The Commissioner Of Income Tax, Madurai ... vs M/S Saravana Spinning Mills Pvt.Ltd on 10 August, 2007
36. AR of the assessee submitted that the items replaced are part of
the machinery, and therefore, allowable as revenue expenditure. These
items cannot be used independently. The expenditure was incurred for
efficient functioning of plant, and not for acquiring of any new asset.
The expenditure was incurred for replacement of old items, which were
worn out. He also relied on the decision of the Hon'ble Supreme Court
in the case of CIT Vs. Saravana Spinning Mills Pvt. Ltd., 293 ITR 201
(SC) and submitted that Hon'ble Supreme Court has held that the basic
test whether the expenditure was revenue or capital in nature, was to
find out whether the expenditure was incurred to preserve and maintain
an already existing asset and the expenditure must not be to bring a
new asset into existence or to obtain a new advantage.