Sree Satyanarayana Spinning Mills Ltd., Tanuku V. The ACIT, Rajahmundry, Rajahmundry

ITA 373/VIZ/2011

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9710 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Keywords: Capital asset; Depreciation; Revenue expenditure; Capital expenditure
• Section: 37

Judgement Text

ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.373/VIZAG/2011 ( / ASSESSMENT YEAR: 2008-09) SREE SATYANARAYANA SPINNING MILLS LTD., TANUKU VS. ADDL. CIT, RAJAHMUNDRY [PAN: AAFCS1110D ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI M.K. SETHI, DR / DATE OF HEARING : 21.09.201 6 / DATE OF PRONOUNCEMENT : 25.11.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), RAJAHMUNDRY DATED 09-09- 2011 AND IT PERTAINS TO THE A.Y. 2008-09. ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF COTTON AN D BLENDED YARN, FILED ITS RETURN OF INCOME FOR THE A.Y. 2008-09 DECLARING TOTAL LOSS OF RS. 61,05,475/-. THE CASE HAS BEEN SELECTED FOR SCRUTIN Y AND DURING SCRUTINY PROCEEDINGS, THE A.O. NOTICED THAT AN AMOUNT OF RS. 4,78,55,664/- IS DEBITED TO REPAIRS TO MACHINERY. ON VERIFICATION OF STORES CONSUMPTION REGISTER, IT IS NOTICED THAT THE ASSESSEE COMPANY P URCHASED TOP WEIGHTING ARM HP GX (SIX IN NUMBER), ALONG WITH EL ITE COMPACT SET WITH ELITWIST FOR LMW LR6 912 SPINDLES WITHOUT FRONT BUTTON ROLLER FROM SPINDLE FABRIC SUESSEN GMBH, GERMANY FOR AN AMOUNT OF RS. 3,30,31,851/- AND THE SAID EXPENDITURE WAS TREATED AS REVENUE EXPENDITURE AND DEBITED TO REPAIRS TO MACHINERY ACC OUNT. THE ASSESSEE WAS ASKED TO JUSTIFY AS TO WHY SUCH EXPENDITURE SHO ULD NOT BE TREATED AS CAPITAL EXPENDITURE. IN RESPONSE, THE ASSESSEE S UBMITTED THAT IT HAS REPLACED WARN OUT OLD DRAFTING SYSTEM WITH NEW DRAF TING SYSTEM FOR THE PURPOSE OF KEEPING RING FRAME IN A GOOD MECHANICAL CONDITION TO PRODUCE QUALITY YARN. IT WAS FURTHER SUBMITTED THAT IT HAD REPLACED WORN OUT TOP ARM WHICH IS VERY ESSENTIAL PART OF PRODUCT ION OF MARKETABLE QUALITY YARN. THE ABOVE REPAIR WAS NECESSITATED AS THE EXISTING TOP WEIGHTING ARMS GOT WORN OUT AND IT WAS NECESSARY TO REPLACE IN ORDER TO AVOID FREQUENT BREAKDOWNS IN THE OPERATIONS OF RING FRAME. THE ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 3 ASSESSEE FURTHER SUBMITTED THAT REPLACED PART OF RI NG FRAME IS A INTEGRAL PART OF RING FRAME SYSTEM, WHICH CANNOT FUNCTION IN DEPENDENTLY. 3. THE ASSESSEE HAS FURNISHED PHOTOGRAPHS OF RING F RAME SYSTEM AND DRAFTING SYSTEM ALONG WITH ELABORATE WRITE-UP ABOUT THE RING FRAME AND REPLACED PART AND EXPLAINED HOW IT IS PART OF A INT EGRATED RING FRAME SYSTEM AND CANNOT BE CONSIDERED AS INDEPENDENT MACH INE. THE ASSESSEE ALSO EXPLAINED THE NECESSITY OF REPLACING THE PART TO STATE THAT PURCHASE OF ELITWIST WAS REQUIRED TO IMPROVE THE TW ISTING OPERATION CARRIED OUT WITH THE AID OF THE RING FRAME WHICH WA S NECESSITATED DUE TO TECHNOLOGICAL CHANGES IN THE INDUSTRY AND TO MAINTA IN THE MARKET SHARE BY ENSURING CUSTOMER SATISFACTION. THE ASSESSEE REF ERRING TO PLETHORA OF JUDICIAL DECISIONS, SUBMITTED THAT THE BASIC TEST T O FIND OUT WHAT WOULD CONSTITUTE CURRENT REPAIRS IS THAT THE EXPENDITURE MUST HAVE BEEN INCURRED TO PRESERVE AND MAINTAIN AN ALREADY EXISTI NG ASSET AND MUST NOT BRING NEW ASSET INTO EXISTENCE OR OBTAIN A NEW ADVANTAGE. THERE IS NO SINGE DEFINITIVE CRITERION WHICH BY ITSELF IS DE TERMINATIVE AS TO WHETHER A PARTICULAR OUTLAY IS CAPITAL OR REVENUE. WHAT IS RELEVANT IS THE PURPOSE OF THE OUTLAY, ITS INTENDED OBJECT AND EFFE CT, CONSIDERED IN A COMMON SENSE WAY HAVING REGARD TO THE BUSINESS REAL ITIES. THE EXPENDITURE INCURRED TO REPLACE WORN OUT DRAFTING S YSTEM CANNOT BE CONSIDERED AS REPLACEMENT OF EXISTING MACHINERY WHI CH GIVES ENDURING ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 4 BENEFIT, BUT IT IS DEFINITELY A REPAIR TO MACHINERY WHICH COMES UNDER CURRENT REPAIRS U/S 31 OF THE ACT. 4. THE