2007 (1) TMI 156

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....ct of replacement expenditure of muratec auto coner and 18 ring frames as revenue expenditure and treated the same as capital expenditure. Aggrieved, the assessee went on appeal and. the Commissioner of Income-tax (Appeals) held in favour of the assessee. The Revenue took up the issue before the Appellate Tribunal and the Tribunal held the issue in favour of the assessee. Hence, this appeal by the Revenue raising the following questions of law: "1. Whether, on the facts and circumstances of the case, the Tribunal was right in allowing a deduction of the amount spent on replacement of machinery as revenue expenditure? 2. Whether, on the facts and circumstances of the case, replacement of independent complete machinery can be treated as rev....

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...., this court, in the decision cited supra, explained the principle or object of introducing the concept of "block of assets" in detail. It is apposite to refer to the following: "Regarding the argument relating to 'block of assets', it is the claim of learned counsel for the assessees that the said principle or object of introduction of the above concept is totally not applicable relating to the nature of expenditure incurred by the respondent. These provisions were introduced from April 2, 1987, as defined under section 2(11) of the Income-tax Act, 1961, and they are in operation on different field. It is stated that they were intended to replace the provisions on depreciation of capital assets. The block of assets concept was introduced ....