M/s. Sri Ramakrishna Mills (Coimbatore) Ltd., CHENNAI V. ACIT, Coimbatore

ITA 389/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61297 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-07-2012
• Assessment Year: 1996-1997
• Appeal Filed On: 23-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOB IRS A DDL
• Keywords: Revenue expenditure; Capital expenditure
• Section: 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI V.DURGA RAO, JUDICIAL MEMBER ITA NO.389(MDS)/2012 ASSESSMENT YEAR: 1996-97 M/S.SRI RAMAKRISHNA MILLS (COIMBATORE) LTD., 1493, SATHY RD., GANAPATHY POST, COIMBATORE-641 006. PAN AACCS9188A. VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE IV(2), COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAROJ KUMAR PARIDA, AD VOCATE RESPONDENT BY : SHRI SHAJI P JACOB, IRS, ADD L.CIT DATE OF HEARING : 19 TH JULY, 2012 DATE OF PRONOUNCEMENT : 19 TH JULY, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL FILED BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 1996-97. IT IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-I AT COIMBATORE , DATED 19-12-2011 AND ARISES OUT OF THE ASSESSMENT COMPLET ED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961. - - ITA 389 OF 2012 2 2. THE GROUND RAISED BY THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN TR EATING THE COST OF REPLACING THE EXISTING MACHINERY AS CAPITAL EXPENDITURE. IT IS THE CASE OF THE ASSESSEE THAT THE EXPENSES CL AIMED BY THE ASSESSEE WERE REVENUE EXPENDITURE IN THE NATURE OF REPLACEMENT OF ONE CONE WINDING MACHINE WHICH IS TO BE KEPT ALW AYS IN EFFICIENT CONDITION FOR SUCCESSFUL PERFORMANCE OF S PINNING MACHINE. ACCORDING TO THE ASSESSEE, IT IS IN THE N ATURE OF REGULAR EXPENDITURE INCURRED IN MAINTAINING THE EFFICIENCY OF THE EXISTING SPINNING MACHINE. THE ALTERNATE CONTENTION OF THE ASSESSEE IS THAT THE CLAIM IS ATLEAST ALLOWABLE UNDER SECTION 3 7 OF THE INCOME-TAX ACT, 1961. 3. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE RELEVANT FACTS HAVE NOT BEEN BROUGHT ON RECORD. TH E CASE WHETHER AN EXPENDITURE IS INCURRED FOR REPLACEMENT OR REPAIR AND WHETHER THE EXPENDITURE IS TO BE TREATED AS CAPITAL OR REVENUE, DEPENDS ON OTHER SURROUNDING CIRCUMSTANCES SUCH AS WHETHER A NEW ASSET HAS COME INTO EXISTENCE OR ANY CAPACITY I NCREASE HAS TAKEN PLACE OR ANY OTHER BENEFIT OF ENDURING NATURE IS DERIVED OR IT IS A REGULAR FEATURE OF REPAIR AND MAINTENANCE, ETC. AS THESE - - ITA 389 OF 2012 3 FACTORS HAVE NOT BEEN PROPERLY EXAMINED IN THE LIGH T OF THE RELEVANT JUDICIAL PRONOUNCEMENTS, WE FIND THAT THIS ISSUE NEEDS A RELOOK IN THE HANDS OF THE ASSESSING OFFICER. THER EFORE, THIS ISSUE IS REMITTED BACK TO THE ASSESSING OFFICER TO DECIDE AS TO WHETHER THE EXPENDITURE IS CAPITAL OR REVENUE, AFRE SH IN ACCORDANCE WITH LAW AFTER HEARING THE ASSESSEE IN D ETAIL. 4. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THURSDAY, THE 19 TH OF JULY, 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 19 TH JULY, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.