A.O. AFTER CONSIDERING EXPLANATION OF THE AS SESSEE, ANALYZING FUNCTIONS OF RING FRAME AND DRAFTING SYSTEM AND ALS O FOLLOWING CERTAIN JUDICIAL PRECEDENTS, HELD THAT THE EXPENDITURE INCU RRED TOWARDS REPLACEMENT OF WORN OUT EXISTING DRAFTING SYSTEM WI TH A TECHNOLOGICALLY ADVANCED DRAFTING SYSTEM IS AMOUNTS TO REPLACEMENT OF EXISTING MACHINE WITH A NEW MACHINE WHICH CONSTITUTE CAPITAL EXPENDITURE, BUT NOT CURRENT REPAIRS. THE A.O. FURTHER HELD THAT EXP ENDITURE INCURRED IS THAT OF CAPITAL NATURE FOR THE REASON THAT IT WAS N OT INCURRED FOR PRESERVING AND MAINTAINING AN ALREADY EXISTING ASSE T, BUT BRING INTO EXISTENCE A NEW ASSET WHICH HAD AN ENDURING BENEFIT . THE A.O. HAS ELABORATELY DISCUSSED ABOUT THE MANUFACTURING PROCE SS IN TEXTILE INDUSTRY AND ALSO DISCUSSED ABOUT RING FRAME AND DRAFTING SY STEM AND CONCLUDED THAT IT IS MERELY A REPLACEMENT OF ALREADY EXISTING MACHINE WITH A NEW TECHNOLOGICALLY ADVANCED MACHINE WITH NEW FUTURES T O ENHANCE THE QUALITY AND PRODUCTION CAPACITY OF YARN. THE A.O. A FTER ANALYZING THE FINANCIALS OF THE ASSESSEE, HELD THAT AFTER REPLACE MENT OF MACHINERY, THE PRODUCTION CAPACITY OF THE ASSESSEE HAS INCREASED W HEN COMPARED TO PRE REPLACEMENT PERIOD. THE A.O AFTER CONSIDERING T HE RATIO OF CERTAIN JUDICIAL DECISIONS, INCLUDING APEX COURT JUDGMENT I N THE CASE OF ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 5 MANGAYARKARSI MILLS (P) LTD VS. CIT, 315, ITR 114, CAME TO THE CONCLUSION THAT THE EXPENDITURE INCURRED FOR REPLAC EMENT OF DRAFTING SYSTEM WHICH HAS DISTINCT FUNCTION IN THE PRODUCTIO N PROCESS, NEEDS TO BE TREATED AS REPLACEMENT OF AN INDEPENDENT ASSET, WHICH RESULTED IN ENDURING BENEFIT, BUT DOES NOT FALL UNDER CURRENT REPAIRS AS ENVISAGED U/S 31 OF THE ACT. 5. AGGRIEVED BY ASSESSMENT ORDER, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE CIT(A). BEFORE, THE CIT(A), THE ASSESSEE REITERATED SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. THE CIT(A), AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE AND ALSO AN ALYZING CASE LAWS RELIED UPON BY THE ASSESSEE AND THE ASSESSING OFFIC ER, UPHELD THE FINDINGS OF THE ASSESSING OFFICER. THE CIT(A) FURTH ER HELD THAT EXPENDITURE INCURRED TOWARDS REPLACEMENT OF EXISTIN G DRAFTING SYSTEM OF RING FRAME IS CAPITAL NATURE, BUT NOT CURRENT REPAI RS AS ENVISAGED U/S 31 OF THE ACT. THE CIT(A) FURTHER OBSERVED THAT, BASIC ALLY, THE ASSESSEE FAILS TO EXPLAIN WHY IT HAS PURCHASED IMPORTED SPARE PART S WHEN EXISTING MACHINERY IS INDIGENOUS AND MANUFACTURED BY LAXMI MACHINE WORKS. IT WAS FURTHER OBSERVED THAT THE ASSESSEE REPLACED EXI STING DRAFTING SYSTEM WITH IMPORTED TECHNOLOGICALLY ADVANCED DRAFTING SYS TEM WHICH RESULTED IN ENHANCED QUALITY OF YARN AND PRODUCTION CAPACITY . THE ASSESSEE HAS GOT ENDURING BENEFIT FROM REPLACEMENT OF DRAFTING S YSTEM WHICH IS ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 6 EVIDENT FROM THE FACTS THAT THE PRODUCTION OF YARN HAS GONE UP FROM THE PREVIOUS PRODUCTION. 6. THE CIT(A) FURTHER OBSERVED THAT EXISTING RING F RAME WERE IN WORKING CONDITION AND THE REPAIR IS WARRANTED ONLY FOR REPLACING WHOLE SYSTEM. RING FRAMES WOULD HAVE CONTINUED TO WORK, E VEN IF NEW COMPONENTS HAD NOT BEEN REPLACED. THE ASSESSEE HAS GOT THE CHOICE OF REPLACING ONLY THOSE WORN OUT PARTS, HAD IT NOT GON E FOR ELITWIST TECHNOLOGY. THE CIT(A) FURTHER OBSERVED THAT, WITHO UT DRAFTING SYSTEM THE BARE RING FRAME IS ONLY IRON MOUNTED STRUCTURE WHICH IS OF NO USE. DRAFTING SYSTEM IS A INDEPENDENT PROCESS AS SUCH AN D ACCORDINGLY, DRAFTING SYSTEM CONSTITUTES A SEPARATE MACHINERY IN THE TEXTILE MILLS. THE ASSESSEE REPLACED EXISTING MACHINERY WITH NEW MACHI NERY, THEREFORE EXPENDITURE INCURRED TOWARDS PURCHASE OF TOP WEIGH TING ARM HP GX (SIX IN NUMBER), ALONG WITH ELITE COMPACT SET WITH ELITWIST FOR LMW LR6 912 SPINDLES WITHOUT FRONT BUTTON ROLLER FROM SPIN DLE FABRIC SUESSEN GMBH, GERMANY