COMMISSIONER OF INCOME TAX Vs. BINNY LIMITED

JUDGEMENT

(1.) AT the instance of the Department under section 256(2) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal referred the following question for our opinion :

(2.) THE assessee, Binny 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 revenue expenditure. On further appeal, the Appellate Tribunal confirmed the view taken by the Appellate Assistant Commissioner.

(3.) AS already pointed out, to decide whether a particular expenditure incurred by the assessee is in the nature of revenue or capital we have to depend upon the facts of each case. According to the facts arising in the present case, the existing roof was changed by the assessee. Originally, the roof was with G.I. sheets placed on the wooden frames. After replacement, the roof was made of asbestos sheets placed on steel frames. The entire structure of the spinning department was not altered. Replacing of the roof was for the purpose of repairing the existing roof. According to the assessee, by replacing the existing roof with asbestos sheets and steel frames, it cannot be said that a new asset has come into existence. The 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 revenue nature, we area of the opinion that there is no infirmity in the order passed by the tribunal in holding that the amount of Rs. 4,19,000 expended by the assessee for the purpose of replacement of the roof is revenue in nature. Accordingly, we answer the question in the affirmative and against the Department. There will be no order as to costs. Counsel's fee is Rs. 1,000.