High Court rules on export obligation deduction & machine expenditure for improved performance

The High Court of Madras ruled in favor of the Revenue regarding the denial of deduction for provision towards breach of export obligation for the assessment year 1990-91. However, the court favored the assessee in considering the expenditure on new machines for improved performance as revenue expenditure due to their attachment to existing machines.

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The High Court of Madras ruled on two questions for the assessment year 1990-91.

1. The deduction for provision towards breach of export obligation was denied as it did not relate to the current assessment year. Decision favored the Revenue.

2. Expenditure on new machines for improved performance was considered revenue expenditure as they were attached to existing machines. Decision favored the assessee.

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