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TMI Blog2018 (10) TMI 1846X X X X Extracts X X X X X X X X Extracts X X X X ..... 75,76,77,78,79,80/Mds/2002, for the assessment years 1988-89, 1989-90, 1990-91, 1991-92, 1992-93, 1993-94, 1994-95, respectively. 2.These Appeals have been admitted, vide order dated 10.09.2008, on the following Substantial Question of Law: "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that expenditure on replacement of old machinery by purchase and installation of new machinery was allowable as revenue expenditure??" 3.We have heard Mr.Vijaykumar Punna for Mr. T.R.Senthil Kumar, the learned counsel for the appellant and Mr.R.Venkatanarayan for Mr.Subbaraya Iyer Padmanbhan, the learned counsel for the respondent. 4.Though the tax effect in each of the appeals is lesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellate Authority agreed with I.T.O. Before the Tribunal, the assessee contended that the amount expended for introducing Casablanca Conversion System was current expenditure under Section 10(2)(v) of the Indian Tax Act, 1922 (Section 31(i) of the 1961 Act). The Tribunal inspected the spinning factory of the assessee. It studied the working of the machinery with the Casablanca Conversion System. It also studied the literature published by the manufacturer of Casablanca Conversion System. After a detailed study, the Tribunal held that on account of the stress and strain of production over a long period there was a need for change and that the assessee had replaced old parts by introducing the said system. Accordingly, the Tribunal treate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o application to the facts of the present case. Moreover, the judgement of this Court in Mahalakshmi Textile Mills (supra) has not defined the word "asset" to mean the entire production system in the textile mill. In the said judgement, it is nowhere stated that the entire textile mill is one single asset and that it represents one single integrated process." 6.The decision in the case of Saravana Spinning Mills Private Limited (supra) was relied on by the Hon'ble Supreme Court in the case of Commissioner of Income Tax, Madurai Vs. Mangayarkarasi Mills (P) Ltd., [2009(315)ITR114(SC)], wherein it was held as follows: "14.The first issue that needs to be resolved is whether each machine in a textile mill is an independent item or merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in Saravana Spinning Mills Pvt. Ltd., and Mangayarkarasi Mills (P) Ltd., remanded the matter to the Commissioner of Income Tax (Appeals) to decide the issue as to whether the expenditure, in effect, could be treated as revenue expenditure. 8.In the light of the legal position as enunciated by the Hon'ble Supreme Court in Saravana Spinning Mills Pvt. Ltd., and Mangayarkarasi Mills (P) Limited, we are of the considered view that the matter has to be remanded for fresh consideration. Though in the case of Super Spinning Mills Ltd., the Division Bench thought fit to remand the matter to CIT(A), we are of the considered view that the matter should be remanded to the Assessing Officer, since the assessee company is under liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X
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