Appeal details
Counselvise Citation
[2012] 140 COUNSELVISE.COM (IT) 64844 (ITAT-COCHIN)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 4 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-09-2012
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
07-08-2012
Assessment Year
2007-2008
Appeal Filed On
21-04-2010
Judgement Text
1 ITA NO. 266 & 281/COCH/2010 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 266/COCH/2010 (ASSESSMENT YEAR 2007-08) MIDAS POLYMER COMPOUNDS PVT LTD VS THE A.C.I.T., C IR.1 MIDAS MARKETING BLDG KOTTAYAM VARISSERRY, MARIATHURUTHU PO KOTTAYAM-686 027 PAN : AACCM0080H (APPELLANT) (RESPONDENT) I.T.A NO. 281/COCH/2010 (ASSESSMENT YEAR 2007-08) A.C.I.T., CIR.1 VS M/S MIDAS POLYMER COMPOUNDS KOTTAYAM PVT LTD, KOTTAYAM (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MATHEW JOSPEH REVENUE BY : MS VENI RAJ DATE OF HEARING : 07-08-2012 DATE OF PRONOUNCEMENT : 18-09-2012 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE TAXPAYER AND THE REVENUE A RE DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX(A)-IV, KOC HI DATED 17-02-2010 AND PERTAINS TO ASSESSMENT YEAR 2007-08. THEREFORE, WE HEARD TH E APPEALS TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORDER. 2 ITA NO. 266 & 281/COCH/2010 2. LET US FIRST TAKE THE TAXPAYERS APPEAL IN ITA N O.266/COCH/2010. 3. THE FIRST GROUND OF APPEAL IS WITH REGARD TO DIS ALLOWANCE OF DEDUCTION U/S 80IB IN RESPECT OF INCOME EARNED FROM MIXING OF RUBBER FOR THIRD PARTIES. 4. WE HAVE HEARD THE LD.REPRESENTATIVE FOR THE TAXP AYER AND THE LD.DR. ADMITTEDLY, THE VERY SAME ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE TAXPAYERS OWN CASE FOR EARLIER ASSESSMENT YEAR IN ITA NO.375/COCH/2006 DAT ED 25-09-2008. BOTH THE AUTHORITIES BELOW HAVE CONSIDERED THIS DECISION OF THE TRIBUNAL IN THE TAXPAYERS OWN CASE FOR THE EARLIER ASSESSMENT YEAR AND FOUND THAT THE TAXPAYER IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. IT IS NOT THE CASE OF THE TAXPAYER THAT THE DECISION OF THIS TRIBUNAL IN THE TAXPAYERS OWN CASE FOR EARLIER ASS ESSMENT YEAR WAS REVERSED BY THE HIGH COURT. IN THE SAME SET OF FACTS, THIS TRIBUNAL HAS FOUND THAT THE TAXPAYER IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB FOR EARLIER ASSESSMENT YEAR. THEREFORE, THE DECISION OF THE CO- ORDINATE BENCH IN THE TAXPAYERS OWN CASE WOULD BE BINDING. ACCORDINGLY BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN TAXPAYERS OWN CASE F OR THE EARLIER ASSESSMENT YEAR AND FOR THE REASONS STATED THEREIN WE UPHOLD THE DISALLOWAN CE AND CONFIRM THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) ON THIS ISSUE. 5. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DEDU CTION U/S 80IB IN RESPECT OF INTEREST ON THE SECURITY DEPOSIT WITH THE ELECTRICI TY BOARD. 