1993 (10) TMI 70

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....se, the expenditure of Rs. 3,51,852 and Rs. 6,87,014 incurred by the assessee in the assessment years 1979-80 and 1980-81, respectively, in connection with the modernisation of the factory is allowable as revenue expenditure ? For the assessment year 1980-81 only : Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the assessee is entitled to claim deduction towards bonus paid in excess of the statutory bonus ?" The assessee had a spinning mill. The assessee claimed deduction as revenue expenditure of Rs. 3,51, 852 and Rs. 6,87,014, respectively, for the assessment years 1979-80 and 1980-81. The Income-tax Officer rejected the claim holding that the expenditure is in the nature of ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....iness to run smoothly and efficiently. We shall consider first question No. 1. It is clear from the statement of facts and from the order of the Tribunal that the expenditure incurred by the assessee was on renovating and replacing the old and worn out parts of the machinery. The Tribunal found that the need for modernisation of the machinery was imperative for the business to run smoothly and effectively. As we said earlier, the Tribunal relied on its own decision in the case of Madras Spinners Ltd. Madras Spinners' case is the subject-matter of Income-tax Reference No. 168 of 1986. (CIT v. Madras Spinners Ltd. [1994] 207 ITR 35). In this income-tax reference, at the instance of the Revenue, the questions referred are almost identical. ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t another major change was the replacement of aluminium pulleys of 23 frames. The nature of expenditure incurred in these two cases which is the subject matter of the question of law referred is in no way different from the nature of expenditure incurred in the cases we have decided of the assessee in Income-tax References Nos. 105 and 106 of 1989, etc. We are of the opinion that we are fully justified in relying on the decisions we have rendered in Income-tax References Nos. 105 and 106 of 1989, etc., holding that the expenditure incurred in these two cases is not in the nature of capital expenditure but only revenue expenditure. We are appending a copy of our judgment in Income-tax References Nos. 105 and 106 of 1989, etc., along with ....