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TMI Blog1994 (11) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ny Limited, is a public limited company. In the assessment year 1971-72, the assessee replaced the roofing over the spinning department and incurred an expenditure of Rs. 4,19,000. According to the assessee, such expenditure is revenue in nature. Therefore, deduction should be allowed. However, the Income-tax Officer held that it is capital in nature. On appeal, the Appellate Assistant Commissioner held that the amount of Rs. 4,19,000 expended by the assessee should be allowed as a revenue expenditure. On further appeal, the Appellate Tribunal confirmed the view taken by the Appellate Assistant Commissioner. Before us, learned standing counsel appearing for the Department submitted that the existing roof consisting of wooden frames with G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or replacing the roof is only of revenue nature. In the decision of Silver Screen Enterprises v. CIT [1972] 85 ITR 578, the Punjab and Haryana High Court while considering the distinction between the capital expenditure and the revenue expenditure observed as follows (at page 580) : " There is no dearth of decided cases wherein the controversy whether certain expenditure is capital or revenue fell for determination. Some of these decisions have tried to lay down certain principles which are merely aids to the determination of such controversy. Yet, it must be recognised that those tests are not the conclusive tests. It is difficult to formulate a test which will always suffice to discriminate between expen diture which is not capital and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y incurring this expenditure a substantial improvement in the property and a material improvement and change was brought about in the property. The learned standing counsel also relied upon a decision in Silver Screen Enterprises v. CIT [1972] 85 ITR 578 (P H), in order to support his contention that the expenditure incurred by the assessee herein is of capital in nature. According to the facts arising in the abovesaid decision, the assessee claimed the expenditure incurred for replacing the old wooden chairs by steel chairs are revenue in nature. However, the High Court was of the view that replacement was an improvement of enduring nature and, therefore, it was not allowable as revenue expenditure. On the other hand, learned counsel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1967] 66 ITR 710 (SC). According to the facts arising in the decision, the assessee which carried on the business of manufacture and sale of cotton yarn, spent Rs. 93,215 for introduction of the "Casablanca conversion system" in its spinning plant. Substantially, this involved replacement of certain roller stands and fluted rollers fitted with rubber aprons to the spinning machinery, removal of ring frames from certain existing parts, introduction, inter alia, of ball-bearing jockey-pulleys for converting the original band-drivers to tape drivers and other additions and alterations in the drafting mechanism. The assessee claimed development rebate on these items of expenditure. The Supreme Court pointed out that the assessee is not entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenditure incurred for the purpose of replacing the roof also cannot be considered to be for the purpose of obtaining an enduring benefit. On the facts, the Appellate Assistant Commissioner and the Appellate Tribunal came to the conclusion that the expenditure incurred by the assessee for replacing the roof is of revenue in nature. For the purpose of modernising the business carried on by the assessee replacement of the roof was stated to be necessary. Considering the factual position, the Tribunal came to the conclusion that the expenditure incurred by the assessee for replacing the roof is of revenue nature. Considering the reasons given by the Tribunal for holding that the expenditure incurred for replacing the existing roof was of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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