6. WE HEARD THE LD.REPRESENTATIVE FOR THE TAXPAYER AND THE LD.DR. THIS ISSUE WAS CONSIDERED BY THE APEX COURT IN THE CASE OF PANDIAN CHEMICALS LTD VS COMMISSIONER OF INCOME-TAX (2003) 262 ITR 278 (SC) AND HELD THAT IN TEREST ON ELECTRICITY BOARD DEPOSIT IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. RE SPECTFULLY FOLLOWING THE JUDGMENT OF THE APEX COURT IN THE CASE OF PANDIAN CHEMICALS LTD (SUPRA) WE UPHOLD THE ORDER OF THE LOWER AUTHORITIES. 3 ITA NO. 266 & 281/COCH/2010 7. THE NEXT ISSUE IS WITH REGARD TO DEDUCTION U/S 8 0IB IN RESPECT OF INTEREST ON FIXED DEPOSIT. 8. WE HAVE HEARD THE LD.REPRESENTATIVE FOR THE TAXP AYER AND THE LD.DR. ADMITTEDLY, THE INTEREST WAS RECEIVED FROM FIXED DEPOSIT. THE SOURCE OF INTEREST IS THE FIXED DEPOSIT AND NOT THAT OF THE BUSINESS. THEREFORE, IT CANNOT BE SAID THAT THE INTEREST INCOME WAS DERIVED FROM INDUSTRIAL UNDERTAKING OR BUSINESS OF THE TAX PAYER . THEREFORE, THE TAXPAYER IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT IN RESPECT OF INTEREST RECEIVED FROM FIXED DEPOSIT. 9. NOW COMING TO THE REVENUES APPEAL, THE ONLY ISS UE IS WITH REGARD TO DISALLOWANCE OF EXPENDITURE INCURRED BY THE TAXPAYE R IN REPLACING CHAMBER ASSEMBLY IN THE INTERMIX MACHINE. 10. SHRI MATHEW JOSEPH, THE LD.REPRESENTATIVE FOR T HE TAXPAYER SUBMITTED THAT THE TAXPAYER IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF TREAD RUBBER. ACCORDING TO THE LD.REPRESENTATIVE, IN THE COURSE OF ITS BUSINESS AC TIVITY, THE TAXPAYER HAS REPLACED CHAMBER ASSEMBLY WHICH IS A PART OF INTERMIX MACHIN E CONSISTS OF MOTOR, GEAR BOX, TOP CYLINDER, CHAMBER ASSEMBLY, HYDRAULIC POWER BACK AN D MOTOR STARTER. WHAT WAS REPLACED IS ONLY CHAMBER ASSEMBLY. ACCORDINGLY TO THE LD.REPRESDENTATIVE, THE CHAMBER ASSEMBLY HAS NO INDEPENDENT FUNCTION. THE CHAMBER ASSEMBLY CAN PERFORM ITS FUNCTION ONLY WHEN IT IS INSTALLED IN THE INTERMIX MACHINE. ACCORDING TO THE LD.REPRESENTATIVE, INTERMIX MACHINE IS A COMPOSITE OF THE ABOVE MACHIN ES. ACCORDING TO THE LD.REPRESENTATIVE, CHAMBER ASSEMBLY IS ONLY A PART OF THE MACHINE. THEREFORE, THE COST OF REPLACEMENT OF THE CHAMBER ASSEMBLY IS ONLY A RE VENUE EXPENDITURE. ACCORDING TO THE LD.REPRESENTATIVE, WITHOUT REPLACING THE CHAMBE R ASSEMBLY, THE TAXPAYER CANNOT USE THE INTERMIX MACHINE AT ALL. THEREFORE, TO MAINTAI N THE INTERMIX MACHINE IN A USEFUL CONDITION, THE TAXPAYER HAD TO NECESSARILY REPLACE THE CHAMBER ASSEMBLY. THEREFORE, THE EXPENDITURE ON REPLACEMENT OF THE CHAMBER ASSEM BLY FALLS UNDER CURRENT REPAIR 4 ITA NO. 266 & 281/COCH/2010 WITHIN THE MEANING OF SECTION 31(I) OF THE ACT. RE FERRING TO THE JUDGMENT OF THE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS SARAVANA SPINNING MILLS P. LTD (2007) 293 ITR 201 (SC), THE LD.REPRESENTATIVE FOR THE TAXPAYER SUBMITTED THAT THE ASSESSING AUTHORITY HAS MISCONSTRUED THE JUDGMENT O F THE APEX COURT. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT IN THE CAS E OF SARAVANA SPINNING MILLS P. LTD (SUPRA), THE APEX COURT FOUND THAT THE RING FRAME W AS AN INDEPENDENT AND SEPARATE MACHINE CAPABLE OF INDEPENDENT AND SPECIFIC FUNCTIO N. THEREFORE, THE EXPENDITURE INCURRED FOR REPLACEMENT OF RING FRAME WOULD NOT CO ME WITHIN THE MEANING OF CURRENT REPAIR. IN THIS CASE, ACCORDING TO THE LD.REPRESE NTATIVE, CHAMBER ASSEMBLY IS ONE OF THE PARTS OF THE INTERMIX MACHINE. THE CHAMBER ASSEMBL Y CANNOT PERFORM ITS FUNCTION INDEPENDENTLY. IN OTHER WORDS, THE CHAMBER ASSEMBL Y IS NOT AN INDEPENDENT MACHINE. IT CANNOT PERFORM ANY INDEPENDENT OR SEPARATE FUNCT ION AT ALL. THE CHAMBER ASSEMBLY CAN PERFORM ITS FUNCTION ALONG WITH OTHER MACHINERI ES WHICH WAS PART OF INTERMIX MACHINE. THEREFORE, ACCORDING TO THE LD.REPRESENTA TIVE, THE JUDGMENT OF THE APEX COURT IN THE CASE OF SARAVANA SPINNING MILLS P LTD (SUPRA ) IN FACT SUPPORTS THE CASE TAXPAYER. THE FIRST APPELLATE AUTHORITY HAS RIGHTLY FOUND THA T THE COST OF REPLACEMENT OF CHAMBER ASSEMBLY IS REVENUE EXPENDITURE WITHIN THE MEANING OF SECTION 31(I) OF THE ACT. 11. WE HEARD MS. VENI RAJ, THE LD.DR ALSO. THE LD. DR SUBMITTED THAT THE CHAMBER ASSEMBLY IS ONE OF THE PARTS OF INTERMIX MACHINE WH ICH CANNOT PERFORM ANY FUNCTION INDEPENDENTLY. HOWEVER, THE LD.DR SUBMITTED THAT R EPLACEMENT OF CHAMBER ASSEMBLY GIVES AN ENDURING BENEFIT TO THE TAXPAYER. THEREFO RE, THE COST OF SUCH REPLACEMENT HAS TO BE TREATED AS CAPITAL EXPENDITURE. ACCORDING TO THE LD.REPRESENTATIVE, THE COMPLETE REPLACEMENT OF CHAMBER ASSEMBLY HAS TO BE TREATED A S CAPITAL EXPENDITURE. THEREFORE, THE JUDGMENT OF THE APEX COURT IN THE CASE OF SARAV ANA SPINNING MILLS P LTD (SUPRA) WOULD BE APPLICABLE TO THE CASE OF THE TAXPAYER. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE TAXP AYER IS IN THE BUSINESS OF 5 ITA NO. 266 & 281/COCH/2010 MANUFACTURING TREAD RUBBER. THE TAXPAYER HAS ALSO RECEIVED INCOME FROM MIXING CHARGES. INTERMIX MACHINE IS USED FOR DERIVING INC OME FROM MIXING CHARGES. INTERMIX MACHINE CONSISTS OF BED PLATE, MIXING CHAMBER (CHAM BER ASSEMBLY), TOP CYLINDER, MOTOR, GEAR, HYDRAULIC POWER PACK. THE TECHNICAL R EPORT CONTAINS THE PICTURE OF THE INTERMIX MACHINE AND IT CONTAINS THE DETAILED EXPLA NATION WITH REGARD TO ITS FUNCTIONING. AS FOUND FROM THIS TECHNICAL REPORT, MIXING CHAMBER (CHAMBER ASSEMBLY) IS ONE OF THE INTEGRAL PART OF THE INTERMIX MACHINE. CHAMBER ASS EMBLY IS FULLY INTEGRATED TO THE BED PLATE BELOW THE TOP CYLINDER. THE ROTORS INSIDE TH E MIXING CHAMBER OF THE INTERNAL MIXER ROTATE IN OPPOSITE DIRECTIONS AND MIX THE INGREDIEN TS INTO RUBBER COMPOUND. THEREFORE IT IS VERY CLEAR THAT THE CHAMBER ASSEMBLY CANNOT P ERFORM ANY INDEPENDENT AND SEPARATE FUNCTION. IT FUNCTIONS ONLY WHEN IT IS F ED WITH ROTARS AND OTHER PARTS OF THE INTERMIX