FOR AN AMOUNT OF RS. 3,30,31,851/-, I S CAPITAL EXPENDITURE CANNOT BE ALLOWED UNDER THE HEAD CURRE NT REPAIRS U/S 31 OF THE ACT. IN SO FAR AS, ALTERNATIVE CLAIM OF THE ASS ESSEE, THE CIT(A) HELD THAT THE EXPENDITURE INCURRED ON REPLACEMENT OF DRA FTING SYSTEM IS OF CAPITAL NATURE, AS THE SAME GIVES ENDURING ADVANTAG ES, CANNOT BE CONSIDERED AS REVENUE EXPENDITURE ALLOWABLE U/S 37 OF THE INCOME TAX ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 7 ACT, 1961 AND THUS CONFIRMED ADDITIONS MADE BY THE A.O. AND DISMISSED APPEAL FILED BY THE ASSESSEE. AGGRIEVED BY THE CIT( A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LD. A.R. FOR THE ASSESSEE, SUBMITTED THAT TH E LD. CIT(A) ERRED IN CONFIRMED ADDITIONS MADE BY THE A.O., TOWARDS DI SALLOWANCE OF EXPENDITURE INCURRED FOR REPLACEMENT OF WORN OUT DR AFTING SYSTEM WITH NEW DRAFTING SYSTEM AS CAPITAL EXPENDITURE. THE CIT (A) FAILED TO APPRECIATE THE FACT THAT IT IS A MERE REPLACEMENT O F WORN OUT SPARE PARTS BEING DRAFTING SYSTEM OF INTEGRATED TEXTILE PROCESS ING MACHINERY POPULARLY KNOWN AS RING FRAME. THE A.R. FURTHER SUB MITTED THAT THE AMOUNT INCURRED TOWARDS REPLACEMENT OF DRAFTING SYS TEM IS VERY MUCH CURRENT REPAIR, BECAUSE FROM REPLACEMENT OF EXISTIN G MACHINERY, THE ASSESSEE COULD NOT GET ENDURING BENEFIT. THE ASSESS EE HAD FURNISHED A COMPACT DISC CONTAINS A SMALL VIDEO AND PHOTOGRAP HS OF RING FRAME SYSTEM AND DRAFTING SYSTEM ALONG WITH ELABORATE WRI TE-UP ABOUT THE RING FRAME AND REPLACED PART BEING DRAFTING SYSTEM AND EXPLAINED HOW IT IS PART OF A INTEGRATED RING FRAME SYSTEM AND CA NNOT BE CONSIDERED AS INDEPENDENT MACHINE. THE ASSESSEE ALSO EXPLAINED TH E NECESSITY OF REPLACING THE PART TO STATE THAT PURCHASE OF ELITWI ST WAS REQUIRED TO IMPROVE THE TWISTING OPERATION CARRIED OUT WITH THE AID OF THE RING FRAME, WHICH WAS NECESSITATED DUE TO TECHNOLOGICAL CHANGES IN THE ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 8 INDUSTRY AND TO MAINTAIN THE MARKET SHARE BY ENSURI NG CUSTOMER SATISFACTION. THE ASSESSEE REFERRING TO PLETHORA OF JUDICIAL DECISIONS, SUBMITTED THAT THE BASIC TEST TO FIND OUT WHAT WOUL D CONSTITUTE CURRENT REPAIRS IS THAT THE EXPENDITURE MUST HAVE BEEN INCU RRED TO PRESERVE AND MAINTAIN AN ALREADY EXISTING ASSET AND MUST NOT BRI NG NEW ASSET INTO EXISTENCE OR OBTAIN A NEW ADVANTAGE. THERE IS NO SI NGE DEFINITIVE CRITERION WHICH BY ITSELF IS DETERMINATIVE AS TO WH ETHER A PARTICULAR OUTLAY IS CAPITAL OR REVENUE. WHAT IS RELEVANT IS THE PURPO SE OF THE OUTLAY, ITS INTENDED OBJECT AND EFFECT, CONSIDERED IN A COMMON SENSE WAY HAVING REGARD TO THE BUSINESS REALITIES. THE EXPENDITURE I NCURRED TO REPLACE WORN OUT DRAFTING SYSTEM CANNOT BE CONSIDERED AS RE PLACEMENT OF EXISTING MACHINERY WHICH GIVES ENDURING BENEFIT, BU T DEFINITELY IT IS REPAIR TO MACHINERY WHICH COMES UNDER CURRENT REPAI RS AS ENVISAGED U/S 31 OF THE ACT. 8. THE LD. A.R. FURTHER SUBMITTED THAT THE CIT(A) I S ERRED IN OBSERVING THAT AS TO WHY ASSESSEE PURCHASED IMPORTED PARTS WH EN ORIGINAL MACHINERY IS MANUFACTURED BY LOCAL MANUFACTURER. B UT, THE FACT IS THAT WHEN MACHINERY WAS INITIALLY PURCHASED, THE SUPPLIE R FORCED TO BUY SPINNING MACHINE WITH THEIR OWN DRAFTING PARTS EVEN THOUGH ITS QUALITY IS NOT AS GOOD AS OF SUESSEN. THUS, AT THE TIME OF REP LACEMENT, IT WAS OPTED FOR BETTER QUALITY, INSTEAD OF GOING TO THE O RIGINAL MANUFACTURER. ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 9 THE CIT(A), WHILE OBSERVING THAT MODERNIZATION PROG RAMME RESULTED IN ENDURING BENEFIT AND ALSO RESULTED IN IMPROVED PROD UCTION CAPACITY, FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE CHO SEN TO BUY BETTER QUALITY PARTS TO UPGRADE QUALITY OF YARN PRODUCED. IT IS FURTHER SUBMITTED THAT THE CIT(A) FAILED IN HIS EFFORTS TO ANALYZE TH E PRODUCTION RESULTS BEFORE COMING TO THE CONCLUSION THAT BECAUSE OF REP LACEMENT OF PARTS ITS PRODUCTION CAPACITY HAS GONE UP. BUT, THE FACT IS T HAT PRODUCTION IS INCREASED NOT BECAUSE OF REPLACEMENT OF PARTS, BUT IT IS BECAUSE OF INCREASE IN MACHINE CAPACITY UTILIZATION AND ADJUST MENT OF OPENING AND CLOSING STOCK OF GOODS PRODUCED. 