The Commissioner Of Income Taxmadurai v. M/S Fenner (India) Limited3, Madurai Melakkal Roadkochadaimadurai – 625 016Pan Aaacf2348D

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 27.04.2009CORAM: THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANANDTHE HONOURABLE MR.JUSTICE M.M.SUNDRESH Tax Case(Appeal) Nos.171 and 172 of 2009 The Commissioner of Income TaxMadurai.. Appellant -vs- M/s Fenner (India) Limited3, Madurai Melakkal RoadKochadaiMadurai – 625 016PAN AAACF2348D.. Respondent TAX CASES in T.C.Appeal Nos.171 and 172 of 2009 are filed underSection 260 A of the Income Tax Act, 1961 against the order of theIncome Tax Appellate Tribunal, MADRAS 'B' Bench, Chennai dated31.7.2008 passed in ITA.Nos.324 and 326/Mds/2007 relating to theassessment years 2003-2004 and 2002-2003 respectively against theorder of the Commissioner of Income Tax (Appeals-I), Madurai dated10.10.2006 and made in ITA No.0059/06-07 and ITA No.0058/06-07 inPAN/GIR/No.AAA CF 2348D for the Assessment Year 2003-04 and 2002-03respectively against the order of the Joint Commissioner of IncomeTax Circle-I, Madurai dated 31.3.2006 and made in P.A.No.AAACH3917Nand PA No.AAA CF 2348D for the Assessment Year 2003-2004 and 2002-2003 respectively. (Judgment of the Court was delivered by K.RAVIRAJA PANDIAN,J) The revenue is on appeal against the order of the Income TaxAppellate Tribunal MADRAS 'B' Bench, Chennai dated 31.7.2008 passedin ITA.Nos.324 and 326/Mds/2007 relating to the assessment years2003-2004 and 2002-2003 respectively. The appeals are admitted onthe following question of law: https://hcservices.ecourts.gov.in/hcservices/ " Whether in the facts and circumstancesof the case, the Tribunal was right in allowing a deduction of the amounts spent on replacement ofmoulds as revenue expenditure/current repairs? 3. It is submitted across the bar by the learned counselappearing on either side that the above question of law is covered bythe decision of the Supreme Court in the case of Commissioner ofIncome Tax vs.Ramaraju Surgical Cotton Mills reported in 294 ITR 328,wherein the Judgment of this Court in Commissioner of Income Tax(Appeals) vs. Janakiram Mills Limited reported in 275 ITR 430 wasconsidered by the Supreme Court with reference to the contention ofthe assessee that replacement of assets without increasing theproduction capacity would amount to revenue expenditure. The SupremeCourt remanded the matter by observing that there are a number oftests which are required to be considered while deciding whether theexpenditure was revenue or capital in nature. In the absence of therequisite details regarding the production capacity remainingconstant even after replacement, the matter could not be decided onmerits and require to be remitted back to the Commissioner (Appeals)for consideration of that particular issue with reference to theproduction capacity. In this case also, there is no materialavailable as to the increase or otherwise of the production capacityin replacement of the machineries. Without the factual details, thequestions of law cannot be decided. Hence this case also require tobe remitted back to the Commissioner of Appeals as done by theSupreme Court in the aforesaid decision. 4. Hence, the order of the Tribunal is set aside and thematter is remitted back to the Commissioner of Appeals to redo theexercise as directed by the Supreme Court in the case of Commissionerof Income Tax vs.Ramaraju Surgical Cotton Mills reported in 294 ITR328 with liberty to the assessee to adduce evidence in order tosustain their case. With the above observations, the appeals aredisposed of. No costs. Sd/Asst.Registrar usk To 1.The Commissioner of Income Tax,Madurai. 2. Income Tax Appellate Tribunal, "B" Bench, Chennai https://hcservices.ecourts.gov.in/hcservices/ 3. The Commissioner of Income Tax(Appeals-I) , Madurai. Madurai. 4.The Joint Commissioner of Income Tax Circle-I,Madurai.Madurai. 5.The Asst. Registrar,Income Tax Appellate Tribunal,Rajaji Bhavan III Floor,Besant Nagar,Chennai-90. JSV(CO)km/19.5. T.C.A.Nos.171 and 172 of 2009