MACHINE. WHEN THE RAW RUBBER IS INJECTED INTO THE CHAMBER ASSEMBLY ALONG WITH OTHER COMPONENTS THE COMPOUNDED RUBBER AFTER M IXING FALLS ON THE OPEN MILL. THEREFORE, ONCE THE RAW RUBBER IS INJECTED, THE FIN ISHED PRODUCT WOULD COME OUT AFTER THE SAME IS MIXED WITH RELEVANT COMPOUNDS. THIS FU NCTION OF THE INTERMIX MACHINE CLEARLY SHOWS THAT THE MIXING CHAMBER AS CHAMBER AS SEMBLY IS AN INTEGRAL PART OF THE INTERMIX MACHINE AND IT CANNOT DO ANY INDEPENDENT F UNCTION. IN FACT, THE DR ALSO SUBMITTED THAT THE CHAMBER ASSEMBLY CANNOT DO ANY I NDEPENDENT FUNCTION. 13. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF THE APEX COURT IN THE CASE OF SARAVANA SPINNING MILLS P LTD (SUPRA). THE QUESTIO N AROSE FOR CONSIDERATION BEFORE THE APEX COURT IN THE CASE OF SARAVANA SPINNING MILLS P LTD (SUPRA) WAS WITH REGARD TO REPLACEMENT OF THE RING FRAMES. THE APEX COURT FOU ND THAT RING FRAME IS AN INDEPENDENT AND SEPARATE MACHINE CAPABLE OF INDEPEN DENT AND SPECIFIC FUNCTION AND THEREFORE, THE EXPENDITURE INCURRED FOR REPLACEMENT THEREOF WOULD NOT COME WITHIN THE MEANING OF CURRENT REPAIR. IN FACT, THE APEX COU RT FOUND THAT THE RING FRAME PLAY AN IMPORTANT ROLE IN PRODUCING QUALITY YARN. THEREAFT ER THE YARN OBTAINED FROM THE SPINNING DEPARTMENT GOES TO WINDING DEPARTMENT WHER E THERE IS AUTOCONERS IN ORDER TO 6 ITA NO. 266 & 281/COCH/2010 PRODUCE FAULT FREE YARN. THE FUNCTIONING OF THE SP INNING MILL HAS BEEN EXPLAINED BY THE APEX COURT AS FOLLOWS: ..BROADLY, A TEXTILE MILL MANUFACTURES DIFFERENT VARIETIES OF YARNS, NAMELY, COTTON YARN, MLANGE YARN, COLOUR MLANGE, POLYESTER VISCOSE YARN AND THE PROCESS OF MANUFACTURE GOES THROUGH VA RIOUS SEGMENTS / DIVISIONS. THE FIRST SEGMENT IS THE BLOW ROOM. TH E FUNCTION OF THE BLOW ROOM IS TO CLEAN THE RAW COTTON THOROUGHLY BEFORE I T IS FED TO THE CARDING DEPARTMENT. THE FUNCTION OF THE CARDING DEPARTMENT IS TO REMOVE THE WASTE IN THE COTTON RECEIVED FROM THE BLOW ROOM. I N THE CARDING DEPARTMENT THERE ARE INDIVIDUAL CARDING MACHINES. THEY ARE EQUIPPED WITH AUTO LEVELERS TO PRODUCE SLIVER. THE CARDING MACHINE REMOVES NEPS FORMED IN THE BLOW ROOM LINE DURING THE PROCESS. T HE CARDING MACHINE PRODUCES SLIVER FOR BETTER QUALITY OF YARN. THIS S LIVER PRODUCED IN THE CARDING DEPARTMENT IS CARRIED TO THE COMBING DEPART MENT. FOR MANUFACTURING COMBED YARN. AFTER THE CARDING OPERA TION, THE IMPURITIES PRESENT IN THE SLIVER WILL BE REMOVED IN THE COMBIN G DEPARTMENT. THAT SLIVER WHICH IS PRODUCED IN THE COMBING DEPARTMENT WILL PASS THROUGH THE DRAW FRAMES USED IN THE DRAWING DEPARTMENT IN ORDER TO OBTAIN PARALLEL FIBERS. THESE PARALLEL FIBRES GO THROUGH SPEED FRA MES IN THE ROVING DEPARTMENT IN ORDER TO CONVERT THE SLIVER INTO THIN NER FORMS CALLED ROVES WHICH ROVES ARE THEREAFTER SENT TO THE SPINNING DEP ARTMENT. IN THE SPINNING