9. THE A.R. FURTHER ARGUED THAT THE CIT(A) GROSSLY ERRED IN OBSERVING THAT FOR REPLACEMENT OF ELITWIST SET, EXISTING ROLL ERS HAVE TO BE REPLACED IRRESPECTIVE OF THE FACT THAT THEY ARE WORN OUT OR NOT, AS THE SITUATION WARRANTS REPLACEMENT OF PARTS BECAUSE OF WORN OUT D RAFTING SYSTEM WHICH NEEDS IMMEDIATE REPLACEMENT, OTHERWISE THE TO TAL RING FRAME SYSTEM COULD HAVE BREAK DOWN. THE CIT(A) TOTALLY MI SCONSTRUED THE FACTS TO STATE THAT IT IS ONLY A REPLACEMENT OF PAR TS TO ENHANCE THE PRODUCTION CAPACITY AND TO IMPROVE THE QUALITY OF Y ARN, BUT NOT FOR REPAIR OF WORN OUT PARTS, AS IT IS CONTRARY TO THE FINDING S OF THE A.O. TO THE EXTENT THE A.O. HAS ACCEPTED THAT REPLACED PARTS AR E WORN OUT WHICH NEEDS REPLACEMENT. THE A.R. REFERRING TO THE PLETHO RA OF JUDICIAL ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 10 DECISIONS, SUBMITTED THAT CURRENT REPAIRS MEANS, RE PAIRS TO KEEP THE EXISTING MACHINE IN GOOD WORKING CONDITION, BUT NOT AS OBSERVED BY THE CIT(A) THAT REPAIR MEANS, ONLY TO REPAIR BREAK DOWN MACHINERY. THEREFORE, THE LOWER AUTHORITIES TOTALLY MISCONSTRU ED THOSE FACTS TO COME TO THE CONCLUSION THAT THE COST INCURRED TOWARDS RE PLACEMENT OF WORN OUT PARTS OF RING FRAME IS CAPITAL IN NATURE AND HE NCE, NOT ALLOWABLE U/S 31 AS CURRENT REPAIRS. IN SUPPORT OF ITS ARGUMENTS RELIED UPON THE FOLLOWING JUDGMENTS. 1. PRABHU SPINNING MILLS (P) LTD. VS. DCIT (2012) 19 I TR 106 2. CIT VS. SRI MANGAYARKARASI MILLS (P) LTD. (2009) 31 5 ITR 114 3. CIT, ETC ETC VS. SARAVANA SPINNING MILLS (P) LTD. ( 2007) 293 ITR 201 4. CIT & ANR VS. SAGAR TALKIES (2010) 325 ITR 133 5. MIDAS RUBBER (P) LTD. VS. QACIT (2012) 20 ITR 0006 6. DCIT VS. LASIK CENTRE (INDIA) (P) LTD. (2013) 022 I TR 0462 7. MIDDLE EAST ESTATE BUILDERS VS. ITO (2008) 14 DTR 0 041 8. CIT VS. RENU SAGAR POWER CO. LTD. (2008) 298 ITR 00 94 9. COPY OF ORDER DT.21.1.2011 OF HONBLE ITAT, VISAKHA PATNAM (IN THE CASE OF SREE SATYANARAYANA SPINNING MILLS ITA NO.309/V/2008) 10. CIT VS. SARVARAYAN TEXTILES LTD. (2011) 332 ITR 055 3. 10. THE LD. D.R., ON THE OTHER HAND STRONGLY SUPPOR TED THE CIT(A) ORDER. THE D.R. FURTHER SUBMITTED THAT THE A.O. CLE ARLY BROUGHT OUT THE FACTS TO ESTABLISH THAT THE COST INCURRED TOWARDS R EPLACEMENT OF WORN OUT EXISTING DRAFTING SYSTEM WITH A TECHNOLOGICALLY ADVANCED DRAFTING SYSTEM IS AMOUNTS TO REPLACEMENT OF EXISTING MACHIN E WITH A NEW MACHINE WHICH CONSTITUTE CAPITAL EXPENDITURE, BUT N OT CURRENT REPAIRS. ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 11 THE D.R. FURTHER SUBMITTED THAT EXPENDITURE INCURRE D IS THAT OF CAPITAL NATURE FOR THE REASON THAT IT WAS NOT INCURRED FOR PRESERVING AND MAINTAINING AN ALREADY EXISTING ASSET, BUT BRING IN TO EXISTENCE A NEW ASSET WHICH HAD AN ENDURING BENEFIT WHICH IS EVIDEN T FROM THE FACT THAT THE ASSESSEE PRODUCTION HAS GONE UP SUBSTANTIALLY A FTER REPLACEMENT OF DRAFTING SYSTEM. THE CIT(A), HAS ELABORATELY DISCUS SED THE ISSUE AND COUNTERED THE CLAIMS OF ASSESSEE TO PROVE THAT EXPE NDITURE INCURRED TOWARDS PURCHASE OF TOP WEIGHTING ARM HP GX (SIX IN NUMBER), ALONG WITH ELITE COMPACT SET WITH ELITWIST FOR LMW LR6 91 2 SPINDLES WITHOUT FRONT BUTTON ROLLER FROM SPINDLE FABRIC SUESSEN GM BH, GERMANY FOR AN AMOUNT OF RS. 3,30,31,851/- IS CAPITAL EXPENDITURE , THEREFORE, THE ORDER OF CIT(A) SHOULD BE UPHELD. 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIA LS ON RECORD AND GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. THE F ACTUAL MATRIX OF THE CASE WHICH LEADS TO DISALLOWANCE OF EXPENDITURE INC URRED TOWARDS REPLACEMENT OF OLD DRAFTING SYSTEM WITH NEW IMPORTE D DRAFTING SYSTEM FOR AN AMOUNT OF RS. 3,30,31,851/- ARE THAT DURING THE FINANCIAL YEAR RELEVANT TO A.Y. 2008-09, THE ASSESSEE HAD PURCHASE D SIX SETS OF TOP WEIGHTING ARM HP GX (SIX IN NUMBER), ALONG WITH EL ITE COMPACT SET WITH ELITWIST FOR LMW LR6 912 SPINDLES WITHOUT FRONT BUTTON ROLLER FROM SPINDLE FABRIC SUESSEN GMBH, GERMANY FOR AN AMOUNT OF RS. ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 12 3,30,31,851/-. THE ASSESSEE HAD REPLACED ALL SPINDL ES OF SIX RING FRAME CONSISTING OF 912 SPINDLES IN EACH RING FRAME TOTAL ING 5472 SPINDLES, WHICH WERE ORIGINALLY PURCHASED IN THE YEAR 2000-01 . THE COST OF EACH REPLACED SPINDLES WORKS OUT TO RS. 6036/- PER UNIT. THE ASSESSEE HAS CLAIMED COST OF PURCHASE OF ABOVE SPINDLES UNDER TH E HEAD CURRENT REPAIRS. 12. IN THIS BACK GROUND, LET US EXAMINE WHETHER TH E EXPENDITURE INCURRED TOWARDS PURCHASE OF SIX SET OF TOP WEIGHTI NG ARM HP GX (SIX IN NUMBER), ALONG WITH ELITE COMPACT SET WITH ELIT WIST FOR LMW LR6 912 SPINDLES WITHOUT FRONT BUTTON ROLLER IS A CURRENT REPAIR DEDUCTIBLE AS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE TO BE CA PITALIZED AS COST OF MACHINERY. THE LD. A.R. VEHEMENTLY ARGUED THAT THE EXPENDITURE IS DEFINITELY COMES UNDER CURRENT REPAIRS AS ENVISAGED U/S 31 OF THE ACT. THE A.R. HAD FURNISHED A COMPACT DISC CONTAINS A SMALL VIDEO AND PHOTOGRAPHS OF RING FRAME SYSTEM AND DRAFTING SYSTE M ALONG WITH ELABORATE WRITE-UP ABOUT THE RING FRAME AND REPLACE D PART BEING DRAFTING SYSTEM AND EXPLAINED HOW IT IS PART OF A I NTEGRATED RING FRAME SYSTEM AND CANNOT BE CONSIDERED AS INDEPENDENT MACH INE. THOUGH, THE CD WAS NOT REFERRED, AS THE PAPER FORMAT DOCUMENTS FURNISHED ARE SUFFICIENT TO UNDERSTAND THE FUNCTIONING OF THE REP LACED PARTS, THE CD WAS KEPT IN FILE. AS PER THE DOCUMENTS SUBMITTED, W HAT WE UNDERSTOOD ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 13 WAS THE EQUIPMENT REPLACED, I.E. DRAFTING SYSTEM IS A PART OF THE CRUCIAL RING FRAME DEPARTMENT. A RING FRAME IS CONSTRUCTED FROM CAST IRON OR PRESSED STEEL IT COMPRISE OF VARIOUS INDIVIDUAL MAC HINES INCLUDING CREEL, BOBBIN, DRAFTING, RING RAIL AND SEPARATOR. THE LONG SECTION OF THE MACHINE, ON WHICH PRODUCTION IS ACTUALLY CARRIED OU T, CONSISTS PRIMARILY OF LONGITUDINAL MEMBERS IN THE FORM OF SPINDLES RAI LS AND DRAFTING ROLLERS EXTENDING OVER THE COMPLETE MACHINE LENGTH. THESE L ONGITUDINAL MEMBERS ARE SECURED TO INTERMEDIATE SECTIONS ARRANG ED AT SHORT INTERVALS ALONG THE MACHINE AND THE SECTION ALSO SE RVE AS SUPPORTS FOR THE CREEL.(SOURCE INTRODUCTION TO RING SPINNING FRA ME SUPPLIED BY THE ASSESSEE) FROM THESE FACTS, ONE CAN COME TO CONCLUS ION THAT THOUGH RING FRAME IS ONE MACHINERY, IT HAS INDEPENDENT MAC HINES PERFORMING DIFFERENT FUNCTIONS EITHER COLLECTIVELY OR INDEPEND ENT IN THE WHOLE SPINNING PROCESS. AS SUCH DRAFTING SYSTEM IS ONE OF THE IMPORTANT MACHINES IN THE WHOLE RING FRAME SYSTEM WHICH INFLU ENCE ON YARN QUALITY AND PERFORMANCE. 13. THE ISSUE BEFORE US IS WHETHER THE EXPENDITUR E CLAIMED BY THE ASSESSEE UNDER THE HEAD REPAIRS TO MACHINERY IS A C URRENT REPAIR IS IN THE NATURE OF REVENUE EXPENDITURE OR A CAPITAL EXPE NDITURE WHICH GIVES ENDURING BENEFIT TO THE ASSESSEE. VARIOUS TESTS TH AT HAVE TO BE BORNE IN ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 14 MIND SO AS TO ASCERTAIN AS TO WHETHER A PARTICULAR EXPENDITURE IS OF REVENUE OR CAPITAL NATURE HAVE BEEN LAID DOWN IN A SERIES OF DECISIONS OF VARIOUS COURTS INCLUDING HONBLE SUPREME COURT IN T HE CASE OF CIT VS. SRI MANGAYARKARSI MILLS (P) LTD, (2009) 315 ITR 114 AND CIT VS. SARAVANA SPINNING MILLS (P) LTD, (2007) 293 ITR 201. THESE T ESTS ARE NEITHER EXHAUSTIVE NOR INTENDED TO BE. THEY SERVE AS GUIDEL INES TO SOLVE THE PROBLEM THAT IS BEFORE THE COURT. ACCORDINGLY, A PA RTICULAR EXPENDITURE IS A CAPITAL EXPENDITURE OR REVENUE EXPENDITURE HAS TO BE DECIDED BASED ON THE NATURE AND TYPE OF ASSETS AND ITS USAGE IN T HE BUSINESS