Commissioner of Income Tax vs Prime Textiles Ltd. (formerly) ATL Textiles Ltd.

K. Raviraja Pandian, J.—The revenue has preferred these appeals before us against the order of the Income Tax Appellate Tribunal,

Madras ''D'' bench dated 20.05.2005 made in ITA Nos. 2014(Mds)/2000, 1461 and 1582(Mds)/1999.

The facts are : The assessee filed its return for the assessment years 1994-95 to 1996-97 claiming the cost of replacements of certain machinery

as revenue expenditure. The assessing officer disallowed the claim of the assessee and treated the expenditure as capital in nature, which was

confirmed by the Commissioner of Income Tax (Appeals). The assessee went on further appeal before the Tribunal. The Tribunal relying on the

decision of this Court in the case of The Commissioner of Income Tax Vs. Janakiram Mills Ltd., , allowed the appeals of the assessee. Hence, the

revenue is before us in these appeals.

These appeals were admitted by this Court on the following substantial questions of law:

Whether the replacement of machinery parts will amount to revenue expenditure or not?

Whether bringing into existence of a new asset or obtaining a new advantage would amount to revenue expenditure or not?

Learned Counsel for the revenue submits that the issue involved in these appeals is squarely covered by the decision of the apex Court in the

case of Commissioner of Income Tax Vs. Ramaraju Surgical Cotton Mills, , wherein the apex Court has remitted the matter back to the

Commissioner (Appeals). Following the same, the matter is remitted to the assessing officer to consider the expenditure as directed by the

Supreme Court in the case referred to supra. The appeals stand disposed of accordingly. No costs.