DEPARTMENT WE HAVE WHAT IS CALLED THE RING FRAMES (MACHINES) WHICH ARE USED TO SPIN THE ROVES RECEIVED FROM THE ROVING DEPARTMENT. THE RING FRAMES ARE MACHINES, WHICH ARE EQUIPPED WI TH CLEANERS, REMOVE THE ACCUMULATED DIRT. THE RING FRAMES PLAY AN IMPO RTANT ROLE IN PRODUCING QUALITY YARN. THEREAFTER, THE YARN OBTAI NED FROM THE SPINNING DEPARTMENT GOES TO THE WINDING DEPARTMENT. IN THE WINDING DEPARTMENT WE HAVE AUTOCONERS IN ORDER TO PRODUCE FAULT-FREE Y ARN. FROM THE ABOVE FACTS, IT IS CLEAR THAT BLOW ROOM, C ARDING, COMBING, DRAWING, ROVING, SPINNING AND WINDING ARE DIFFERENT DEPARTMENTS / DIVISIONS IN A TEXTILE MILL. IN EACH DEPARTMENT / DIVISION THERE ARE SEVERAL MACHINES. EACH OF THE ABOVE DEPARTMENTS / DIVISION S PERFORMS DIFFERENT FUNCTIONS AND THE FUNCTIONING OF EACH DEPARTMENT / DIVISION THERE ARE SEVERAL MACHINES. EACH OF THE ABOVE DEPARTMENTS / DIVISIONS PERFORMS DIFFERENT FUNCTIONS AND THE FUNCTIONING OF EACH DEP ARTMENT / DIVISION PRODUCES A DIFFERENT OUTPUT WHICH IS CARRIED FORWAR D TO THE NEXT DEPARTMENT / DIVISION HAVING DIFFERENT MACHINES THE REIN. FOR EXAMPLE, IN THE BLOW ROOM THERE ARE DIFFERENT BEATERS (MACHINES ) WHICH OPEN THE RAW COTTON AND REMOVE THE DIRT THEREFROM. THAT COT TON IS FORWARDED TO THE CARDING DEPARTMENT IN WHICH THERE ARE CARDING M ACHINES EQUIPPED 7 ITA NO. 266 & 281/COCH/2010 WITH AUTOLEVELERS WHICH PRODUCE SILVER WHICH IS THE N CARRIED FORWARD TO THE COMBING DEPARTMENT. IT IS IMPORTANT TO NOTE TH AT EACH DEPARTMENT HAS DIFFERENT ITEMS OF MACHINES, FOR EXAMPLE, IN TH E BLOW ROOM WE HAVE MACHINES CALLED BEATERS. SIMILARLY, IN THE CARDING DEPARTMENT WE HAVE CARDING MACHINES WITH AUTOLEVELERS. IF THE AUTOLEV ELERS FAILS, THE CARDING MACHINE BECOMES NON-FUNCTIONAL. IF AN AUTOLEVELER IS TO BE REPAIRED THEN THAT REPAIR WOULD COME WITHIN THE CONNOTATION OF TH E WORD CURRENT REPAIRS BECAUSE IT IS A PART OF THE CARDING MACHIN E. EVEN IF IN A GIVEN CASE, REPLACEMENT OF AN AUTOLEVELER COULD COME WITH IN THE CONNOTATION OF THE WORD CURRENT REPAIRS IF THE OLD PART IS NO T AVAILABLE IN THE MARKET. IT IS A CURRENT REPAIR BECAUSE THE CARDING MACHIN E REMAINS AN ASSET WITHOUT ANY CHANGE EVEN AFTER REPAIR OR REPLACEMENT OF THE AUTOLEVELER. TO GIVEN AN EXAMPLE, A COMPRESSOR IS AN IMPORTANT P ART OF AN AIR CONDITION MACHINE. REPAIR OF THE COMPRESSOR WILL C OME IN THE CONNOTATION OF THE WORD CURRENT REPAIRS IN SECTIO N 31(I) OF THE SAID ACT BECAUSE THE ASSESSEE DOES NOT REPLACE THE AIR-CONDI TION MACHINE. AT THE HIGHEST, HE REPLACES A PART OF THE AIR-CONDITION MA CHINE. SO IS 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 REP AIRS ALONE CAN COME WITHIN THE CONNOTATION OF THE WORD CURRENT REPAIRS IN SECTION 31(I) OF THE SAID ACT AS IT STOOD AT THE MATERIAL TIME. THE Y ARE EFFECTED TO PRESERVE AND MAINTAIN THE ASSET, VIZ, AIR-CONDITION