COMMISSIONER OF INCOME TAX Vs. KOTHARI TEXTILES LIMITED

JUDGEMENT

(1.) AT the instance of the Commissioner of Income-tax, Tamil Nadu-I, the following identical question has been referred in these two cases as there was an appeal and a cross appeal before the Income-tax Appellate Tribunal :

(2.) THE assessee is a public limited company. THE accounting year is the calendar year preceding the relevant assessment year. In respect of the assessment year 1966-67, the assessee claimed deduction of a sum of Rs. 1,44,061 as revenue expenditure. It was its case that the expenditure represented import duties, clearing and forwarding charges as also consulting fees and erection and servicing charges in connection with the installation of blow room lines in the assessee's textile mills and that, therefore, it is an expenditure incurred towards current repairs. THE Income-tax Officer disallowed this claim on the ground that the machinery was sent for replacing the old machinery by new machinery and the incidental expenses were connection with the same. THE Income-tax Officer was further of the view that in any case the expenditure cannot be said to have been incurred in connection with current repairs. THE assessment order contained a note that the total of Rs. 1,44,061 comprising two components, namely, Rs. 73,510 representing the expenditure incurred in respect of the erection and service charges and Rs. 70,551 representing payment towards import duties, clearing and forwarding charges, was incurred in the accounting period relevant to the assessment year 1965-66.