Ramachandran Nair, J._ v. Ita

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN WEDNESDAY, THE 23RD JUNE 2010 / 2ND ASHADHA 1932 ITA.No. 145 of 2001() --------------------- ITA.362/COCH/1995 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT ---------------------------------- THE COMMISSIONER OF INCOME TAX, TRICHUR. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENT/RESPONDENT: --------------------------------------- M/s. VANAJA TEXTILES Ltd., KURICHIKKARA, TRICHUR. ADV. SRI.P.BALAKRISHNAN (E) FOR R1 THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 23/06/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. --------------------------- I.T.A No. 145 OF 2001 -------------------------- Dated this the 23[rd ]day of June, 2010 J U D G M E N T Ramachandran Nair, J. The question raised in the appeal filed by the revenue iswhether the Tribunal was justified in allowing the deduction of theexpenditure incurred by the assessee for purchase of Autoconer238 in the place of Conewinder. The case of the assessee is that itis only replacement of old machinery which entitle them to claim theexpenditure as revenue and the same was rightly allowed by theTribunal. The learned sanding counsel for the revenue relied on thedecision of the Supreme Court reported in Commissioner ofIncome Tax v. Sri. Mangayarkarasi Mills P. Ltd [(2009) 315 ITR114 (SC)] wherein the Supreme Court has held that replacement ofmachinery in the spinning mill is not revenue expenditure. Thelearned counsel for the assessee on the other hand relied on thedecision of the Supreme Court in Commissioner of Income Tax v.McDowell and Co.Ltd [(2009) 314 ITR 177 (SC)]. We notice fromthe Tribunal's order that they have relied on their another order inBhagavathi Textile's case, which was also subject matter of theappeal before this Court. However, since that Company is ITA No.145/01 insolvent, this Court felt that there was no necessity to decide thecase on merits. In the above circumstances and since the decision of the Supreme Court referred above were not before the assessingofficer while deciding the issue, we allow the appeal by setting asidethe order of the Tribunal and remand the matter back to theassessing officer to decide the issue afresh in the light of the factsand the decisions of the Supreme Court referred above or any otherrelevant decision of this Court, after giving an opportunity to theassessee but without being influenced by the Tribunal's order inBhagavathi Textile's case. Both the parties are free to rely on anyother decisions of the Supreme Court or of this Court. Theassessing officer shall revise the assessment within a period of threemonths from the date of receipt of a copy of this judgment. C.N.RAMACHANDRAN NAIR (JUDGE ) vps P.S.GOPINATHAN (JUDGE ) ITA No.145/01 ITA No.145/01