ER OR CARDING MACHINE. LASTLY, IT CANNOT BE SAID THAT THE TEXTILE MILL CON STITUTES A PLANT AS IT IS ONE CONTINUOUS PROCESS OF MANUFACTURE BEGINNING FROM BL OW ROOM TO THE WINDING SECTION. AS STATED ABOVE, DIFFERENT OUTPUT S FLOW FROM DIFFERENT SEGMENTS OF PRODUCTION LIKE BLOW ROOM, CARDING, COM BING, ROVING, WINDING ETC. IN THE CASE OF A TEXTILE MILL THERE I S NO PROCESS WHEREBY RAW MATERIAL IS FED ON ONE END AND THE FINISHED PRODUCT COMES OUT AT THE OTHER END WITHOUT INVENTION IN BETWEEN. FOR EXAMPL E, IN THE CASE OF CONTINUOUS CASTING MACHINE 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 ALUMINIUM. ANOTHER E XAMPLE, 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 I N THE THIRD IT IS COOLED. DUCT CARRIES HOT AND COLD WATER. THE RAW MATERIAL IS RAW MILK, THE END PRODUCT IS THE PASTUERISED MILK. IN THE HEAT CHAMB ER THERE IS THE HEATER. IN THE COOLING CHAMBER WE HAVE A COOLING PLANT WHIC H 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 IS THE TEXTILE MILL IS ONE CO NTINUOUS INTEGRATED PROCESS. 8 ITA NO. 266 & 281/COCH/2010 14. IN VIEW OF THE ABOVE OBSERVATIONS OF THE APEX C OURT IT IS OBVIOUS THAT WHEN AN INTEGRAL PART OF THE MACHINE IS REPLACED IT WOULD C OME WITHIN THE CONNOTATION OF CURRENT REPAIRS. THE APEX COURT HAS ALSO GIVEN T HE EXAMPLE OF REPLACING COMPRESSOR IN THE AIR CONDITIONING MACHINE AND PICTURE TUBE IN THE TELEVISION SET. REPLACING COMPRESSOR IN THE AIR CONDITION MACHINE AND PICTURE TUBE IN THE TELEVISION SET WOULD COME WITHIN THE CONNOTATION OF CURRENT REPAIRS U/ S 31(I) OF THE ACT. 15. IN THIS CASE ALSO CHAMBER ASSEMBLY IS ONE OF TH E INTEGRAL PART OF THE INTERMIX MACHINE LIKE COMPRESSOR IN THE AIR CONDITIONER OR P ICTURE TUBE IN THE TELEVISION SET. THEREFORE, REPLACING OF CHAMBER ASSEMBLY IN THE INT ERMIX CHAMBER IS ONLY FOR THE PURPOSE OF MAINTAINING THE INTERMIX CHAMBER IN A WO RKING CONDITION. THEREFORE, THE EXPENDITURE INCURRED BY THE TAXPAYER FOR REPLACING THE CHAMBER ASSEMBLY WOULD COME WITHIN THE MEANING OF CURRENT REPAIR. THIS TRIBU NAL FINDS THAT THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY DECIDED THE ISSUE IN FAVO UR OF THE TAXPAYER BY FOLLOWING THE PRINCIPLES LAID DOWN BY THE APEX COURT IN THE CASE OF SARAVANA SPINNING MILLS P LTD (SUPRA). 16. IN VIEW OF THE ABOVE DISCUSSION BY RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN IN THE JUDGMENT OF THE APEX COURT IN THE CASE OF SA RAVANA SPINNING MILLS P LTD (SUPRA) AND FOR THE REASONS STATED THEREIN THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) IS CONFIRMED. 17. IN THE RESULT, APPEALS OF THE TAX PAYER AND THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH SEPTEMBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 18 TH SEPTEMBER, 2012 PK/- 9 ITA NO. 266 & 281/COCH/2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH
