Madras High Court
Tuticorin Spinning Mills Ltd. vs Commissioner Of Income-Tax on 23 September, 2002
Equivalent citations: [2003]261ITR291(MAD)
Author: R. Jayasimha Babu
Bench: R. Jayasimha Babu, K. Raviraja Pandian
JUDGMENT R. Jayasimha Babu, J.
1. Two questions have been referred to us at the instance of the assessee. The assessment year is 1990-91. The questions are :
"I. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in sustaining the action of the lower authorities in denying the deduction under Section 37(1) of the Act on the provision for Rs. 8,50,000 created towards breach of certain export obligation based on director's order dated November 20, 1989 ?
2. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in confirming the replacement expenditure on certain machines as on the capital field and not on the revenue field ?"
2. Regarding the first question, the finding of the Tribunal is that the amount claimed does not relate to the current assessment year. On this ground alone, the question is answered against the assessee, as there is nothing to show that the amounts related to this year. All the authorities have uniformly held so. The first question is answered against the assessee, and in favour of the Revenue.
3. So far as the second question is concerned, the assessee being a spinning mill had installed a splicer and stripping roller costing Rs. 30,897 and Rs. 1,22,188, respectively, for improved performance of its machines. The splicer was meant to joint the broken ends of the yarn and the stripping roller was attached to the carding machines for the purpose of cleaning. The Tribunal, rejecting the assessee's appeal, did so on the ground that they were new items and were independent of the existing machines. It overlooked the fact that they were to be attached to the existing machines and was meant to improve the quality of what was being done with the aid of the existing machines. The mere fact that the work performed by these two machines was earlier done manually would not make these items of machinery fall outside the revenue field. Hence, the second question is answered against the Revenue, and in favour of the assessee.