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2012 (12) TMI 79 - HC - Income TaxExpenditure on Iron rolls - Capital vs Revenue Expense - assessee does not claim its expenditure as replacement of whole machinery or repairing of machinery as such = Held that:- Whether expenditure is "revenue" or "capital in nature" would depend upon several factors, namely, nature of the expenditure, nature of business activity etc. - In the case of Commissioner of Income Tax Vs. Ramaraju Surgical Cotton Mills (2007 (8) TMI 39 - SUPREME COURT OF INDIA), the Supreme Court considered the decision in the case of CIT Vs. Saravana Spinning Mills P.Ltd reported in (2007 (8) TMI 16 - SUPREME COURT OF INDIA) and in the case of CIT Vs. Janakiram Mills Ltd [2005 (4) TMI 39 - MADRAS HIGH COURT] and pointed out that in considering whether the expenditure is revenue or capital in nature, the proven tests have been evolved that if the expenditure is of the nature not leading to the increased production capacity and the same remaining as constant, even after replacement, then, the expenditure would be revenue in nature. Given the technicalities on the "revenue" and "capital expenditure", "current repairs" and its application to a finding based on facts, Assessing Officer should have adverted to the various facts involved in the use of steel rolls to arrive at the decision as to whether the assessee is entitled to deduction under Section 37 of the Act or not. When the authorities below had not adverted to any of these, proper course herein would be to set aside the order of the Income Tax Appellate Tribunal. Accordingly, the order of the Income Tax Appellate Tribunal is set aside and the matter is restored to the files of the Assessing Officer to consider the claim of the assessee in the background of the nature of the expenditure incurred by the assessee and to the decisions of the Apex Court as referred to above and thereafter arrive at a finding - In the result, the Tax Case Appeal stands disposed of with the above observation. No costs.
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