OF THE ASSESSEE. CAPITAL EXPENDITURE REPRESENTS MAJOR INVE STMENTS OF CAPITAL THAT A COMPANY MAKES TO MAINTAIN OR MORE OFTEN TO E XPAND BUSINESS AND GENERATE ADDITIONAL PROFITS. CAPITAL EXPENSES ARE FOR THE ACQUISITION OF LONG TERM ASSETS, SUCH AS FACILITIES OR MANUFACT URING EQUIPMENT, BECAUSE SUCH ASSETS PROVIDE INCOME GENERATING VALUE FOR A COMPANY FOR A PERIOD OF YEARS. ON THE OTHER HAND, REVENUE EXPE NSES ARE SHORT TERM EXPENSES REQUIRED TO MEET THE ONGOING OPERATIONAL C OST OF RUNNING A BUSINESS AND THESE ARE ESSENTIALLY THE SAME AS OPER ATING EXPENSES. REVENUE EXPENSES RELATED TO EXISTING ASSETS INCLUDE REPAIRS AND REGULAR MAINTENANCE AS WELL AS REPAINTING AND OTHER MAINTEN ANCE AS WELL AS RENEWAL EXPENSES. REVENUE EXPENDITURE CAN BE CONSI DERED TO BE RECURRING EXPENSES IN NATURE IN CONTRAST TO ONE OF NATURE OF MOST CAPITAL ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 15 EXPENDITURE. IN SHORT, IF EXPENDITURE IS INCURRED F OR ACQUIRING OR BRINGING INTO EXISTENCE AN ASSET OR ADVANTAGE OF ENDURING NA TURE, THE EXPENDITURE IS OF A CAPITAL NATURE. BUT, IF FOR RUN NING THE BUSINESS OR TO PRODUCE PROFITS A RECURRING EXPENDITURE IS INCURRED WHICH IS NOT OF ENDURING NATURE, THE EXPENDITURE IS OF REVENUE NATU RE. THEREFORE, TO BE CONSIDER ANY EXPENDITURE AS ORDINARY REPAIR AND MAI NTENANCE EXPENDITURE THAT ARE NECESSARY TO KEEP THE ASSET IN WORKING ORDER WITHOUT SUBSTANTIALLY IMPROVING OR EXPANDING THE US EFUL LIFE OF THE ASSET SHOULD BE IN THE NATURE OF OPERATIONAL EXPENDITURE INCURRED AS AND WHEN SITUATION ARISES TO MAINTAIN OR KEEP THE MACHINE IN A WORKING CONDITION. 14. HAVING SAID, LET US EXAMINE THE FACTS OF THE PR ESENT CASE. IN THIS CASE, THE FACTS INDICATE THAT THE ASSESSEE HAD CHAN GED TOTAL SPINDLES OF SIX RING FRAME WITH A TECHNICALLY ADVANCED SUESSEN, GERMANY MAKE IMPORTED SPINDLES. AS PER THE DOCUMENTS FURNISHED, WE FIND THAT THE ASSESSEE HAS PURCHASED SIX SET OF TOP WEIGHTING AR M HP GX (SIX IN NUMBER), ALONG WITH ELITE COMPACT SET WITH ELITWIS T FOR LMW LR6 912 SPINDLES WITHOUT FRONT BUTTON ROLLER. THESE EQUIPM ENTS ARE MANUFACTURED BY SUESSEN, GERMANY UNDER THE REGISTER ED TRADE MARK, ELITWIST IS AN IMPROVED TECHNOLOGY WITH WHICH A COM PACT YARN IS MADE FOR SUPERIOR QUALITY HIGH END SHIRTS. THE BIGGEST A DVANTAGE OF THESE ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 16 EQUIPMENT IS THAT THEY CAN BE FITTED ON EXISTING RI NG FRAMES WHICH MEANS THAT A PERSON BUYING THE SETS NEED NOT CHANGE THE ENTIRE RING FRAME SYSTEM, BUT CAN INSTALL ELITWIST COMPACT SET ON THE EXISTING RING FRAMES. THE ASSESSEE IS HAVING LMWLR6 RING FRAMES W HICH WERE PURCHASED IN THE YEAR 2000-01, ON WHICH THE NEW SET IS FITTED REPLACING THE EXISTING DRAFTING SYSTEM. FROM THESE FACTS, IT CAN BE SEEN THAT WHAT THE ASSESSEE HAS DONE IS REPLACED OLD WORKING CONDI TION DRAFTING SYSTEM WITH NEW ELITWIST SETS WHICH ALLOWS ASSESSEE TO MAN UFACTURE NEW OR IMPROVED PRODUCTS. 15. THE ASSESSEE CLAIMS THAT IT IS A MERE REPAIR TO AN EXISTING ASSET TO KEEP THE ASSET IN GOOD WORKING CONDITION. THE ASSES SEE FURTHER CLAIMS THAT FROM THE REPLACEMENT OF PARTS, IT DOES NOT GET ANY ENDURING BENEFIT. THE ASSESSEE ALSO EXPLAINED THE NECESSITY OF REPLAC ING THE PART TO STATE THAT PURCHASE OF ELITWIST WAS REQUIRED TO IMPROVE T HE TWISTING OPERATION CARRIED OUT WITH THE AID OF THE RING FRAME, WHICH W AS NECESSITATED DUE TO TECHNOLOGICAL CHANGES IN THE INDUSTRY AND TO MAI NTAIN THE MARKET SHARE BY ENSURING CUSTOMER SATISFACTION. THE ASSESS EE ITSELF ADMITTED THAT THE WHOLE EXERCISE IS TO REPLACE OLD MACHINERY WITH NEW TECHNICALLY SOUND FEATURED MACHINERY SO AS TO BRING TECHNOLOGIC AL CHANGES IN THE INDUSTRY. AS PER ASSESSEES OWN ADMISSION, THE PRES ENT SENT OF RING ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 17 FRAMES ARE IN WORKING CONDITION. THE ASSESSEE HAD C HANGED ALL THE EXISTING SET OF SPINDLES OF SIX