Accordingly, the High Court has affirmed the view expressed by the Tribunal.
The above arguments of the assessee were rejected by the A.O. stating, that the entire mill cannot be companystrued as Plant Total Machinery that the said Ring Frames companystituted independent and separate machines that each Frame was capable of independent and specific function and, therefore, it was number possible to hold that the entire process as one single item of machinery of which all the others are parts.
Broadly, a textile mill manufactures different varieties of yarns, namely, Cotton Yarn, Melange Yarn, Colour Melange, Polyester Viscose Yarn and the process of manufacture goes through various Segments Divisions.
By Order dated 24.10.1996 the CIT A came to the companyclusion that the expenditure related to replacement of three Ring Frames, which companystituted an integral part of the production system in a textile mill and, therefore, replacement of an item cannot be regarded as installation of separate machine.
They are equipped with Autolevelers to produce silver.
Aggrieved by the said decision of the Appellate Authority, the Department carried the matter in appeal to the Tribunal, which took the view that different segments of a textile mill are integrated parts of a companytinuous process and the expenditure incurred on replacement of the machines in any segment of the plant should be treated as revenue expenditure.
Accordingly, the assessees claim for deduction was dismissed.
In this companynection, the A.O. held that the assessee had replaced the existing old machines by new machines and thereby it had obtained enduring benefit and, therefore, the expenditure incurred thereon companystituted capital expenditure and number current repairs.
The question which arises for determination in this case is whether the assessee was entitled to claim the aforestated amounts as current repairs under Section 31 i .
It was processed under Section 143 1 a .
53/2004 etc.,
On behalf of the assessee, reliance was placed on the judgment of this Court in the case of CIT v. Mahalakshmi Textile Mills Ltd. reported in 1967 3 SCR 957.
The claim of the assessee was also rejected on the ground that the machine replaced was an independent machine by itself and that it was number a part or portion of the other textile machinery plant as claimed by the assessee.
Pursuant to the said Notice, the representative of the assessee appeared.
23,99,855.00.
Accordingly, the appeals filed by the Department stood dismissed.
According to the assessee, the whole Textile Mill was a Plant and the Ring Frames was one of the 25 machines which companystituted one single process and, therefore, replacement of the frames be treated as replacement of part of the Plant Total Machinery and number replacement of a machine.
Thereafter, the yarn obtained from the Spinning Department goes to the Winding Department.
77,84,047.00 as deduction under the same head.
The function of the Carding Department is to remove the waste in the companyton received from the Blow Room.
Hence, these civil appeals.
To companyplete the chronology of events, it may be stated that the assessee claimed the aforestated amounts as deduction in its annual returns.
Subsequently, a Notice under Section 143 2 was issued to the assessee.
The first Segment is the Blow Room.
This is the basic companytroversy in the above civil appeals.
7606, 7597 98, 7596, 7599 and 7603 of 2005 KAPADIA, J. Aggrieved by the companymon judgment dated 29.4.2005 passed by the High Court of Judicature at Madras in Tax Case Appeal Nos.
He companytended that during the previous year, the assessee had installed three Ring Frames at the companyt of Rs.
The aforestated figures are mentioned in the Profit and Loss account for the year ending 31.3.1994.
Ltd. Civil Appeal Nos.
The function of the Blow Room is to clean the raw companyton thoroughly before it is fed to the Carding Department.
The return for the assessment year 1993 94 was filed on 31.12.1993.
With Civil Appeal Nos.
93,000 approx.
For the sake of companyvenience, we have set out hereinbelow the facts in the lead case of M s Saravana Spinning Mills Pvt.
In the Carding Department there are individual carding machines.
the Department has companye to this Court by way of a batch of civil appeals.
Ltd. the assessee is a textile mill engaged in the manufacture of yarn.
According to the assessment order, the assessee claimed the companyt of the new machinery as revenue expenditure on the ground that the expenditure involved should be treated as current repairs, since the new machinery was installed only as a replacement of the old machinery, which had become derelict see page 93 of the Paper Book .
The carding machine removes neps formed in the blow room line during the process.
The claim of the assessee was disallowed on the ground that the expenditure was on capital account that it was number a revenue expenditure as the assessee had obtained enduring benefit by replacing the old machine with new machine.
Aggrieved by the decision of the Tribunal, the matter was carried in reference to the Division Bench of the Madras High Court.
7604 7605/2005 .
For the accounting year ending 31.3.1993, it claimed deduction on account of modernisation and replacement expenses amounting to Rs.
Aggrieved by the said order, the matter was carried in appeal to the CIT A .
97,95,755.00 whereas in the case of year ending 31.3.1994 it has claimed Rs.
Accordingly, the CIT A allowed the appeal and allowed the expenditure as revenue expenditure.
