2015 (8) TMI 1063

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.... mill. The assessee filed a return of income for the year under consideration declaring total income of Rs. 99,07,020/-. Initially it was processed under section 143(1) of the Income Tax Act, 1961 ('the Act' for short). Subsequently the assessment was completed u/s 143(3) of the Act. During the course of the assessment proceedings, the Assessing Officer found that the assessee had claimed a sum of Rs. 34,01,457/- as an expenditure on replacement of Draw Frames and the same was claimed as revenue expenditure. It was submitted before the Assessing Officer that this expenditure incurred by the assessee for the purpose of the business and is a revenue expenditure. However, the Assessing Officer did not accept the submissions of the asse....

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....et in a textile mill gives the purchaser an enduring benefit of better and more efficient production over a period of time. The expenditure incurred was to bring a new asset into existence with a view to obtain a new advantage and not expenditure incurred to preserve and maintain an already existing asset. The expenditure was capital in nature." The facts of the appellant's case are similar to the facts in the judgements discussed above. Accordingly, the claim of the appellant is rejected and the Assessing Officer is directed to treat the expenditure of Rs. 34.01 lakhs incurred on replacement of machinery as capital expenditure and allow depreciation thereon as per the provisions of the Act for this year and subsequent years." 3. On bein....

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....R 900) (SC) and Lakshmiji Sugar Mills P. Co. v. CIT AIR 1972 SC 159 and observed that "it has been held by this court that bringing into existence a new asset or an enduring benefit for the assessee amounts to capital expenditure. We have already explained why replacement, in this case, amounts to bringing into existence a new asset and also an enduring benefit for the assessee It is clear then that the expenditure of the assessee here is not of a revenue nature and thus, cannot be claimed as a deduction under section 37 of the Act.". 6. The Hon'ble jurisdictional High Court in the case of CIT, Madurai v. Madura Coats (2012) 205 Taxman 357 (Madras) has observed as under : "11. When the tax case appeals came up for consideration ....