RING FRAME WITH A N EW SPINDLES SO AS TO GO FOR BETTER AND IMPROVED QUALITY OF YARN. IT IS NOT THE CASE OF THE ASSESSEE THAT IT HAD CHANGED ONLY WORN OUT SPINDLES OR ROLLERS. HAD IT BEEN CHANGED ONLY WORN OUT SPINDLES, THERE IS NO NE ED TO GO FOR MASS REPLACEMENT OF ALL THE 5472 SPINDLES OF SIX RING FR AME. FROM THIS, IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE INTENDED TO REPL ACE OLD DRAFTING SYSTEM WITH NEW ELITWIST DRAFTING SYSTEM WITH MORE ADVANCED FEATURES TO GET BETTER QUALITY YARN AND ALSO TO INCREASE THE PRODUCTION CAPACITY. THOUGH, THE ASSESSEE CLAIMS VARIOUS REASONS TO JUST IFY ITS CLAIM, THE LOWER AUTHORITIES NEGATED ALL CLAIMS OF THE ASSESSE E WITH CLEAR FINING OF THE FACTS TO THE EFFECT THAT THE EXPENDITURE INCURR ED BY THE ASSESSEE IS NOT A MERE REPAIR TO EXISTING MACHINERY, BUT IT IS A REPLACEMENT OF EXISTING MACHINERY WITH NEW MACHINERY. THIS FINDS S UPPORT FROM THE FACT THAT THE DIRECTORS OF THE COMPANY IN THEIR REPORT A TTACHED TO ANNUAL ACCOUNTS STATED THAT THE COMPANY HAS CARRIED OUT A MODERNIZATION PROGRAMME IN VARIOUS DEPARTMENTS TO IMPROVE THE QUA LITY AND PRODUCTIVITY. THE DIRECTORS FURTHER STATED THAT THE Y HAD TAKEN UP TECHNICAL UP GRADATION. FROM THE ABOVE, IT CAN BE S EEN THAT THERE IS A NEXUS BETWEEN REPLACEMENT OF DRAFTING SYSTEM OF SIX RING FRAMES AND DIRECTORS REPORT. THIS IS FURTHER SUPPORTED BY THE FACT THAT THERE IS A ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 18 INCREASE IN PRODUCTION OF FINISHED PRODUCT, WHEN CO MPARED TO PREVIOUS YEAR, EVEN THOUGH THE CONSUMPTION OF RAW MATERIALS REMAINS SAME. THEREFORE, IT CANNOT BE CONSIDERED AS REPLACEMENT O F WORN OUT PARTS OF MACHINERY WHICH COMES UNDER CURRENT REPAIRS AS ENVI SAGED U/S 31 OF ACT. 16. COMING TO THE CASE LAWS CITED BY BOTH THE PART IES. THE LD. A.R. REFERRING TO THE DECISION OF ITAT, CHENNAI BENCH IN THE CASE OF PRABHU SPINNING MILLS P. LTD VS. DCIT, (2012) 19 IT R 106 , SUBMITTED THAT THE FACTS OF THE CASE SQUARELY APPLI CABLE TO THE FACTS OF THE ASSESSEE CASE, WHEREIN THE ASSESSEE A SPINNING MILL, REPLACED WORN OUT MECHANICAL YARN CLEARERS OF RING FRAME WITH NEW ELECTRONIC YARN CLEARERS. THE ITAT, UNDER SIMILAR SET OF FACTS, HEL D THAT WHEN WORN OUT PART OF RING FRAME IS CHANGED WITH A NEW PART, DEFI NITELY THE EXPENDITURE INCURRED BY THE ASSESSEE TAKES THE CHAR ACTERS OF REVENUE EXPENDITURE. IN THE CASE BEFORE ITAT, CHENNAI BENCH , THE ASSESSEE REPLACED WORN OUT DRAFTING SYSTEM WITH NEW TECHNICA LLY ADVANCED DRAFTING SYSTEM TO PRESERVE THE EXISTING MACHINERY IN A WORKING CONDITION, THEREFORE THE SAME CANNOT BE HELD AS CAP ITAL EXPENDITURE. ALTHOUGH, THE ITAT, HAS TAKEN A VIEW THAT REPLACEME NT OF MECHANICAL YARN CLEARERS WITH ELECTRONIC YARN CLEARERS IS A RE VENUE EXPENDITURE, THE ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 19 FACTS OF THE CASE ARE DIFFERENT FROM THE FACTS OF A SSESSEE CASE. IN THE PARBHU SPINNING MILLS CASE, THE ASSESSEE HAS CHANGE D WORN OUT CLEARERS AND REPLACED DRAFTING SYSTEM BECOMES SCRAP AND CANN OT BE USED AT ALL AND ALSO THE REPLACEMENT HAS NOT INCREASED THE VOLU ME OF PRODUCTION OF THE ASSESSEE. ON THE OTHER HAND, THE A.O. HAD CLEAR LY BROUGHT OUT FACTS WHICH INDICATE THAT THE CASE OF THE ASSESSEE IS SQU ARELY FALL WITHIN THE RATIO OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS SARAVANA SPINNING MILLS PVT LTD 293 ITR 201 AND CIT VS. SRI MANGAYARK ARSI MILLS PVT LTD, 315 ITR 114. 