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TMI Blog2013 (3) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... as committed an error apparent from the records while passing its order inasmuch as the Tribunal has not considered a binding decision of the Hon'ble Supreme Court. 2. The assessee had filed three appeals in ITA Nos.156, 157 & 158/Mds/2011 relating to the assessment years 2004-05, 2005-06 and 2006-07 before the Tribunal. The Revenue had also filed cross appeals before the Tribunal for the assessment years 2004- 05, 2005-06, 2006-07 in ITA Nos.342, 343 & 344/Mds/2011and appeal for the assessment year 2007-08 in ITA No. 345/Mds/2011. The assessee had also further filed four cross objections corresponding to the appeals filed by the Revenue in CO Nos.46, 47, 48 & 49/Mds/2011. All these appeals and cross objections totalling to eleven files we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances, both Revenue as well as assessee came before the Tribunal in second appeals with further cross objections filed by the assessee. 6. While disposing of the appeals filed by the Revenue, the Tribunal relying on the decision of the Hon'ble Supreme Court in the case of CIT vs. Saravana Spinning Mills Pvt. Ltd. (293 ITR 201) held that the expenditure cannot be deducted as they were capital in nature. The order of the Commissioner of Income tax( Appeals) was set aside on the point and the order of the Assessing Officer was restored. In assessee's appeal on the question of Membrane and Cell Elements, the Tribunal upheld the orders of the lower authorities that they were capital expenditure. Ultimately, the appeals filed by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chine constituted an advantage of an enduring nature and would be capital in nature. It was the case of the assessee in the appeals considered by the Tribunal that the replacement made by the assessee has not increased the production capacity of the assessee-company. Therefore, the decision of the Hon'ble Supreme Court in the case of CIT vs. Ramaraju Surgical Cotton Mills (294 ITR 328) is the most relevant decision for the appeals of the assessee and by not considering such binding decision of the Hon'ble Supreme Court, the Tribunal has committed an error which is apparent from the records. 10. The learned counsel further relied on a recent judgment of the Hon'ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals filed by the Revenue, the issue raised was whether the expenditure incurred for replacement of Membrane and Cell Elements were deductible or not in computing the taxable income of the assessee-company. The Assessing Officer as well as the Tribunal relied on the judgment of the Hon'ble Supreme Court in the case of CIT vs. Saravana Spinning Mills Pvt. Ltd. (293 ITR 201), as the claim was made by the assessee under sec.31 of the Income-tax Act, 1961 towards "current repairs". But now, it is clear that the assessee has nowhere raised the question of deducting its expenditure as 'current repairs'. Therefore, it is clear that sec.31 does not have application on the issue raised by the assessee before the assessing authority. But rather the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, in the facts and circumstances, we find that the common order of the Tribunal dated 25th August, 2011 is to be rectified. All these rectification petitions filed by the assessee are accordingly allowed. 16. Now, coming to the rectification of the common order of the Tribunal dated 25th August, 2011, we find that the assessee had claimed deduction on the ground that the replacement expenditure were revenue in nature under sec.37 of the Incometax Act, 1961. The Hon'ble Supreme Court in the case of CIT vs. Ramaraju Surgical Mills [294 ITR 328] has held that sec.31 and 37 of the Income-tax Act, 1961 operate in different spheres and the tests applicable to sec.31 cannot be read into sec.37 of the Income-tax Act, 1961. As the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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