TaxTMI 
TaxTMI 
2013 (7) TMI 872
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....iled its return of income for the assessment year (AY) 2008-09 on September 28, 2008 declaring its income as Rs. 4,55,98,940 under normal computation and Rs. 16,61,85,390 under section 115JB of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The case of the assessee was selected for scrutiny and notice under section 143(2) was issued to the assessee on September 24, 2009. During the course of assessment, the Assessing Officer made additions in the income returned by the assessee on account of expenditure incurred by the assessee on replacement of plant and machinery. During the relevant assessment year, the assessee had made an investment of Rs. 4,25,47,573 on purchase of new machineries and introduced a new technology call....
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....rasi Mills P. Ltd. reported as [2009] 315 ITR 114 (SC). The learned Departmental representative further submitted that the compact spinning system introduced by the assessee in manufacturing process of yarn is not replacement of old machinery parts, but state of art technology which is added to the existing machinery and hence needs to be capitalised. The assessee has got an advantage of enduring nature with the introduction of this technology. 5. On the other hand, Shri Banusekhar, representing the assessee strongly supported the order of the Commissioner of Income-tax (Appeals) on the issue. The learned authorised representative referred to the decision of the Tribunal in the assessee's own case in Prabhu Spinning Mills P. Ltd. v. ....
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....have to examine the process involved in this case. The yarn from the stage of simplex is sent to drafting before spinning. The drafting system is situated in the ring frames. The conventional drafting system has been replaced with the latest, state-of-the-art gadget called 'compact spinning'. After examining the relevant details, we have found that this is a single piece gadget which is fixed to each spindle. It is not a 'machinery' by itself but only an 'attach ment to the machine' (like manual analog wall clock is fixed with bat tery operated system). It has been claimed as revenue expenditure. The old drafting systems have become scrap on replacement. The learned authorised representative has taken us through a se....
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....od from the pictograph and pho tographs produced by the learned authorised representative. There fore, in order to produce high quality of yarn, the conventional type is replaced with the latest, hi-tech gadget. It was brought to our notice and it was found for a fact that all the ring frames have not been replaced with the latest gadget. Only certain number of ring frames are fitted with this new gadget and the remaining continued to manufacture earlier quality of yarn catering to the requirement of lower strata of the society. Out of 50 ring frames, only 37 ring frames are fitted with this gadget and the remaining are running with conventional gadget. This fact was also found to be undeniable and to be correct. It was also found to be a f....