VANAJA TEXTILES LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE income -tax references are in respect of one assessee for the period 1973 -74 to 1980 -81. Since all these references relate to one assessee and in the majority of cases, one general question arises for consideration, we propose to dispose of all these references by a common judgment. Of course in regard to certain cases, apart from the general question, some other questions are also referred for decision. Except Income -tax References Nos. 60 of 1983 and 52 of 1986, all the references are at the instance of the Revenue. Some of these references are under Section 256(2) of the Income -tax Act, 1961.

(2.) THE common question referred for our opinion, we propose to consider with reference to Income -tax References Nos. 105 of 1989 and 106 of 1989. We do so, since these income -tax references arise from the assessment years 1973 -74 and 1974 -75 and the common question has been decided by the Tribunal in other income -tax references, following the decision by the Tribunal for the assessment years 1973 -74 and 1974 -75.

(3.) THE assessee is a company doing business in manufacture of yarn. The company undertook a comprehensive scheme of modernisation and rehabilitation of old machinery in the mills from October, 1972, onwards. This was done on the report to the shareholders by the directors stating that it is being done to bring the mill in line with modern mills. The company had as a first step converted 14 carving engines to metallic card clothing, costing over Rs. 1 lakh, thus considerably getting over the bottleneck of want of supply of enough carded silver to the preparatory section. The items of expenditure involved for the assessment year 1973 -74 as stated in the statement of facts are these :