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TMI Blog2009 (4) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... reasing the production capacity would amount to revenue expenditure – but as there is no material regarding the production capacity remaining constant even after replacement, matter require to be remitted back to the Commissioner of Appeals - 1129 to 1132 of 2006 - - - Dated:- 16-4-2009 - JUSTICE K.RAVIRAJA PANDIAN and JUSTICE M.M.SUNDRESH Mrs. Pushya Sitaraman for the appellant. Mr. P. J. Rishikesh for the respondent. JUDGMENT The Judgment of the Court was delivered by K.RAVIRAJA PANDIAN, J. - The revenue on appeal against the order of the Income Tax Appellate Tribunal, dated 07.10.2005 passed in ITA Nos. 950,951, 1044, 1128/Mds/2000 in respect of the assessment years 1995-96 and 1996-97. 2. For the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Whether in the facts and circumstances of the case, the Tribunal was right in allowing a deduction of the amounts spent on purchase of templates as a revenue expenditure? 3. We have heard the argument of the learned counsel on either side and perused the materials available on record. 4. The first question of law viz., whether expenditure on renting and maintaining a guest house is allowable as a business expenditure has been decided in favour of the assessee by this Court in the case of CIT vs. South India Viscose Limited (2003) 259 ITR 107. The Supreme Court reversed the same and held in favour of the revenue in the case of Britannai Industries Ltd., vs. Commissioner of Income Tax and another reported in 2005 278 ITR 546 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and answered as such. 5. The 2nd question of law viz., exclusion of sales tax and excise duty from the total turnover for the purpose of calculation of benefit u/s 80HHC, is covered by the decision of the Supreme Court in the case of CIT v. Lakshmi Machine Works, (2007) 290 ITR 667, wherein the Supreme Court has held as follows : "The principal reason for enacting a formula in section 80HHC of the Income Tax Act, 1961, is to disallow a part of the concession thereunder when the entire deduction claimed cannot be regarded as relating to exports. Therefore, while interpreting the words "total turnover" in the formula in section 80HHC one has to give a schematic interpretation. The various amendments made therein show ..... X X X X Extracts X X X X X X X X Extracts X X X X
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