2002 (9) TMI 36 - HC - Income Tax

1. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in sustaining the action of the lower authorities in denying the deduction under section 37(1) of the Act on the provision for Rs. 8,50,000 created towards breach of certain export obligation based on director s order dated November 20, 1989 ? - This first question is answered against the assessee, and in favour of the Revenue. - 2. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in confirming the replacement expenditure on certain machines as on the capital field and not on the revenue field ? The mere fact that the work performed by these two machines was earlier done manually would not make these items of machinery fall outside the revenue field. Hence, the second question is answered against the Revenue, and in favour of the assessee.

Summary

The High Court of Madras ruled on two questions for the assessment year 1990-91.

1. The deduction for provision towards breach of export obligation was denied as it did not relate to the current assessment year. Decision favored the Revenue.

2. Expenditure on new machines for improved performance was considered revenue expenditure as they were attached to existing machines. Decision favored the assessee.