COMMISSIONER OF INCOME TAX Vs. DATTATREYA TEXTILES LTD.

JUDGEMENT

(1.) THE above tax case appeals are directed against the common order of the Tribunal in ITA Nos. 436 and 1014/Mad/2000,

(2.) THE Revenue is the appellant. The assessee is a limited company engaged in the textile business. They have filed their return for the asst. yrs. 1993 -94 and 1996 -97. Their claim with regard to the cost of replacement of pnemofil unit costing Rs. 1,14,937 for the asst. yr. 1993 -94 and blow room scutcher costing Rs. 25,69,459 for the asst. yr. 1996 -97, was disallowed by the AO, who was of the opinion that replacement of old by new machinery cannot be treated as revenue expenditure and allowed depreciation. The expenditure was treated as capital expenditure. Aggrieved by the said orders, the assessee filed an appeal before the CIT(A), who allowed the appeal, holding that the cost of replacement of machinery is to be treated as revenue expenditure by applying the decision of the Tribunal Madras in the case of Shree Venkatesa Ltd., and consequently, the depreciation granted was withdrawn. The Tribunal dismissed the appeal filed by the Revenue holding that the replacement of part in a machinery has to be treated as revenue in nature.

(3.) AGGRIEVED by the same, the Revenue has preferred the above appeals raising the following substantial questions of law :