COMMISSIONER OF INCOME TAX Vs. SITALAKSHMI MILLS LIMITED

JUDGEMENT

(1.) THE revenue on appeal against the order of the Income Tax Appellate Tribunal MADRAS 'd' Bench, Chennai dated 19. 02. 2007 passed in ITA. No. 994/mds/2000 by formulating the following questions of law:-

(2.) IT is submitted across the bar by the counsel appearing for the revenue that the above questions of law are covered by the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Ramaraju Surgical Cotton Mills reported in 294 ITR 328, wherein the Judgment of this Court in Commissioner of Income Tax (Appeals) vs. Janakiram Mills Limited reported in 275 ITR 430 was considered by the Supreme Court with reference to the contention of the assessee that replacement of assets without increasing the production capacity would amount to revenue expenditure. The Supreme Court remanded the matter by observing that there are a number of tests which are required to be considered while deciding whether the expenditure was revenue or capital in nature. In the absence of the requisite details regarding the production capacity remaining constant even after replacement, the matter could not be decided on merits and require to be remitted back to the Commissioner (Appeals) for consideration of that particular issue with reference to the production capacity. In this case also, there is no material available as to the increase or otherwise of the production capacity in replacement of the machineries. Without the factual details, the question of law cannot be decided. Hence this case also require to be remitted back to the Commissioner of Appeals as done by the Supreme Court in the aforesaid decision.

(3.) HENCE, the order of the Tribunal is set aside and the matter is remitted back to the Commissioner of Appeals to redo the exercise as directed by the Supreme Court in the case of Commissioner of Income Tax vs. Ramaraju Surgical Cotton Mills reported in 294 ITR 328. With the above observation, the appeal is disposed of. No costs.