2019 (7) TMI 704

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....y the Revenue under Section 260A of the Income Tax Act, 1961 to set aside the common order dated 27.6.2001 made in ITA.Nos.1738/Mds/1999 and 1711/Mds/2000 on the file of the Income Tax Appellate Tribunal, Madras 'B' Bench respectively for the assessment years 1996-97 and 1997-98. 3. The appeals were admitted on 10.8.2009 on the following substantial questions of law : "i. Whether, in the facts and circumstances of the case, the Tribunal was right in allowing a deduction of the amounts spent on replacement of machinery as revenue expenditure/current repairs? And ii. Whether, in the facts and circumstances of the case, replacement of independent complete machinery can be treated as revenue expenditure?" ....

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....e. During the assessment year 1974-75, the respondent-assessee has claimed deduction of Rs. 35,49,011/- as repairs and replacement of machinery expenditure on conversion material etc. The assessing authority disallowed a sum of Rs. 27,71,270/- out of the aforesaid revenue expenditure claimed by the respondent on the ground that it related to installation of the above machinery and is in the nature of outlay of capital expenditure. 4. Feeling aggrieved, the respondentassessee preferred appeal before the Commissioner of Income Tax Appeals. The Commissioner of Income Tax Appeals vide order dated 29th September, 1983 allowed Rs. 26,84,235/- as admissible revenue expenditure and at the same time directed the assessing officer to withdra....

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....attention to paragraphs 9,10,12,13 and 14 of the judgement in the case of Saravana Spg.Mills(P)Ltd., (supra) and submitted that if the current repairs related to independent machines itself instead of repairs of a part of that machine, deduction cannot be granted under Section 31(i) of the Income Tax Act, 1961. In Saravana Spg.Mills(P.) Ltd., (supra) this Court has held that in a textile mill there are several department/divisions. In each department/division there are several machines and perform different functions. Therefore, when each of the department/ division perform different functions, repair/ substitution of an old machine will not come within the definition of the word "current repairs" and deduction cannot be claimed thereunder.....