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TMI Blog2015 (8) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... a Rao, JJ. For the Appellant : Shri K. Raghu, CA For the Respondent : Shri Shaji P. Jacob, Addl. CIT ORDER PER V. DURGA RAO, JUDICIAL MEMBER: This appeal by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals)-I, Coimbatore dated 29-02-2012 for the assessment year 1994- 95. 2. The facts in brief are that the assessee is a company engaged in the business of textile spinning mill. The assessee filed a return of income for the year under consideration declaring total income of ₹ 99,07,020/-. Initially it was processed under section 143(1) of the Income Tax Act, 1961 ('the Act' for short). Subsequently the assessment was completed u/s 143(3) of the Act. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be regarded as a single asset, replacement of parts which can be considered to be for the mere purpose of preserving or maintaining this asset. All machines put together constitute the production process and each separate machine is an independent entity. Replacement of an old machine with a new one would constitute the bringing into existence of a new asset in the place of the old one, and not repair of the old and existing machine. A new asset in a textile mill gives the purchaser an enduring benefit of better and more efficient production over a period of time. The expenditure incurred was to bring a new asset into existence with a view to obtain a new advantage and not expenditure incurred to preserve and maintain an already existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the decisions of various High Courts and the Hon'ble Supreme Court including the decision in the case of CIT v. Ramaraju Surgical Cotton Mills Ltd. (supra) and by following the decision in the case of CIT v. Mangarkarasi Mills Ltd. (supra) has held that replacement of Draw Frame is a capital expenditure. For that proposition the Hon'ble Supreme Court has relied on the decisions in the case of Travancore Cochin Chemicals Ltd. v. CIT (106 ITR 900) (SC) and Lakshmiji Sugar Mills P. Co. v. CIT AIR 1972 SC 159 and observed that it has been held by this court that bringing into existence a new asset or an enduring benefit for the assessee amounts to capital expenditure. We have already explained why replacement, in this case, amounts t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as an integrated unit may have had the effect of treating the replacement of machinery as replacement of parts of a larger whole and thus treated as revenue expenditure and once the concept of block of assets has been brought in by the Parliament from the assessment year 1988-89, whether the mill is an integrated whole or not, whether the replacement of machines resulted in increased capacity or not, will have no bearing and when any item belonging to the block is removed, its value is reduced and if any new item comes in its place, its value is added to the block. In view of the above, it is submitted that the third substantial question of law is also covered as per the judgment of this Court dated 25.04.2011 in Tax Case (Appeals) Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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