17. THE A.O. RELIED UPON THE RATIOS OF THE HONBLE SUPREME COURT, IN THE CASE OF CIT VS SARAVANA SPINNING MILLS PVT L TD 293 ITR 201 . THE HONBLE SUPREME COURT, HELD THAT IN THE CASE OF TEXTILE MILL EACH MACHINE INCLUDING THE RING FRAME WAS AN INDEPE NDENT AND SEPARATE MACHINE CAPABLE OF INDEPENDENT AND SPECIFIC FUNCTIO N AND, THEREFORE, THE EXPENDITURE INCURRED FOR REPLACEMENT THEREOF WO ULD NOT COME WITHIN THE MEANING OF CURRENT REPAIRS. IN A LATER JUDGMENT OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS. SRI MANGAYARK ARSI MILLS PVT LTD, 315 ITR 114 , THE COURT HELD THAT IN THE CASE OF TEXTILE MACHINERY, REPAIR OF A MACHINERY CAN AT BEST AMOUNT TO A REPAIR MADE TO THE PROSESS OF MANUFACTURE YARN AND CANNOT BE SA ID TO BE HELD THAT ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 20 THE EXPENDITURE OF THE ASSESSEE FOR REPLACEMENT OF PARTS OF TEXTILE MILL FOR SPINNING YARN IS NOT REVENUE EXPENDITURE U/S 37 OF THE ACT. IN A RECENT JUDGMENT OF HONBLE MADRAS HIGH COURT, IN THE CASE OF CIT VS. MADURA COATS, (2012) 205 TAXMANN 357 , IT WAS HELD THAT WHEN EACH OF THE MACHINERY IN QUESTION, SUCH AS RING FRA MES, DRAW FRAMES AND SPEED FRAME IS PURCHASED FOR THE FIRST TIME, TH EN IT IS A CAPITAL ASSET, ON WHICH, DEPRECIATION SHOULD BE GRANTED. TH E SALE OF A WORN OUT MACHINERY AND REPLACEMENT THEREOF BY NEW MACHINERY CAN ONLY BE TREATED AS REDUCTION AND ADDITION TO THE BLOCK OF A SSETS, WHICH IS A PART OF REPLACEMENT. WHILE UNDER THE LAW, AS IT STOOD PR IOR TO 1988-89, THE FACT OF TREATING THE ENTIRE MILL AS AN INTEGRATED U NIT MAY HAVE HAD THE EFFECT OF TREATING THE REPLACEMENT OF MACHINERY AS REPLACEMENT OF PARTS OF A LARGER WHOLE AND THUS, TREATED AS REVENUE EXPE NDITURE, AND ONCE THE CONCEPT OF BLOCK OF ASSETS HAS BEEN BROUGHT IN BY THE PARLIAMENT, FROM THE ASSESSMENT YEAR 1988-89, WHETHER THE MILL IS AN INTEGRATED WHOLE OR NOT, WHETHER THE REPLACEMENT OF MACHINES R ESULTED IN INCREASED CAPACITY OR NOT, WILL HAVE NO BEARING AND WHEN ANY ITEM BELONGING TO THE BLOCK IS REMOVED, ITS VALUE IS RED UCED AND IF ANY NEW ITEM COMES IN ITS PLACE, ITS VALUE IS ADDED TO THE BLOCK. SINCE, THE CASE LAWS RELIED UPON BY THE A.O. ARE SQUARELY APPLICABL E TO THE FACTS OF THE CASE, WE PREFERRED TO FOLLOW THE CASE LAW RELIED UP ON BY THE A.O., RATHER ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 21 RELIED UPON BY THE ASSESSEE IN THE CASE OF PRABHU S PINNING MILLS P. LTD VS. DCIT, (2012) 19 ITR 106. IN SO FAR AS OTHER CAS E LAWS RELIED UPON BY THE ASSESSEE, WE FIND THAT ALL THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE DIFFERENT FROM THE FACTS OF ASSESSEE CASE AND H ENCE, NOT SPECIFICALLY DISCUSSED. 18. IN THIS VIEW OF THE MATTER AND ALSO CONSIDERIN G THE RATIOS OF CASE LAWS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THE E XPENDITURE INCURRED BY THE ASSESSEE TOWARDS REPLACEMENT OF TOP WEIGHTI NG ARM HP GX (SIX IN NUMBER), ALONG WITH ELITE COMPACT SET WITH ELITWIST FOR LMW LR6 912 SPINDLES WITHOUT FRONT BUTTON ROLLER IS NOT A CURRENT REPAIRS AS ENVISAGED U/S 31 OR REVENUE EXPENDITURE DEDUCTIBLE U/S 37, BUT REPLACEMENT OF EXISTING ASSET WITH NEW ASSET WHICH GIVES ENDURING BENEFIT TO THE ASSESSEE IN THE FORM OF ADVANCED TEC HNOLOGY FOR PRODUCTION OF QUALITY YARN AND ALSO INCREASING PROD UCTION CAPACITY. WE FURTHER OPINED THAT THE REPLACEMENT OF OLD WORN OUT DRAFTING SYSTEM WITH NEW DRAFTING SYSTEM IS REPLACEMENT OF AN ASSET, BUT NOT CURRENT REPAIRS WHICH IS DEDUCTIBLE U/S 31 OF THE ACT. THE CIT(A) FOR THE DETAILED REASONS RECORDED IN HIS ORDER, HAS UPHELD THE ADDIT ION MADE BY THE A.O. WE DO NOT SEE ANY REASONS TO INTERFERE WITH HIS ORDE R. HENCE, WE INCLINED TO UPHOLD CIT(A) ORDER AND DISMISS APPEAL FILED BY THE ASSESSEE. ITA NO.373/VIZAG/2011 SREE SATYANARAYANA SPINNING MILLS LIMITED, TANUKU 22 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA.NO. 373/VIZAG/2011 IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25 TH NOV16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 25.11.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SREE SATYANARAYANA SPINNING MILL S LIMITED, 9-13, SRINIVASA TALKIES ROAD, VENKATARAYAPURAM, TANUKU, W EST GODAVARI DIST. 2. / THE RESPONDENT THE ADDL. CIT, RAJAHMUNDRY 3. + / THE CIT, RAJAHMUNDRY 4. + ( ) / THE CIT (A), RAJAHMUNDRY 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM