLE DEFECTS WERE NOT D ETECTED. THE DRUM IS SUITABLE FOR DURABLE OPERATION IF THE RESULTS OF PE RIODICAL CONTROL ARE POSITIVE. IN BOILER 9A DRUM IN THE NEAR WELD ZONE OF THE WELD ING JOINT 23 IN THE INNER SIDE A CRACK WAS DETECTED HAVING A LENGTH OF 420 MM AND DEPTH UP TO 3 MM. AFTER ELIMINATING THE CRACK AND GRINDING THE METAL IT IS RECOMMENDED TO CARRY OUT CONTROL OF THE ABOVE STATED WELDING JOINT AFTER TWO YEARS OF THE DRUM OPERATION. IN CASE OF POSITIVE RESULTS OF THE CONTR OL THE DRUM IS SUITABLE FOR DURABLE OPERATION WITH PERIODICAL CONTROL EVERY 25- 30 THOUSAND HOURS. IN UNIT N1 BOILER DRUM NON CONTINUOUS LAMINATION OF THE SHELL BETWEEN WELDING JOINTS J4 AND J5 WAS DETECTED. AFTER 7000 HOURS OF THE, DRUM OPERATION IT IS RECOMMENCED TO CARRY OUT METAL CONTROL OF THE ABOVE STATED SHELL AND AFTER COMPARING THE RESULTS OF THIS CONTROL WITH THOSE OF 1989 TO TAKE A DECISION ABOUT THE SUITABILITY OF THE DRUM FOR FURTHER OPERA TION. THE SOVIET SPECIALIST, ON HIS BEHALF, WILL PREPARE A REQUEST TO THE PLANT MANUFACTURER OF THE DRUM CONCERNING THE POSSIBILITY OF ITS OPERATION WITH TH E ABOVE STATED DEFECT. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 12 5. MAIN STEAM PIPE LINES THE MAIN STEAM PIPE LINES SUPPLIED WITH THE BOILERS BY THE PLANT MANUFACTURER CAN BE LEFT FOR DURABLE OPERATION (FOR A TOTAL LIFE EXPENDITURE UP TO 180 200 THOUSAND HOURS). THE REST OF THE MAIN STEAM PIPES E XHAUSTED THEIR RESOURCES. IT IS PROVED BY THE INCREASE OF THEIR DIAMETRE UP T O 275 MM, REDUCTION OF THE BEND EVALITY ALMOST UPTO 0 % THE WALL THICKNESS OF THE BENDS OF THE MAIN STEAM PIPE LINES OF UNIT N9 DOES NOT MEET THE REQUI REMENTS OF STRENGTH FOR THE PERIOD OF OPERATION UPTO 150 THOUSAND HOURS AND THA T OF UNIT N1 UP TO 200 THOUSAND HOURS. 6. 100% OF FEED WATER PIPES OF 108 X 7 MM. 7. CASING AND OTHER PARTS OF THE TURBINES SUBJECTE D TO CONTROL ACCORDING TO THE WORKED OUT PROGRAMME ARE SUITABLE FOR FURTHE R OPERATION WITH PERIODICAL CONTROL EVERY 25-30 THOUSAND HOURS. IN A DDITION TO THE CONTROL STATED IN THE PROGRAMME IT IS RECOMMENDED TO CARRY OUT CONTROL OF THE HP ROTOR BOROSCOPIC OPENING FOR ABSENCE .OF DEFECTS AN D NON-PERMISSIBLE VALUE OF RESIDUAL DEFORMATION. 12) IN SO FAR AS REJUVENATION OF BUCKET WHEEL EXCA VATORS ARE CONCERNED THE APPELLANT'S TECHNICAL EXPERTS WERE CALLED FOR H EARING AND A TECHNICAL NOTE HAS BEEN SUBMITTED BY THEM. THE FOLLOWING POINTS EM ANATED OUT OF THE SAME. C) THE BUCKET WHEELS REJUVENATED WERE INSTALLED BET WEEN 1960 AND 1966. D) THE EQUIPMENTS HAD WORKED ROUND THE CLOCK FOR EX CAVATION OF OVERBURDEN AND LIGNITE. E) ALL EQUIPMENTS HAD TO WORK IN OPEN ATMOSPHERE SU BJECTIVE ATMOSPHERIC CORROSION. F) THE STRUCTURAL PARTS HAD THINNED OUT DUE TO THE ABOVE. G) THERE WERE REPLACEMENT OF ONLY PARTS LIKE CRAWLE R PAD, CRAWLER FRAMES, TRACK GEAR BOX, SELF ALIGNING TRACK ETC ALL PART OF THE BUCKET WHEEL EXTRACTOR. H) THERE WAS ALSO REPAIRS TO SECONDARY STRUCTURES E TC, STEERING TILLER, UNDERCARRIAGE, TURNTABLE ETC. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 13 I) IT WAS THEREFORE SUBMITTED THERE WAS NO REPLACE MENT OF ANY OLD PLANT WITH A NEW ONE BUT ONLY REPLACEMENT OF PARTS OF A MACHINE. J) A DIAGRAM OF THE BUCKET WHEEL EXCAVATOR WAS GIVE N AND PART OF THE SAME WERE IDENTIFIED TO DRIVE HOME THE POINT THAT T HE REPLACEMENTS CARRIED OUT WERE PARTS OF THE BUCKET WHEEL EXCAVATO R WHICH IS A SINGLE EQUIPMENT. K) IT WAS THEREFORE SUBMITTED THAT THE EXPENDITURE WERE IN THE NATURE OF REPAIRS ACCORDINGLY ADMISSIBLE AS DEDUCTION UNDER S EC 31 (1) OR 37 (1). L) IT WOULD BE SEEN FROM THE TECHNICAL REPORT THAT THERE WAS ONLY REPLACEMENT OF COMPONENTS AND OVERHAULING OF EQUIPM ENTS. M) IT WAS SUBMITTED THAT THE EXPENDITURE WAS INCURR ED TO SUSTAIN PRODUCTION UNDER SAFE OPERATING CONDITIONS AND HENC E THE EXPENDITURE WOULD BE IN THE REVENUE DOMAIN. N) IT WAS EMPHASIZED THAT THE SAFE CONTINUED OPERATION OF THE PLANT WAS IN JEOPARDY AND HENCE THE EXPENDITURE WAS INCURRED TO ENABLE THE ASSESSEE TO CONTINUE TO CARRY ON THE BUSINESS AND A CCORDINGLY THE EXPENDITURE WAS REVENUE EXPENDITURE. O) THE APPELLANT ALSO PRODUCED A TECHNICAL WRITE UP ON THE NATURE OF WORK CARRIED OUT WHICH HAS BEEN REPRODUCED BELOW: TECHNICAL WRITE UP FOR THE REJUVENATION OF BWES 1144/1145/1193 THE 700 LTRS. BWES (1144/1145/1193 & 1198) WERE ERE CTED AND COMMISSIONED BETWEEN 1960 & 1966. THESE BWES ARE DE PLOYED IN THE LIGNITE CORPORATION MINES FOR EXCAVATION OF OVERBUR DEN / LIGNITE. THESE EQUIPMENTS HAVE WORKED ROUND THE CLOCK EXCEPT DURIN G THE TIME OF REGULAR MAINTENANCE I BREAKDOWN AND PLANNED STOPPAGE. ALSO THESE EQUIPMENTS WORKED IN THE OPEN ATMOSPHERE, WHICH IS CORROSIVE I N NATURE WITH RESPECT TO THE STEEL STRUCTURES. DUE TO THE ABOVE ATMOSPHERE THE STRUCTURAL PARTS OF THESE EQUIPMENTS HAVE THINNED OUT. ALSO BECAUSE OF THE CONTINUOUS WO RKING THESE EQUIPMENTS, SOME PARTS OF THESE EQUIPMENTS HAVE BEEN SUBJECTED TO DYNAMIC LOADING AND I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 14 ALSO THE PARTS HAVE BEEN SUBJECTED TO TENSION AND C OMPRESSION WHICH MIGHT CHANGE THE PROPERTIES OF MATERIAL. IN VIEW OF THE ABOVE CONDITIONS, THE OUTPUT OF THE MACHINE HAVE DEPLETED GRADUALLY. IN ORDER TO BRING BACK THE OUTP UT OF THE MACHINE CLOSE TO THE ORIGINAL THESE MACHINES HAVE BEEN REJUVENATED T O GIVE A NEW LEASE OF LIFE. THE PARTICULARS OF THE WORK CARRYOUT DURING THE REJ UVENATION WITH REFERENCE TO THE DRAWING IS SUBMITTED HEREWITH. THE NUMBER INDICATED WITHIN BRACKET BELOW IS THE PART REFERRED IN THE ABOVE DRA WING. THE DETAILS OF THE ITEM REPLACED (I) CRAWLER FRAME ASSEMBLY (2) THE CRAWLER FRAME CONSISTS OF CRAWLER PAD, CRAWLER FRAME, TRACK GEAR BOX. CRAWLER PAD: THE CRAWLER PADS IS THE ITEM ON WHICH THE TOTAL MA CHINE IS MOVING FOR HANDLING OVERBURDEN / LIGNITE DURING THE EXCAVATION AND AS MINE FACE ADVANCES. THESE ITEMS ARE ALWAYS HAVING CONTACT WIT H SOIL WHICH IS MOSTLY SLUSHY IN NATURE DEPENDING UPON THE AREA WHERE IT I S WORKING. DUE TO THE CONDITION OF THE SOIL AS WELL AS WORKING ATMOSPHERE THIS ITEM WILL CORRODE AND GET ELONGATED AND HENCE NEEDS REPLACEMENT IN THE NO RMAL CONDITIONS AT APPROPRIATE INTERVAL. DURING THE REJUVENATION THESE ITEMS WERE REPLACED. CRAWLER FRAMES: THESE BWES CONSISTING OF 6 NOS. OF CRAWLER FRAMES O N WHICH THE PARTS MEANT FOR MOVEMENT OF THE MACHINE ARE ASSEMBLED (SU CH AS ROLLERS, GEAR BOXES ETC). THE PARTS OF THESE ITEMS GETS THINNED O UT DUE TO PROLONGED EXPOSURE TO THE ATMOSPHERIC CONDITION AND WORKING I N THE SLUSHY SOIL. ALSO THIS STRUCTURAL PART DEVELOPS CRACKS BECAUSE OF CON TINUOUS WORKING. THIS ITEM WAS REPLACED WITH THE NEW ONE KEEPING THE SKELETON OF THE ITEM FOR SUBSEQUENT MODIFICATIONS. TRACK GEAR BOX: THE GEAR BOX IS THE PRIME MOVER FOR THE TRACK SYSTE M IN THE MACHINE. IT WAS REPLACED TOTALLY AS A UNIT. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 15 (II) SELF ALIGNING TRACK: THIS ITEM IS USED TO ASSEMBLE TWO NOS. OF CRAWLER F RAMES TO COMPLETE SET OF CRAWLER FRAMES (SELF ALIGNING TRACK). THE WO RKING CONDITION OF THIS ITEM IS ALSO SIMILAR TO THAT OF CRAWLER FRAMES. HENCE TH IS STRUCTURE WAS ALSO SEEN TO HAVE THINNED OUT AND GOT DAMAGED. THIS ITEM WAS RE-USED AFTER REPAIR AND STRENGTHENING SUFFICIENTLY. (III) TOWER FRAME COMPLETES INCLUDING PULLEY MAST (4) : THE TOWER FRAME IS ALSO CALLED AS PYLON. IN THE COU RSE OF WORKING, THE SOIL GETS ACCUMULATED IN THE BOTTOM PORTION OF 'THI S ITEM. BECAUSE OF THE NATURE OF THE SOIL, THIS PORTION HAS ALSO BECOME TH INNER . THIS ITEM IS ONE THE CRITICAL ITEM ON WHICH MOST OF THE UPPER PARTS OF T HE BUCKET WHEEL ARE MOUNTED. HENCE IT WAS TOTALLY REPLACED INSTEAD OF R EPAIR/STRENGTHENING AND HOWEVER IN THE COURSE OF REPLACEMENT CERTAIN IMPROV EMENT WERE ADOPTED. (IV) BUCKET WHEEL BOOM COMPLETE: IT IS CONSISTING OF RECEIVING CONVEYOR, BUCKET WHEE L AND BUCKETS. RECEIVING CONVEYOR (6), BUCKET WHEEL (7) AND BUCKET S (9) : THE RECEIVING CONVEYOR IS ALSO A STRUCTURAL PARTS, HANDLING THE MATERIAL EXCAVATED WITH THE HELP OF BUCKETS. THESE PARTS WERE REPLACED CONSIDERING THE PROLONGED USAGE DUE TO WEAR AND TEA R. (V) DISCHARGE BOOM COMPLETE (8): THE MATERIAL EXCAVATED BY THE BUCKET WHEEL IS BEING HANDLED THROUGH THE RECEIVING CONVEYOR AND LOADED IN THE DISCHARGE BOOM CONVEYOR WHICH IS IN TURN TRANSPORTED TO CONVEYOR SYSTEM AND IT IS DU MPED IN THE DUMPING YARD. THIS PART IS ALSO (DISCHARGE BOOM COMPLETE) SUBJECT ED TO CONTINUOUS LOAD AND ALSO GETS CORRODED DUE TO ATMOSPHERIC CONDITION. IN VIEW OF THE ABOVE, THIS PART WAS ALSO REPLACED WITH NEW ONE. (VI) MAIL SLEWING BALL RACE AND MAIN SLEWING GEAR BOX SHELL (12): THE UPPER PART OF THE BUCKET WHEEL EXCAVATOR (SUPER STRUCTURE) IS MOUNTED ON THE UNDER CARRIAGE THROUGH TURN TABLE. B ETWEEN THESE TWO PARTS A BALL RACE IS PROVIDED FOR ROTATING THE SUPER STRUCT URE. AS THE BALL RACE IS CONTINUOUSLY ROTATING WITH .THE SUPER STRUCTURE THI S PART GETS WORN OUT DUE TO WEAR AND TEAR AND HENCE IT WAS REPLACED. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 16 THE SLEW GEAR BOX SHELL IS THE ONE ON WHICH THE DRI VE PARTS OF THE SLEW GEAR BOX IS ASSEMBLED. THIS GEAR BOX SHELL GOT DAMA GED DUE TO PROLONGED USE AND HENCE IT WAS STRENGTHENED AND REUSED. (VII) BUCKET WHEEL BOOM HOIST WINCH DRUM (13): . THE BUCKET WHEEL HOIST WINCH DRUM IS FOR HOISTING / LOWERING THE BUCKET WHEEL BOOM FOR EXCAVATION OF OVERBURDEN/LIGNITE. THE BUCK ET WHEEL BOOM AND HOIST WINCH ARE CONNECTED WITH A ROPE WHICH IS USED FOR H OISTING / LOWERING OPERATION. THE HOIST WINCH DRUM AND ROPE WERE REPLA CED DUE TO WEAR AND TEAR AS THESE ARE MOST CRITICAL PART OF THE EQUIPME NT. THE COURSE OF REJUVENATION THE FOLLOWING PARTS WERE REPLACED / REPAIRED (I) SECONDARY STRUCTURES LIKE WALK WAY AND STAIR C ASE FOR UNDER CARRIAGE, TURN TABLE, BUCKET WHEEL BOOM, DISCHARGE BOOM, INTE RMEDIATE BOOM AND COUNTER WEIGHT BOOM. (II) MOTOR FOUNDATION AND MOTOR COVERS FOR ALL THE DRIVERS. (III) CABIN AND HOUSES (20) IN ADDITION TO THE ABOVE THE FOLLOWING COMPONENTS H AVE BEEN REPAIRED AND RE- USED : (I) STEERING TILLER (FST AND RST): THESE ITEMS ARE USED TO ASSEMBLE AND CONNECT TWO NO S. OF CRAWLER FRAMES TO COMPLETE SET OF CRAWLER FRAMES. THE WORKI NG CONDITION OF THESE ITEM WERE ALSO SIMILAR TO THAT OF CRAWLER FRAMES. HENCE THESE STRUCTURES HAVE ALSO BECOME THINNED OUT AND DAMAGED. THESE ITEMS WERE RE -USED AFTER REPAIR AND STRENGTHENING. (II) UNDER CARRIAGE (1): THE UNDER CARRIAGE IS A PART ON WHICH THE TOTAL SUP ER STRUCTURE IS MOUNTED. WITH REFERENCE TO THE UNDER CARRIAGE, THE SUPER STRUCTURE IS REVOLVING FOR EXCAVATION. AS ALREADY SUBMITTED THIS PART IS ALSO SUBJECTED TO VARIOUS LOAD WHILE IN OPERATION AND ALSO THE SOIL A CCUMULATION WILL BE THERE ON THE TOP PORTION OF THE PART WHICH ARE EXPOSED. T HIS SOIL HAS THE TENDENCY TO CORRODE THE TOP PLATE OF THIS ITEM. THE CONDITION O F THE ITEM WAS TOTALLY BAD I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 17 AND REQUIRED LOT OF REPAIRS. HENCE IT WAS REPAIRED AND STRENGTHENED AND USED. (III) TURN TABLE (3): THE TURN TABLE WAS REPAIRED AND STRENGTHENED DUE TO IS PROLONGED, THINNING OUT OF PLATES AND DAMAGE OF STRUCTURES. (IV) COUNTER WEIGHT BOOM AND BOX (10): THE COUNTER WEIGHT BOOM IS A PART, WHICH IS USED FO R THE BALANCING THE MACHINE WHILE IN OPERATION. THE COUNTER WEIGHT BOOM WAS REPAIRED AND STRENGTHENED CONSIDERING THE YEARS IT HAS WORKED AN D THE VARIOUS LOADS SUBJECTED ON THIS ITEM DURING THE OPERATION. THIS S TRUCTURES HAVE GOT WEAKENED AND HENCE WERE USED AFTER SUFFICIENT STREN GTHENING. (V) INTERMEDIATE STRUCTURE: THE DISCHARGE BOOM IS SUPPORTED BETWEEN TURN TABLE AND COUNTER WEIGHT BOOM THROUGH THIS STRUCTURE. THE STRUCTURE W AS ALSO REPAIRED / STRENGTHENED AND USED. ON OVERALL BASIS, IT IS SUBMITTED THAT IN THE REJUV ENATION OF BWES, ONLY MAJOR OVERHAUL AND REPAIR WORKS WERE CARRIED OUT. T HE REPLACED PARTS WERE THE PART OF THE BWE AND WERE NOT CAPABLE OF WORKING INDEPENDENTLY. 12) WHILE THE FACTS RELATING TO LEP AND BWE REJUVEN ATION WERE AS STATED ABOVE IT WAS SUBMITTED THAT THE DISALLOWANCE WAS MA DE BY THE LEARNED ASSESSING AUTHORITY ON THE BASIS OF DECISION OF THE SUPREME COURT IN THE CASE OF SARVANA SPINNING MILLS LTD. 293 ITR 201 . 13) IN SO FAR AS THE CASE RELIED UPON BY THE LEARN ED ASSESSING OFFICER, THE APPELLANT SUBMITS THAT THE DECISION IN SARAVANA SPI NNING MILLS IBID RELATED TO A CASE WHERE THERE WAS COMPLETE REPLACEM ENT OF OLD MACHINERY. FURTHER SUPREME COURT HAD SPECIFICALLY S AID THAT THEY ARE NOT PRONOUNCING ANY DECISION ON THE ADMISSIBILITY O F DEDUCTION UNDER SEC 37 (I).THE APPELLANT RELIES UPON THE DECISION O F CIT VS RENU SAGAR POWER CO LTD 298 ITR 94 (ALL) WHERE A REPLACE MENT OF TURBINE ROTOR WAS HELD TO BE REVENUE IN NATURE. THE APPELLA NT FURTHER CITES UPON THE DECISION OF THE JURISDICTIONAL COURT IN TH E CASE OF CIT VS RANE MADRAS LIMITED 293 ITR 459 WHEREIN IT WAS HELD THAT EVEN EXPENDITURE ON A NEW FACTORY WAS HELD AS REVENUE. T HE APPELLANT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 18 SUBMITS THAT ITS CASE IS FAR SUPERIOR TO THAT ONE I NVOLVED IN THE DECISION. 14) THE LEARNED ASSESSING OFFICER PLACED FURTHER RE LIANCE ON THE FOLLOWING CASES IN SUPPORT OF THE STAND THAT THE EXPENDITURE BOTH IN REGARD TO LEP AND FOR REJUVENATION OF BUCKET WHEEL EXCAVATORS WERE CAPITAL IN NATURE A. (I) BALLIAMMAL NAVAL KISHORE AND ANOTHER VS CIT 224 ITR 414 (S C) (II) ASSAM BENGAL CEMENT CO. LTD (27 ITR 34) (SC) (III) CHELLAPALLI SUGAR LTD (98 ITR 167)(SC) (IV) CHABIRANI AGRO INDUSTRIAL ENTERPRISES LTD (191 ITR 226) (PAT) B. THE APPELLANT SUBMITS THAT THE DECISION OF SUPR EME COURT IN ASSAM BENGAL CEMENT COMPANY RELATES TO GRANTING OF LEASE RIGHTS FOR LIMESTONE MINES GRANTED IN RESPECT OF NEW QUARRIES AND HENCE THE SAME IS NOT APPLICABLE TO THE CASE OF THE APPELLANT. IN SO FAR AS THE RELIANCE PLACED ON CHALLAPALLI SUGAR CASE, THE APPELLANT THAT IT RELAT ED TO EXPENDITURE DURING CONSTRUCTION PERIOD AND HENCE NOT ON ALL FOURS WITH THE CASE OF THE APPELLANT. IN REGARD TO THE DECISION OF THE PATNA HIGH COURT I N THE CASE OF CHHABIRANI AGRO INDUSTRIAL ENTERPRISES LIMITED. VS COMMISSIONE R OF INCOME-TAX 191 ITR 226 (PATNA), IT IS SUBMITTED THAT THE CASE RELA TES TO BANK GUARANTEE COMMISSION PAID FOR ACQUIRING NEW MACHINERY. IN THE INSTANT CASE, THE FACTS INVOLVE REPAIR AND REJUVENATION DONE ALREADY EXISTI NG PLANTS NOT RESULTING ANY NEW CAPACITY. THE DECISION OF THE SUPREME COURT IN BALLIAMMAL NAVAL KISHRE AND ANOTHER AGAIN IS DIFFERENT ON FACTS. IN THAT CASE THERE WAS CONVERSION OF GINNING FACTORY INTO A CINEMA THEATRE . IT IS THEREFORE VEHEMENTLY ARGUED THAT THE CASES CI TED DO NOT HAVE ANY RELEVANCE TO THE ISSUE IN APPEAL. C. I HAVE CONSIDERED THE ABOVE SUBMISSIONS AND SUM MARIZED REASONS LISTED AS UNDER:- D. THE ENTIRE DISALLOWANCE SEEMS TO HAVE PROCEEDED ON THE ASSUMPTION THAT THERE HAS BEEN INCREASE IN PRODUCTION CAPACITY . IT IS CLEAR FROM MATERIAL ON RECORD, THAT THERE HAS BEEN NO INCREASE IN POWER GENERATION OR LIGNITE MINED. ACTUALLY THE PRODUCTION HAS INCREASED IF COM PARED TO IMMEDIATELY PRECEDING YEARS WHERE DUE TO THE REPAIR/OVERHAULING REQUIRED THE PRODUCTION HAD GONE DOWN SEVERELY. BUT IF THE SAME IS COMPARED WITH F.Y. 1990-91 AND 1991-92, IT IS FOUND THAT THE PRODUCTION HAS NOT EN HANCED. MOREOVER, REPAIRS WERE REQUIRED AS THE PRODUCTION MACHINERIES WERE FA CING SEVERAL BREAK- DOWNS LIKE THAT ON ACCOUNT OF MAINTENANCE/WEAR AND TEAR. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 19 E. THE ENTIRE EXPENDITURE ON LIFE EXTENSION PROGRA MME IN REGARD TO TPU I WAS INTENDED TO ENSURE CONTINUED OPERATION OF THE POWER PLANT; TOTAL REPLACEMENT OF THE PLANT WOULD HAVE RESULTED IN DIS PROPORTIONATELY HIGH EXPENDITURE. WHAT WERE REPLACED WERE PARTS OF INTEG RATED PLANT FOR GENERATION OF POWER AND THERE WAS NO REPLACEMENT OF MACHINERY AS A WHOLE. F. AS RIGHTLY OBSERVED BY TME APPELLANT, THE CASE OF SARAVANA SPINNING MILLS RELATED TO CLAIM UNDER SEC 31 (I) AND DID NOT DECIDE ALLOWABILITY OF EXPENDITURE UNDER SEC 37 (1) UNDER WHICH ALSO THE A PPELLANT HAD STAKED ITS CLAIM UNDER WHICH ALSO THE APPELLANT HAD STAKED ITS CLAIM. G. THE REPORT BY THE SOVIET ENGINEERS PRODUCED BY THE APPELLANT TESTIFY TO THE STATE OF DISREPAIRS OF THE PLANT. H. ALSO IN REGARD TO THE EXPENDITURE ON BUCKET WHE EL REJUVENATION THE EXPENDITURE IS ONE INCURRED FOR REPLACEMENT OF PART S AND NOT REPLACEMENT OF THE BUCKET WHEEL EXCAVATOR IN TOTO. I. THE SUPREME COURT IN THE CASE OF SARAVANA SPINN ING MILLS LTD (293 ITR 201) DEALT WITH THIS ISSUE AS FOLLOWS:- 'THE POINT FOR CONSIDERATION IS, WHETHER THE MODERN IZATION/CURRENT/ REPAIR EXPENDITURE IS ALLOWABLE AS 'REVENUE EXPENDI TURE', AS CLAIMED BY THE ASSESSEES OR THE REPLACEMENT OF CARDS/BLOW R OOM MACHINERY/ COMBING MACHINERY, ETC., ARE TO BE CONSIDERED AS 'C APITAL EXPENDITURE', AS CLAIMED BY THE REVENUE?' IT WAS CLARIFIED FROM T HE FACT OF THE CASE IT WAS DISCUSSED AS' FROM THE FACTS, IT IS CLEAR TH AT BLOW ROOM, CARDING, COMBING, DRAWING, ROVING, SPINNING AND WINDING ARE DIFFERENT DEPARTMENTS/DIVISIONS IN A TEXTILE MILL. IN EACH DE PARTMENT/DIVISION THERE ARE SEVERAL MACHINES. EACH OF THE ABOVE DEPAR TMENTS/DIVISIONS PERFORMS DIFFERENT FUNCTIONS AND THE FUNCTIONING OF EACH DEPARTMENT/ DIVISION PRODUCES A DIFFERENT OUTPUT WHICH IS CARRI ED FORWARD TO THE NEXT DEPARTMENT/ DIVISION HAVING DIFFERENT MACHINES THEREIN. FOR EXAMPLE, IN THE BLOW ROOM THERE ARE DIFFERENT BEATE RS (MACHINES) WHICH OPEN THE RAW COTTON AND REMOVE THE DIRT THERE FROM. THAT COTTON IS FORWARDED TO THE CARDING DEPARTMENT IN WHICH THERE ARE CARDING MACHINES EQUIPPED WITH AUTO LEVELERS WHICH PRODUCE SLIVER WHICH IS THEN CARRIED FORWARD TO THE COMBING DEPARTMENT. FOR EXAMPLE, IN THE CASE OF CONTINUOUS CASTING MACH INE IN THE STEEL INDUSTRY WE HAVE ONE CONTINUOUS INTEGRATED PROCESS UNDER WHICH SCRAP (RAW MATERIAL) IS PUT IN AND WHAT COMES OUT IS STEEL OR IRON OR I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 20 ALUMINIUM. ANOTHER EXAMPLE, IN THE CASE OF A PASTEURIZATION PLANT WE HAVE THREE CHAMBERS AND DUCTS. IN THE FIRST MILK IS COLLECTED, IN THE SECOND IT IS HEATED AND IN THE THIRD IT IS COOLED. DUCT CARRIES HOT AND COLD WATER. THE RAW MATERIAL IS RAW MILK, THE END P RODUCT IS THE PASTEURIZED MILK. IN THE HEAT CHAMBER THERE IS THE HEATER. IN THE COOLING CHAMBER WE HAVE A COOLING PLANT WHICH HAS A CONCEPT SIMILAR TO AIR-CONDITION PLANT. SUCH A PROCESS IS ONE INTEGRATED PROCESS. THEREFORE, THE TRIBUNAL AND THE HIGH COURT ERRED IN HOLDING THAT THE MANUFACTURING PROCESS IN THE TEXTILE MILL IS ONE CO NTINUOUS INTEGRATED PROCESS'. ACCORDINGLY THE APEX COURT HAS HELD IN THIS CASE, ' THAT THE ASSESSING OFFICER WAS RIGHT IN HOLDING THAT EACH MACHINE INCLUDING TH E RING FRAME WAS. AN INDEPENDENT AND SEPARATE MACHINE CAPABLE OF INDEPEN DENT AND SPECIFIC FUNCTION AND, THEREFORE, THE EXPENDITURE INCURRED F OR REPLACEMENT OF THE NEW MACHINE WOULD NOT COME WITHIN THE MEANING OF THE WO RDS 'CURRENT REPAIRS'. FURTHER, THE SUPREME COURT OBSERVED WHETHER AN EXPE NDITURE IS REVENUE OR CAPITAL IN NATURE WOULD DEPEND AN THE FACTS OF EACH CASE. WE DO NOT WISH TO EXPRESS ANY OPINION AN THE APPLICABILITY OF SECTION 37(1) IN THE PRESENT CASE. THERE WERE CERTAIN CIVIL APPEALS WRONGLY TAGGED WIT H THE PRESENT BATCH WHICH WILL BE DECIDED SEPARATELY BY US AS THEY CONCERN WI TH SECTION 37(1). HENCE WE DO NOT WISH TO EXPRESS ANY OPINION ON APPLICABILITY OF SECTION 37(1). HOWEVER, IN THIS CASE IT HAS BEEN POINTED OUT BY TH E APPELLANT AND NOT STRONGLY CONTROVERTED BY THE AO ON THE BASIS OF EVIDENCE THAT IT IS NOT THE REPLACEMENT OF A NEW MACHINE BUT IT IS THAT OF REPLACEMENT OF PARTS OF MACHINERY OR OVERHAULING OF OLD AND WORN O UT EQUIPMENTS AND HENCE ALLOWABLE AS REVENUE EXPENDITURE AS CLEAR LY BORNE OUT BY THE FACTS BROUGHT ON RECORD BY THE APPELLANT. J. THE DECISION OF THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS RENU SAGAR POWER COMPANY LTD., ( 298 ITR 94) WHICH HAS C ONSIDERED THE DECISION OF SUPREME COURT IN SARAVANA SPINNING MILLS LTD ( 2 93 ITR 201) ALSO SUPPORTS THE CASE OF THE APPELLANT. IN THAT CASE TH E HIGH COURT OBSERVED AS UNDER: THE TRIBUNAL HAS RECORDED A FINDING THAT THE TURBINE ROTOR IS AN ESSENTIAL PART OF THE TURBO GENERATOR SET. IT IS NO T AN INDEPENDENT MACHINERY OR PLANT. THE TURBINE ROTOR ON ITS OWN IN DEPENDENT FUNCTIONING CANNOT GENERATE ELECTRICITY. IT IS BEIN G USED IN THE TURBO GENERATOR SET AS ITS ESSENTIAL PART. ON THESE FINDI NGS RECORDED BY THE TRIBUNAL A QUESTION ARISES- WHETHER THE EXPENDITURE INCURRED ON THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 21 CHANGE/REPLACEMENT OF TURBINE ROTOR IS A REVENUE EX PENDITURE OR CAPITAL EXPENDITURE'. CONSIDERED THE RESPECTIVE SUBMISSIONS OF LEARNED CO UNSEL FOR THE PARTIES. WE FIND THAT THE CONTROVERSY STANDS CONCLUDED BY TH E JUDGMENT OF THIS COURT IN THE CASE OF CFT V. KANODIA COLD STORAGE [1975] 100 ITR 155 WHEREIN IT HAS BEEN HELD AS FOLLOWS: 'REPLACEMENT OF WORN OUT PARTS DOES NOT BY ITSELF B RING IN A NEW ASSET. IN CONSIDERING THE NATURE OF AN EXPENDITURE ONE SHO ULD CONSIDER THE PRODUCTIVE UNIT AS A WHOLE AND NOT PIC K OUT PARTS THEREIN WHICH ARE NEW. IF THE PRODUCTIVE UNIT TO TH E ASSESSEE REMAINS THE SAME BUT A PART OF IT WHICH HAS BECOME UNSUITAB LE FOR ITS USE IS REPLACED BY SOMETHING WHICH MAKES IT POSSIBLE FOR T HE EXISTING SET UP TO FUNCTION EFFICIENTLY, THE COST INCURRED ON SUCH REPLACEMENT WOULD BE REVENUE EXPENDITURE.' (EMPHASIS SUPPLIED) THE CIT V. SARAVANA SPINNING MILLS P. LTD. [2007]29 3 ITR 201 (SC); [2007] 10 JT 111 (SC), WHILE INTERPRETING THE WORDS 'CURRENT REPAIRS' IN SECTION 31 OF THE INCOME-TAX ACT, IT HAS BEEN HELD AS FOLLOWS: ' ... IF AN AUTOLEVELER IS TO BE REPAIRED THEN THAT REPAIR WOULD COME WITHIN THE CONNOTATION OF THE WORDS 'CURRENT REPAIR S' BECAUSE IT IS A PART OF THE CARDING MACHINE. EVEN IF IN A GIVEN CAS E, REPLACEMENT OF AN AUTOLEVELER COULD COME WITHIN THE CONNOTATION OF TH E WORDS 'CURRENT REPAIRS' IF THE OLD PART IS NOT AVAILABLE IN THE MA RKET. IT IS A 'CURRENT REPAIRS' BECAUSE THE CARDING MACHINE REMAINS AN ASS ET WITHOUT ANY CHANGE EVEN AFTER REPAIR OR REPLACEMENT OF THE AUTO LEVELER. TO GIVE AN EXAMPLE, A COMPRESSOR IS AN IMPORTANT PART OF AN AI R-CONDITION MACHINE. REPAIR OF THE COMPRESSOR WILL COME IN THE CONNOTATION OF THE WORDS 'CURRENT REPAIRS' IN SECTION 31 (I) OF THE SA ID ACT BECAUSE THE ASSESSEE DOES NOT REPLACE THE AIR-CONDITION MACHINE . AT THE HIGHEST, HE REPLACES A PART OF THE AIR-CONDITION MACHINE. SO IS THE CASE OF THE PICTURE TUBE IN A TELEVISION SET, WHEN THE PICTURE TUBE IS REPLACED THE TELEVISION SET IS NOT REPLACED, THEREFORE, SUCH REP AIRS ALONE CAN COME WITHIN THE CONNOTATION OF THE WORDS 'CURRENT REPAIR S' IN SECTION 31(I) OF THE SAID ACT AS IT STOOD AT THE MATERIAL TIME. THEY ARE EFFECTED TO PRESERVE AND MAINTAIN THE ASSET, VIZ., AIRCONDITION ER OR CARDING MACHINE .... THE BASIC TEST TO FIND OUT AS TO WHAT WOULD CONSTIT UTE CURRENT REPAIRS IS THAT THE EXPENDITURE MUST HAVE BEEN INCURRED TO 'PR ESERVE AND I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 22 MAINTAIN' AN ALREADY EXISTING ASSET, AND THE OBJECT OF THE EXPENDITURE MUST NOT BE TO BRING A NEW ASSET INTO EXISTENCE OR TO OBTAIN A NEW ADVANTAGE. ' SO FAR AS THE DECISION RELIED UPON BY LEARNED STAND ING COUNSEL FOR THE DEPARTMENT IS CONCERNED, THE SAME IS DISTINGUISHABL E ON THE FACTS. IN THAT CASE, THE QUESTION WHETHER CERTAIN EXPENDITURE INCU RRED BY THE ASSESSEE ON KNIVES AND LOSES IN THE MATERIAL PERIOD QUALIFIED F OR CAPITAL ALLOWANCE UNDER SECTION 16(3) OF THE FINANCE ACT, 1954. ON THE FACT S IT WAS FOUND THAT THE KNIVES ARE NOT PARTS OF THE MACHINE. EACH KNIFE IS A SEPARATE TOOL OR IMPLEMENT DESIGNED TO BE USED IN CONJUNCTION WITH T HE MACHINE. ON THESE FACTS IT WAS HELD THAT REPLACEMENT OF KNIVES WAS TH E CAPITAL EXPENDITURE. IN THE CASE ON HAND THE FACTUAL POSITION IS QUITE DIFF ERENT. IT HAS BEEN FOUND BY THE TRIBUNAL AS A FACT THAT TURBINE ROTOR IS A PART OF TURBO GENERATOR SET. THE TURBINE ROTOR DOES NOT FUNCTION INDEPENDENTLY. IT I S A PART OF TURBO GENERATOR SET. J. ON A DETAILED REVIEWS OF THE FACTS AND CIRCUMSTA NCES, I AM OF THE VIEW THAT SINCE THERE HAS BEEN NO INCREASE IN PRODUCTION CAPACITY AS WRONGLY PRESUMED BY THE OFFICER AND SINCE THE EXPEN DITURE RELATED TO SAFE OPERATION OF TPU I AS ALSO THERE WAS ONLY REPL ACEMENT OF PARTS OF EQUIPMENTS AND OVERHAULING OF EQUIPMENTS, THERE WAS NO ENDURING ADVANTAGE TO THE APPELLANT THAT HAD ACCRUED IN THE CAPITAL FIELD. THE CASE LAWS RELIED UPON THE BY THE ASSESSING OFFICER DURING THE HEARING ARE ALL DISTINGUISHABLE ON FACT AND HENCE NOT APPLI CABLE TO THE ISSUES IN THIS APPEAL. K. I THEREFORE HOLD THAT THE EXPENDITURE IN QUESTI ON IS ALLOWABLE AS REVENUE IN ALL THE YEARS. AFTER CONSIDERATION OF ALL THE SUBMISSIONS ON ALL T HE GROUNDS THE APPEALS ARE ALLOWED. 9. THE REVENUE FILED APPEALS BEFORE US CONTENDING THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPR ECIATE THAT THE EXPENDITURE INCURRED ON TPS-I IS A ONE-TIME EXPENDI TURE UNDERTAKEN AT THE END OF THE LIFE SPAN OF THE ASSET WITH A VIEW TO GI VE IT A NEW LIFE AND SUCH EXPENDITURE IS UNDOUBTEDLY IN THE CAPITAL FIELD AND SAME ANALOGY APPLIES TO REJUVENATION OF BWE. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 23 10. THE COUNSEL FOR THE REVENUE SUBMITS THAT THE N AME OF THE PROGRAMME I.E. LIFE EXTENSION PROGRAMME OF TPS-I ITSELF SUGGE STS THAT THE ASSESSEE IS EXTENDING THE LIFE OF THE MACHINERY I.E. TPS-I, WHI CH BRINGS ENDURING ADVANTAGE TO THE ASSESSEE AND THEREFORE, THE EXPEND ITURE INCURRED ON SUCH LIFE EXTENDING PROGRAMME IS DEFINITELY IN THE CAPIT AL FIELD. THE COUNSEL SUBMITS THAT DUE TO THE LIFE EXTENSION PROGRAMME OF TPS-I AND REJUVENATION OF BWE INCREASES THE EFFICIENCY AND LIFE OF THE MAC HINERY. THE COUNSEL SUBMITS THAT THE EXPENDITURE INCURRED ON THESE MACH INERY IS NOT REPAIRS AS THE MAGNITUDE OF THE EXPENDITURE INCURRED ON THESE PROGRAMMES IS TO THE TUNE OF ` .252.46 CRORES DURING THE ASSESSMENT YEARS 1993-94 TO 99-2000. THE COUNSEL FOR THE REVENUE INVITED OUR ATTENTION T O PAGE 62 TO 63 OF PAPER BOOK FILED BY THE ASSESSEE CONTAINING TECHNICAL WRI TE UP ON LEP OF TPS-I AND SUBMITTED THAT IT IS AN EXTENSIVE REPAIRS AND R EPLACEMENT OF VARIOUS MACHINERIES AND THEY ARE NOT REPLACEMENT OF PARTS O F MACHINERY. HE ALSO INVITED OUR ATTENTION TO PAGE 72 TO 76 OF PAPER BOO K CONTAINING A NOTE ON EXPENDITURE OF REJUVENATION OF BWE OF MINE I CLAI MED AS REVENUE EXPENDITURE AND SUBMITTED THAT THE ASSESSEE HAS REP LACED VARIOUS MACHINERIES AND THEREFORE, THEY ARE NOT PARTS OF MA CHINERY, WHICH CAN BE ALLOWABLE AS REVENUE EXPENDITURE. THE COUNSEL PLACE D RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F SARAVANA SPINNING MILLS (P) LTD. (SUPRA), BHARAT GEARS LTD. V. CIT [3 37 368 (DEL.)], CIT V. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 24 MADURA COATS 205 TAXMAN 357/19 (MAD), CIT V. M/S. RANE BRAKE LININGS LTD. T.C.(A) NO. 71 & 72 OF 2008 DATED 25.04.2011, CIT VS. UNIVERSAL COLD STORAGE LTD. T.C.(A) NO. 39 OF 2008 DATED 08.11.201 1 AND SUBMITTED THAT IN VIEW OF THESE DECISIONS, THE EXPENDITURE INCURRED O N LEP OF TPS-I AND REJUVENATION OF BWE WERE CORRECTLY TREATED AS CAPIT AL EXPENDITURE BY THE ASSESSING OFFICER AND ALLOWED DEPRECIATION AS APPLI CABLE. 11. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E ASSESSEE HAD POWER GENERATION PLANT INSTALLED IN THE YEAR 1962 TO 1970 CONSISTING OF 9 UNITS. THE POWER GENERATION PLANT CUMULATIVELY ACCOUNTED FOR 600MW OF CAPACITY. THE COUNSEL SUBMITTED THAT THE ASSESSEE HAD ERECTED ONE BOILER FOR EACH 50MW OF POWER GENERATION AND THE BOILERS WORKED FOR 12 Y EARS. THE COUNSEL SUBMITTED THAT EACH BOILER CONSISTS OF SEVERAL PART S IN IT AND EACH BOILER IS A SEPARATE MACHINE BY ITSELF. THE COUNSEL SUBMITS THA T IN THE LEP PROGRAMME OF TPS-I, WHAT THE ASSESSEE INCURRED WAS THE EXPEND ITURE ON REPLACEMENT OF ONLY CERTAIN PARTS OF THE BOILER AND CERTAIN PARTS WERE OVERHAULED WHEREVER NECESSARY. REFERRING TO PAGE 62 OF PAPER BOOK FILED FOR THE ASSESSMENT YEAR 1998-99, THE COUNSEL SUBMITS THAT THE TECHNICAL WRI TE-UP WAS GIVEN BY THE EXPERTS ABOUT THE FUNCTIONING OF THE BOILERS AND NE ED FOR REPLACEMENT OF PARTS OF BOILERS AND THE LIST OF PARTS, WHICH WERE REPLACED AND OVERHAULED. THE COUNSEL SUBMITS THAT ALL THE MACHINERY ITEMS AP PEARING IN THE TECHNICAL REPORT WHICH WERE EITHER REPLACED OR OVERHAULED AND THEY ARE ONLY PARTS OF I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 25 THE BOILERS AND NONE OF THESE PARTS ARE CAPABLE OF FUNCTIONING INDEPENDENTLY. SIMILARLY, THE COUNSEL ALSO INVITED OUR ATTENTION T O PAGE 72 TO 76 CONSISTING OF A TECHNICAL WRITE-UP FOR REJUVENATION OF BWE AND SU BMITTED THAT THE ITEMS APPEARING IN THE LIST AT PAGE 76 OF PAPER BOOK ARE ONLY THE PARTS OF BWE AND NOT THE ENTIRE UNIT OF BWE WAS REPLACED. THE COUNSE L FOR THE ASSESSEE SUBMITS THAT THE REPLACEMENT OF PARTS OF BOILER AND BWE ARE ONLY TO PRESERVE AND MAINTAIN THE EXISTING ASSET AND BY INCURRING EX PENDITURE ON SUCH REPLACEMENT OF PARTS AND OVERHAULING OF PARTS DOES NOT BRING ANY ENDURING ADVANTAGE TO THE ASSESSEE SO AS TO TREAT THE EXPEND ITURE AS CAPITAL EXPENDITURE. THE COUNSEL SUBMITS THAT BY INCURRING THE EXPENDITURE ON LEP OF TPS-I AND REJUVENATION OF BWE, THERE WAS NO INCR EASE IN PRODUCTION/ POWER GENERATION CAPACITY. THE COUNSEL SUBMITTED TH AT THESE FACTS WERE DEMONSTRATED WITH FIGURES AND THEREFORE THE MAIN CO NTENTION OF THE ASSESSING OFFICER THAT THERE IS INCREASE IN CAPACIT Y OF PRODUCTION/POWER GENERATION IS WITHOUT ANY BASIS. THE COUNSEL SUBMIT TED THAT THE ASSESSING OFFICER WAS NOT CORRECT IN HOLDING THAT SUCH EXPEND ITURE IS CAPITAL IN NATURE. THE COUNSEL SUBMITTED THAT THE QUANTUM OF EXPENDITU RE IS NOT THE CRITERIA TO DECIDE WHETHER SUCH EXPENDITURE IS EITHER CAPITAL O R REVENUE INCURRED TOWARDS CURRENT REPAIRS. THE COUNSEL SUBMITTED THAT THE TOTAL REPLACEMENT COST OF THE PROJECT SHALL BE ` .4 CRORES PER MW AND IN SUCH CASE THE TOTAL REPLACEMENT COST OF ALL 9 POWER GENERATION UNITS OF THE ASSESSEE CONSTITUTING 600 MW WILL BE ` .2400 CRORES AND THE EXPENDITURE INCURRED ON REPLAC EMENT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 26 AND OVERHAULING OF PARTS OF MACHINERY OVER A PERIOD OF 7 YEARS WAS ABOUT ` .252 CRORES ONLY. 12. THE COUNSEL SUBMITS THAT IN THE CASE OF SARAVA NA SPINNING MILLS (P) LTD. (SUPRA), THE HONBLE SUPREME COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE REVENUE BECAUSE WHAT WAS REPLACED BY THE ASSESS EE WAS RING FRAMES, WHICH ARE INDEPENDENT MACHINERY UNLIKE IN ASSESSEE S CASE, WHERE THE ASSESSEE REPLACED ONLY PARTS OF BOILERS, WHICH ARE NOT CAPABLE OF FUNCTIONING INDEPENDENTLY. THE COUNSEL SUBMITS THAT THE HONBLE SUPREME COURT IN THE CASE OF SARAVANA SPINNING MILLS (P) LTD. (SUPRA) HE LD THAT THERE ARE VARIOUS SECTIONS IN THE SPINNING MILL AND EACH MACHINERY IN CLUDING RING FRAME WAS INDEPENDENT AND SEPARATE MACHINERY CAPABLE OF FUNCT IONING INDEPENDENTLY AND SCIENTIFICALLY. THEREFORE, IT WAS HELD THAT THE EXPENDITURE INCURRED FOR REPLACEMENT THEREOF WOULD NOT COME WITHIN THE MEANI NG OF CURRENT REPAIRS. THE COUNSEL SUBMITS THAT THE DECISION OF THE HONBL E SUPREME COURT IN FACT, SUPPORTS ITS CASE AS THE HONBLE SUPREME COURT HELD THAT WHEN AN EXPENDITURE WAS INCURRED TO PRESERVE AND MAINTAIN A LREADY EXISTING ASSET AND SUCH EXPENDITURE IS NOT BRINGING ANY NEW ASSET INTO EXISTENCE OR OBTAINING NEW ADVANTAGE SUCH EXPENDITURE IS ALLOWAB LE AS CURRENT REPAIRS. THE COUNSEL SUBMITS THAT IN ITS CASE, SINCE ONLY TH E PARTS OF THE BOILERS AND BWE SYSTEM WERE REPLACED AND NOT THE BOILER OR BWE SYSTEM ITSELF, THE EXPENDITURE INCURRED WAS ONLY TO PRESERVE AND MAINT AIN THE BOILER AND THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 27 BWE SYSTEM, WHICH ARE EXISTING ASSETS AND NO NEW AS ST IS COMING INTO EXISTENCE AND NO NEW ADVANTAGE WAS OBTAINED BY WAY OF REPLACEMENT OF PARTS OF THE EXISTING ASSETS. THEREFORE, HE CONTEND ED THAT THE EXPENDITURE IS ONLY IN THE NATURE OF CURRENT REPAIRS AND ARE ALLOW ABLE AS DEDUCTION. 13. THE COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERING ALL THE ASPECTS OF THE MATTER ESPECIALLY WHETHER THERE IS ANY INCREASE IN CAPACITY OF PRODUC TION/POWER GENERATION, WHETHER THE MACHINERY REPLACED BY THE ASSESSEE ARE PARTS OF THE MACHINERY I.E. TPS-I AND BWE AND WHETHER THERE IS ANY ENDURIN G ADVANTAGE TO THE ASSESSEE BY SUCH REPLACEMENT OF MACHINERY, HELD TH AT THE CLAIM OF THE ASSESSEE THAT EXPENDITURE INCURRED FOR CURRENT REPA IRS IS ALLOWABLE AS REVENUE EXPENDITURE. THE COUNSEL FOR THE ASSESSEE P LACED RELIANCE ON THE FOLLOWING DECISIONS IN SUPPORT OF THE ABOVE CONTENT ION: ACIT V. M/S. METRO ISPAT PVT. LTD. 2010-TIOL-194-IT AT-MUM CIT V. CHOWGULE AND CO. PVT. LTD. [214 ITR 523 (BOM )] CIT V. JAFARBHAI AKBARALI AND BROS. [211 ITR 496 (B OM.)] CIT V. CO-OPERATIVE SUGARS LTD. [235 ITR 343(KER.)] CIT V. SERAIKELLA GLASS WORKS (P.) LTD. [157 ITR 58 4(PAT.)] B AND A PLANTATIONS AND INDUSTRIES LTD. V. CIT [251 ITR 455(GAUHATI)] CIT V. RENU SUGAR POWER CO. LTD. [298 ITR 94 (ALL)] CULTURAL ENTERPRISES CORPORATION V. CIT [196 ITR 48 8(CAL)] CIT V. MALHOTRA INDUSTRIAL CORPORATION [254 ITR 635 (P&H)] ACIT V. M/S. KANNAPPAN IRON & STEEL CO. PVT. LTD. I N I.T.A. NO. 1951/MDS/2009 DCIT V. M/S. LASIK CENTRE (INDIA) P. LTD. IN I.T.A. NO.1480/MDS/2011 I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 28 14. WE HAVE HEARD BOTH SIDES, CONSIDERED THE MATER IALS AVAILABLE ON RECORD AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND RELIANCE PLACED ON THE CASE LAW BY THE COUNSELS. THE ASSESSEE IS ENGAG ED IN GENERATION OF ELECTRICITY AND MINING OF LIGNITE INSTALLED POWER G ENERATION PLANTS CONSISTING OF 9 UNITS FOR GENERATION OF 600 MW POWER. DURING T HE ASSESSMENT YEARS 1993-94 TO 99-2000, THE ASSESSEE INCURRED THE FOLLO WING EXPENDITURE TOWARDS REPLACEMENT OF VARIOUS COMPONENTS IN BOILER S AND COMPONENTS OF BWE UNDER THE LEP PROGRAMME STARTING FROM THE ASSES SMENT YEAR 1993-94 TO 1999-2000 AND THE YEAR-WISE BREAKUP FOR SUCH EXP ENDITURE IS AS UNDER: ASST. YEARS AMOUNT ( ` .) 1993-94 : 10,22,63,348/- 1994-95 : 39,35,07,774/- 1995 - 96 : 22,65,86,642/ - 1996-97 : 27,78,53,677/- 1997-98 : 56,84,06,076/- 1998 - 99 : 48,23,92,595/ - 1999-2000 : 47,35,92,595/- TOTAL : 252,46,02,707/- THE ASSESSEE CLAIMS THIS EXPENDITURE AS ALLOWABLE D EDUCTION EITHER UNDER SECTION 31(I) OR UNDER SECTION 37 OF THE INCOME TAX ACT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT REJECTING THE CLAI M OF THE ASSESSEE AND TREATING THE SAID EXPENDITURE AS CAPITAL EXPENDITUR E ON THE GROUND THAT THE ASSESSEE HAS INCURRED HUGE EXPENDITURE ON TPS-I UND ER LEP AND ON REJUVENATION OF BWE AND THIS EXPENDITURE BROUGHT EN DURING BENEFIT TO THE ASSESSEE, ESPECIALLY THERE IS INCREASE IN THE PRODU CTION/POWER GENERATION CAPACITY OF THE ASSESSEE AND THEREFORE, IS IN THE N ATURE OF CAPITAL. THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 29 CONTENTION OF THE ASSESSING OFFICER WAS THAT THIS I S ONE TIME EXPENDITURE AT THE END OF LIFE SPAN OF THE ASSET WITH A VIEW TO GI VE NEW LIFE. THEREFORE, THE EXPENDITURE DID NOT FALL WITHIN THE MEANING OF CUR RENT REPAIRS UNDER SECTION 31(I) OF THE ACT. THE COMMISSIONER OF INCOME TAX (A PPEALS) IN HIS COMMON ORDER FOR THE ASSESSMENT YEARS 1995-96 TO 1997-98 E LABORATELY DEALT WITH VARIOUS ISSUES AND THE ISSUE OF INCREASE IN PRODUCT ION CAPACITY AND CAME TO THE CONCLUSION THAT THERE IS NO INCREASE IN PRODUCT ION/POWER GENERATION CAPACITY AND PLACING RELIANCE ON THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS. SARAVANA SPINNING MILLS P. L TD. (SUPRA) HELD THAT THE EXPENDITURE WAS NOT INCURRED IN THE CAPITAL FIELD A ND ALLOWABLE AS DEDUCTION. FOR BETTER UNDERSTANDING THE NATURE OF EXPENDITURE INCURRED, IT IS NECESSARY TO REPRODUCE THE TECHNICAL WRITE-UP OF TPS-I OF LEP AT PAGE 62 TO 63 AND NOTE ON REJUVENATION OF BWE AT PAGE 76 OF THE PAPER BOOKS, WHICH READS AS UNDER: TPS-I: LEP TECHNICAL WRITE UP ELECTRICITY IS GENERATED FROM 600MW THERMAL POWER S TATION-I, NEYVELI, HAVING NINE UNITS CONSISTING OF BOILERS, T URBINES, GENERATORS & TRANSFORMERS. THE STEAM, GENERATED IN BOILER DRIVES STEAM TURBINE WHICH COUPLED WITH GENERATOR GENERATES ELECTRIC POWER. NEYVELI THERMAL POWER STATION-I (NTPS-I) HAS AN INS TALLED CAPACITY OF 600MW CONSISTING OF SIX 50MW UNITS AND THREE 100 MW UNITS. THE 50 MW UNITS HAVE ONE BOILER EACH AND 100MW UNITS HAVE TWO BOILERS EACH. THE ENTIRE EQUIPMENTS OF 600MW HAD BEEN SUPPLIED, ERECT ED AND COMMISSIONED BY M/S. TECHNOPRORNEXPORT (TPE), RUSSIA FROM 1962 T O 1970 IN THREE STAGES ON TURNKEY BASIS. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 30 DURING THE YEAR 1989, THE RESIDUAL LIFE ASSESSMENT (RLA) STUDIES IN TWO UNITS (UNITS 1 & 9) WERE CARRIED OUT BY M/S TPE , RUSSIA AS APPROACHED BY NLC SINCE ALMOST ALL THE UNITS HAD CROSSED 1.3 L AKHS SERVICE HOURS AND EXPERIENCING FREQUENT FAILURES IN HIGH PRESSURE PAR TS DUE TO AGEING. THE RUSSIAN SPECIALISTS CONDUCTED VARIOUS TESTS AND STU DIED ELABORATELY. BASED ON THE STUDY RESULTS, THEY RECOMMENDED FOR OPERATION O F THE EQUIPMENT WITH REDUCED STEAM PARAMETERS UP TO THE END OF 1991 AND THE POSSIBILITY OF FURTHER OPERATION OF THE EQUIPMENT AT RATED STEAM PARAMETER S ONLY AFTER REPLACEMENT OF THE CORRESPONDING PARTS AND GROUPS. THE HIGH PRESSURE PARTS OF BOILERS NAMELY SUPER HEA TERS AND MAIN STEAM LINE ARE SUBJECTED TO CREEP DAMAGE DUE TO REA CHING OF SERVICE LIFE OF AROUND 180000 RUNNING HOURS, AND THE WATER WALLS & ECONOMISERS ARE SUBJECTED TO CORROSION AND EROSION. OTHER PARTS NAM ELY AIR HEATERS, DUCTS AND AUXILIARY EQUIPMENTS LIKE PULVERISED FUEL BURNERS, MILLS, DRAFT FANS ETC. ARE SUBJECTED TO CORROSION EROSION, WEAR AND TEAR. THUS , THE PERFORMANCE OF BOILERS AND SAFE OPERATING LIFE OF CRITICAL PRESSUR E PARTS OF THE BOILER GOT EXHAUSTED. CONSIDERING THE AGEING OF UNITS AND FOR SAFE OPERAT ION OF THE EQUIPMENTS AT RATED STEAM PARAMETERS, THE LIFE EXTE NSION PROGRAMME WORKS IN ALL UNITS WERE CARRIED OUT FROM APRIL 1992 TO MA RCH 1999 IN PHASED MANNER WITH THE APPROVAL OF GOVT. OF INDIA. THE COMPONENTS SUBJECTED TO CREEP DAMAGE NAMELY SUP ER HEATERS, MAIN STEAM LINES ETC. AND HIGH PRESSURE VALVES, ECO NOMISERS AND OTHER ALLIED PIPE LINES LOST THEIR HEALTHINESS WERE REPLACED IN FULL, WHERE AS OTHER HIGH PRESSURES PARTS NAMELY WATER WALLS & FEED WATER LIN ES AND OTHER PARTS, AFTER INSPECTION WERE PARTIALLY REPLACED TO THE EXTENT RE QUIRED. BOILERS THE FOLLOWING COMPONENTS WERE REPLACED COMPLETELY I N BOILERS: 1. SUPER HEATERS WITH THEIR HEADERS AND INTER CONNE CTING PIPES. 2. MAIN STEAM LINE. 3. UPRISER AND DOWN COMER PIPES. 4. ECONOMISER AND THEIR TRANSFER-PIPES. 5. BOILER CONDENSER AND DE SUPER HEATER. 6. HIGH PRESSURE VALVES. 7. COMPENSATORS OF AIR AND GAS DUCTS. 8. REAR SIDE WATER WALL. THE FOLLOWING COMPONENTS WERE REPLACED PARTIALLY AF TER INSPECTION; I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 31 1. FRONT WATER WALL AND SIDE WATER WALLS. 2. BOILER DRUM INTERNALS. 3. AIR HEATERS. 4. FEED WATER PIPE LINE. 5. BOILER SHIELD PLATES AND HYDRAULIC SEAL. 6. LIGNITE PULVERIZING SYSTEM. THE FOLLOWING EQUIPMENTS WERE OVERHAULED: 1. INDUCED AND FORCED DRAUGHT FANS. 2. BELT FEEDERS 3. SLAG CONVEYORS. 4. ASH HANDLING SYSTEM. TURBINE, GENERATOR AND TRANSFORMER: THESE MAJOR EQUIPMENTS WERE OVERHAULED WITH THE REP LACEMENT OF WORN OUT PARTS. THUS THE WORKS UNDER LEP OF THE UNITS OF THERMAL PO WER STATION-I ARE COMPRISED OF FULL AND PARTIAL REPLACEMENT AND OVERH AUL/ REPAIR OF MAIN EQUIPMENTS. NOTE ON EXPENDITURE OF REJUVENATION OF BUCKET WHEEL EXCAVATOR (BWE) OF MINE-I CLAIMED AS REVENUE: REJUVENATION OF BUCKET WHEEL EXCAVATOR (BWE ) OF MI NE-I: A BRIEF WRITE-UP REGARDING THE WORKS CARRIED OUT WITH DETAILS OF EXPENDITURE UNDER THIS FURNISHED BELOW: THE FOLLOWING CRITICAL ITEMS ARE REPLACED: (I) CRAWLER PADS (II) ALL THE SIX CRAWLER FRAMES WITH DRIVES ASSEMBL IES (FOR 3 TRACKS) INCLUDING THE MECHANICAL COMPONENTS. (III) TRAVERSE BOX OF SELF-ALIGNING TRACK (IV) TOWER FRAME COMPLETES INCLUDING PULLY MAST (V) BUCKET WHEEL BOOM COMPLETE (VI) DISCHARGE BOOM COMPLETE (VII) MAIN SLEWING BALL RACE AND MAIN SLEWING GEAR BOX SHELL (VIII) BUCKET WHEEL BOOM HOIST WINCH DRUM (IX) ALL THE HOST WINCH ROPES I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 32 THE FOLLOWING NON-CRITICAL ITEMS ARE REPLACED: (I) SECONDARY STRUCTURES LIKE WALK WAY AND STAIR CA SE FOR UNDER CARRIAGE, TURN TABLE, BUCKET WHEEL BOOM, DISCHARGE BOOM, INTE RMEDIATE BOOM AND COUNTER WEIGHT BOOM. (II) MOTOR FOUNDATION AND MOTOR COVERS FOR ALL THE DRIVERS. (III) CABIN AND HOUSES. THE FOLLOWING COMPONENTS HAVE BEEN REPAIRED: (I) STEERING TILLER (FST AND RST) (II) UNDER CARRIAGE (III) TURN TABLE (IV) COUNTER WEIGHT BOOM AND BOX (V) INTERMEDIATE STRUCTURE IT MAY BE NOTED THAT REJUVENATION OF BUCKET WHEEL E XCAVATORS INVOLVES REPAIRS / REPLACEMENT OF CERTAIN CRITICAL WORN OUT PARTS, NONE OF THE PART IS INDEPENDENT NATURE OF WORKING. ALL THE REPLACED AND REPAIRED ITEMS ARE FORMING PART OF THE SINGLE MACHINE CALLED BUCKET WH EEL EXCAVATOR AND IN THAT PROCESS THE MACHINE IS BROUGHT TO ITS ORIGINAL COND ITION AND IT DOES NOT RESULT IN A NEW ASSET. DIAGRAMS SHOWING THE PARTS OF THE B UCKET WHEEL EXCAVATOR IS ENCLOSED 15. IT COULD BE SEEN FROM THE ABOVE TECHNICAL WRIT E-UPS, THE WHOLE EXERCISE OF THE LEP OF TPS-I AND REJUVENATION OF BW E IS FOR REPLACEMENT OF CERTAIN PARTS OF BOILERS/BWE ONLY. THE ASSESSEE HAS NOT REPLACED THE ENTIRE BOILER/BWE AND WHAT WAS REPLACED WAS ONLY THE PARTS OF BOILER/BWE. THESE PARTS OF THE BOILER/BWE ARE NOT CAPABLE OF FUNCTION ING INDEPENDENTLY AND THIS FACT IS NOT IN DISPUTE. IN OUR VIEW, THESE EXPENDIT URES WERE INCURRED ONLY TO REPLACE CERTAIN PARTS OF BOILER/BWE AND OVERHAULING OF THE PARTS IN BOILER AND IS ONLY TO PRESERVE AND MAINTAIN THE EXISTING ASSET S I.E. BOILER/BWE AND THERE IS NO ENDURING ADVANTAGE OBTAINED ON REPLACEM ENT OF SUCH PARTS OF I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 33 EXISTING ASSETS. THE ASSESSEE ALSO DEMONSTRATED THA T THERE IS NO INCREASE IN PRODUCTION/ GENERATION OF POWER CAPACITY AND THEREF ORE, THE OBSERVATIONS OF THE ASSESSING OFFICER THAT THERE IS INCREASE IN PRO DUCTION CAPACITY APPEARS TO BE MISPLACED. 16. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HIMSELF STATED THAT, IF A NEW PLANT IS TO BE INSTALLED, THE COST OF SUCH NEW PLANT WOULD BE ABOUT ` .4.5 CRORES PER MW AND IN SUCH CASE THE TOTAL PROJECT CO ST WOULD COME TO ` .2700 CRORES FOR 600 MW. IF THAT IS THE CASE, THE EXPENDI TURE INCURRED FOR THE REPLACEMENT OF PARTS OF MACHINERY I.E. TPS-I/BWE IN ALL THESE SEVEN ASSESSMENT YEARS I.E. 1993-94 TO 1999-2000 WAS ABOU T 252 CRORES AND THIS IS NOT EVEN 10% OF THE TOTAL PROJECT COST. 17. THEREFORE, WE SHOULD NOT GO BY THE QUANTUM OF EXPENDITURE INCURRED BY THE ASSESSEE IN DECIDING THE ISSUE OF WHETHER SU CH EXPENDITURE IS ALLOWABLE AS DEDUCTION AS CURRENT REPAIRS/REVENUE E XPENDITURE OR SUCH EXPENDITURE IS A CAPITAL EXPENDITURE. 18. WHEN THE ASSESSEE IS CLAIMING THE EXPENDITURE AS ALLOWABLE DEDUCTION UNDER SECTION 31(I) OF THE ACT, WHAT IS T O BE SEEN IS THAT BY WAY OF INCURRING THE EXPENDITURE ON REPLACEMENT OF PARTS O F MACHINERY, OVERHAULING THE MACHINERY WHETHER IT WAS INCURRED TO PRESERVE A ND MAINTAIN AN ALREADY EXISTING ASSET OR SUCH EXPENDITURE WAS INCURRED TO BRING A NEW ASSET INTO I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 34 EXISTENCE OR TO OBTAIN A NEW ADVANTAGE. IN THIS CAS E, WE SEE THAT THE EXPENDITURE ON REPLACEMENT OF PARTS OF BOILER/BWE W AS INCURRED ONLY TO PRESERVE AND MAINTAIN THE EXISTING ASSETS AND OBJEC T OF INCURRING SUCH EXPENDITURE WAS NOT TO BRING A NEW ASSET INTO EXIST ENCE. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. RENU SUG AR POWER CO. LTD. [298 ITR 94], ALMOST ON SIMILAR CIRCUMSTANCES, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. SARAVAN A SPINNING MILLS (P) LTD. (SUPRA) HELD THAT THE TURBINE ROTOR IS A PART OF THE TURBO GENERATOR SET AND EXPENDITURE INCURRED BY THE ASSESSEE ON REPLACE MENT OF ONE TURBINE ROTOR ON ACCOUNT OF CURRENT REPAIRS IS ALLOWABLE AS REVENUE EXPENDITURE. THE FACTS IN THIS CASE ARE THAT THE ASSESSEE IS A CAPTI VE POWER PLANT AND HAD 2 THERMAL POWER PLANT OF GENERATING CAPACITY WITH 67. 5 MW EACH. THE ASSESSEE CLAIMED EXPENDITURE OF ` .1,05,44,904/- AS THE COST OF THE TURBINE ROTOR, WHICH WAS DISALLOWED BY THE ASSESSING OFFICE R TREATING AS CAPITAL EXPENDITURE. IT WAS FOUND BY THE TRIBUNAL THAT THE TURBINE ROTOR WAS AN ESSENTIAL PART OF TURBO GENERATOR SET AND IT WAS NO T AN INDEPENDENT MACHINERY OR PLANT. THE TURBINE ROTOR OF ITS OWN IN DEPENDENT FUNCTIONING COULD NOT GENERATE ELECTRICITY. THEREFORE, IT WAS H ELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION, WHICH WAS AFFIRMED BY THE HO NBLE ALLAHABAD HIGH COURT. WHILE AFFIRMING THE ORDER OF THE TRIBUNAL, T HE HONBLE ALLAHABAD HIGH COURT OBSERVED AS UNDER: I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 35 WE FIND THAT THE CONTROVERSY STANDS CONCLUDED BY T HE JUDGEMENT OF THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KANODIA COLD STORAGE [1975]100 ITR 155 WHEREIN IT HAS BEEN HELD AS FOLLO WS(HEADNOTE): 'REPLACEMENT OF WORN OUT PARTS DOES NOT BY ITSELF B RING IN A NEW ASSET. IN CONSIDERING THE NATURE OF AN EXPENDITURE ONE SHO ULD CONSIDER THE PRODUCTIVE UNIT AS A WHOLE AND NOT PICK OUT PARTS T HEREIN WHICH ARE NEW. IF THE PRODUCTIVE UNIT TO THE ASSESSEE REMAINS THE SAME BUT A PART OF IT WHICH HAS BECOME UNSUITABLE FOR ITS USE IS RE PLACED BY SOMETHING WHICH MAKES IT POSSIBLE FOR THE EXISTING SET UP TO FUNCTION EFFICIENTLY, THE COST INCURRED ON SUCH REPLACEMENT WOULD BE REVE NUE EXPENDITURE.' THE COMMISSIONER OF INCOME-TAX VS. M/S. SARAVANA SP INNING MILLS PVT. LTD.[2007] 293 ITR 201(SC); [ 2007] 10 JT 111(SC), WHILE INTERPRETING THE WORDS 'CURRENT REPAIRS' IN SECTION 31 OF THE INCOME -TAX ACT, IT HAS BEEN HELD AS FOLLOWS (PAGE 208):- '.......... IF AN AUTOLEVELER IS TO BE REPAIRED THE N THAT REPAIR WOULD COME WITHIN THE CONNOTATION OF THE WORD 'CURRENT REPAIRS ' BECAUSE IT IS A PART OF THE CARDING MACHINE. EVEN IF IN A GIVEN CAS E, REPLACEMENT OF AN AUTOLEVELER COULD COME WITHIN THE CONNOTATION OF THE WORD 'CURRENT REPAIRS' IF THE OLD PART IS NOT AVAILABLE IN THE MA RKET. IT IS A 'CURRENT REPAIR' BECAUSE THE CARDING MACHINE REMAINS AS AN A SSET WITHOUT ANY CHANGE EVEN AFTER REPAIR OR REPLACEMENT OF THE AUTO LEVELER. TO GIVE AN EXAMPLE, A COMPRESSOR IN AN IMPORTANT PART OF AN AI R-CONDITION MACHINE. REPAIR OF THE COMPRESSOR WILL COME IN THE CONNOTATION OF THE WORD 'CURRENT REPAIRS' IN SECTION 31 (I) OF THE SAID ACT BECAUSE THE ASSESSEE DOES NOT REPLACE THE AIR-CONDITION MACHINE . AT THE HIGHEST, HE REPLACES A PART OF THE AIR-CONDITION MACHINE. SO IS IN THE CASE OF THE PICTURE TUBE IN A TELEVISION SET, WHEN THE PICT URE TUBE IS REPLACED THE TELEVISION SET IS NOT REPLACED, THEREFORE, SUCH REPAIRS ALONE CAN COME WITHIN THE CONNOTATION OF THE WORD 'CURRENT RE PAIRS' IN SECTION 31(I) OF THE SAID ACT AS IT STOOD AT THE MATERIAL T IME. THEY ARE EFFECTED TO PRESERVE AND MAINTAIN THE ASSET, VIZ. AIR-CONDIT IONER OR CARDING MACHINE...... THE BASIC TEST TO FIND OUT AS TO WHAT WOULD CONSTIT UTE CURRENT REPAIRS IS THAT THE EXPENDITURE MUST HAVE BEEN INCURRED TO 'PR ESERVE AND MAINTAIN' AN ALREADY EXISTING ASSET, AND THE OBJECT OF THE EXPENDITURE MUST NOT BE TO BRING A NEW ASSET INTO EXISTENCE OR TO OBTAIN A NEW ADVANTAGE.' I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 36 SO FAR AS THE DECISION RELIED UPON BY THE LEARNED S TANDING COUNSEL FOR THE DEPARTMENT IS CONCERNED, THE SAME IS DISTINGUIS HABLE ON FACTS. IN THAT CASE THE QUESTION WHETHER CERTAIN EXPENDITURE INCURRED B Y THE ASSESSEE ON KNIVES AND LOSSES IN THE MATERIAL PERIOD QUALIFIED FOR CAP ITAL ALLOWANCE UNDER SECTION 16(3) OF THE FINANCE ACT, 1954. ON FACTS IT WAS FOUND THAT THE KNIVES ARE NOT PARTS OF THE MACHINE. EACH KNIFE IS A SEPAR ATE TOOL OR IMPLEMENT DESIGNED TO BE USED IN CONJUNCTION WITH THE MACHINE . ON THESE FACTS IT WAS HELD THAT REPLACEMENT OF KNIVES WAS THE CAPITAL EXP ENDITURE. IN THE CASE ON HAND THE FACTUAL POSITION IS QUITE DIFFERENT. IT HA S BEEN FOUND BY THE TRIBUNAL AS A FACT THAT TURBINE ROTOR IS A PART OF TURBO GEN ERATOR SET. THE TURBINE ROTOR DOES NOT FUNCTION INDEPENDENTLY. IT IS A PART OF TURBO GENERATOR SET. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE TRIBUNAL. THE TRIBUNAL WAS JUSTIFIED IN HOLD ING THAT THE EXPENDITURE BY THE ASSESSEE ON THE REPLACEMENT OF ONE TURBINE ROTO R AMOUNTING TO ` . 1,05,44,904/- WAS ON ACCOUNT OF CURRENT REPAIRS AND AS SUCH IT WAS REVENUE EXPENDITURE. 19. THE CASE LAW RELIED ON BY THE COUNSEL FOR THE REVENUE IN THE CASES OF BHARAT GEARS LTD. V. CIT [337 368 (DEL.)], CIT V. M ADURA COATS 205 TAXMAN 357/19 (MAD), CIT V. M/S. RANE BRAKE LINING S LTD. T.C.(A) NO. 71 & 72 OF 2008 DATED 25.04.2011, CIT VS. UNIVERSAL C OLD STORAGE LTD. T.C.(A) NO. 39 OF 2008 DATED 08.11.2011 ARE DISTINGUISHABLE ON FACTS AND THE RATIO OF THESE DECISIONS ARE NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE SINCE IN THE ASSESSEES CASE, WHAT WAS REPLACED WAS ONLY THE PARTS OF MACHINERY AND THE EXPENDITURE WAS INCURRED ONLY TO PRESERVE A ND MAINTAIN THE EXISTING ASSETS AND THEREFORE, THE EXPENDITURE ON SUCH REPAI RS IS ALLOWABLE AS DEDUCTION UNDER CURRENT REPAIRS. HENCE THE CASE LAW RELIED ON BY THE REVENUE ARE OF NO HELP. THEREFORE, FOLLOWING THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. SARAVANA SPINNI NG MILLS P. LTD. (SUPRA), I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 219 219219 219- -- -221, 981 221, 981 221, 981 221, 981- -- -982/M/09 & 982/M/09 & 982/M/09 & 982/M/09 & I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458 I.T.A. NOS. 1458- -- -1459/M/11 1459/M/11 1459/M/11 1459/M/11 37 WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING THE EXPENDITURE ON REPLACEMENT/OVERHAULING OF TPS-I/BWE AS DEDUCTION. THE GROUNDS RAISED BY THE REVENUE ARE DI SMISSED ON THIS ISSUE FOR ALL THE ASSESSMENT YEARS FROM 1993-94 TO 1999-2 000. 20. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 18 TH JULY, 2012 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI, DATED, THE 18.07.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.