COMMISSIONER OF INCOME TAX Vs. BHAGAVATHI TEXTILES LIMITED

JUDGEMENT

(1.) THESE references are at the instance of the Revenue. The assessments in question relate to the years 1979-80 and 1980-81. The common questions referred for the assessment years 1979-80 and 1980-81 are these :

(2.) THE assessee had a spinning mill. THE assessee claimed deduction as revenue expenditure of Rs. 3,51, 852 and Rs. 6,87,014, respectively, for the assessment years 1979-80 and 1980-81. THE Income-tax Officer rejected the claim holding that the expenditure is in the nature of capital expenditure. Of course, he has said that the expenditure incurred by the company is on major repairs, renovations and installation of new machinery during the accounting years.

(3.) COUNSEL for the Department and for the assesses did not put forward special circumstances or arguments to depart from the view we have taken in regard to the same question which we have considered in the case of Vanaja Textiles (Income-tax References Nos. 105 and 106 of 1989). From the order of the Commissioner of Income-tax (Appeals), it is seen that what has been done for modernisation for the assessment years in question was only replacement of a number of small parts particularly aluminium spindles of ring frames used in the textile mill of the assessee. All spindles were replaced in six frames for the assessment year 1979-80 and eight frames for the assessment year 1980-81. At that time, the assessee had a total of 30 frames in its factory. Further, it is said that in addition to this main work of replacement, certain other parts were also changed for the assessment year 1979-80. For the assessment year 1980-81, yet another major change was the replacement of aluminium pulleys of 23 frames. The nature of expenditure incurred in these two cases which is the subject-matter of the question of law referred is in no way different from the nature of expenditure incurred in the cases we have decided of the assessee in Income-tax References Nos. 105 and 106 of 1989, etc.