COMMISSIONER OF INCOME-TAX VS COOPERATIVE SUGARS LTD.
2001 P T D 2751
[239 I T R 908]
[Kerala High Court (India)]
Before Om Prakash, C.J. and J. B. Koshy, J
COMMISSIONER OF. INCOME‑TAX
versus
COOPERATIVE SUGARS LTD
Income‑tax Reference No.87 of 1995, decided on 18/02/1998.
Income‑tax‑‑‑
‑‑‑‑Capital or revenue expenditure‑‑‑Expenditure on maintenance of machinery‑‑‑ Revenue expenditure‑‑Indian Income Tax Act, 1961,.S.37.
Held, that, on the facts and in circumstances of the case, the Tribunal was justified in holding that the expenditure incurred by the assessee under the head "Machinery maintenance" was revenue in nature and was an allowable deduction.
C.I.T. v. Cooperative Sugars Ltd: (1999)235 ITR 343 (Ker.) fol.
P.K.R. Menon, Senior Advocate and N. R. K. Nair for the Commissioner.
B. S. Krishnan, Senior Advocate and P.R. Raman and K. Anand for the Assessee.
JUDGMENT
OM PRAKASH, C.J.‑‑‑Pursuant to the directions given by this Court vide judgment, dated October 27, 1994, under section 256(2) of the Income Tax Act, 1961 (briefly, the Act) the Income‑tax Appellate Tribunal (Cochin Bench) referred the following question, relating to the assessment year 1984‑85, for the opinion of this Court:
"Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the expenditure incurred by the assessee under the head 'Machinery maintenance' is revenue in nature and is an allowable deduction?"
The case of the assessee was that during the previous year relevant to the assessment year 1984‑85, it incurred expenditure aggregating to Rs.8,40,542 on the replacement of machinery as follows:
| Items | Amounts (Rs.) |
| (a) Crystalliser | 1,70,355 |
| (b) Crystalliser | 1,67,355 |
| (c) Kirloskar machine pump with sleeve | 26,938 |
| (d) Cavity lime water pump | 11,244 |
| (e) Sulphur furnace | 85,844 |
| (f)? Kirloskar 180 KW 10 HP motor. | 1,64,027 |
| (g) Kirloskar injection motor | 43,072 |
| (h) Welding rejector model | 41,130 |
| (i) Replacement of chimney | 79,000 |
| (j) Oil Pump | 61,577 |
| Total | 8,40,542 |
In the course of arguments before the Appellate Tribunal, both the representatives of the parties categorically stated that the controversy arising in this case for the assessment year 1984‑85 would be governed by the decision in the case of the assessee relating to the assessment year 1983‑84, in which an identical question was involved. The Appellate Tribunal, therefore, relying on its earlier decision relating to the assessment year 1983‑84, in which it took the view that the expenditure incurred on replacement of machinery was revenue in nature, held that the expenditure incurred on replacement of machinery was revenue expenditure.
At the instance of the Revenue, an identical question was referred to this Court for opinion for the assessment year 1983‑84. Both references relating to the assessment years 1983‑84 and 1984‑85 came to be heard together before us. In the reference relating to the assessment year 1983‑84, we accepted the view taken by the Appellate Tribunal that the expenditure incurred on replacement of machinery was in the nature of revenue.
Following the said judgment, we answer the question in this reference in the affirmative, that is, in favour of the assessee and against the Revenue.
M.B.A./276/FC ????????????????????????????????????????????????????????????????????? Reference answered.