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2012 (4) TMI 244 - AT - Income TaxModernization and replacement expenses - assessee claimed deduction under section 37(1) for expenditure incurred on replacement of machineries – AO treated it as a capital expenditure – assessee stated that replacement of ring frames and balancing machines was not done with a view to bring into existence a new asset and had been made only to restore the machinery to its original state of efficiency – Held that:- the issue stands fully covered by the judgment of the Hon'ble Supreme Court in the case of CIT v. Sri Mangayarkarasi Mills (P) Ltd. - 2009 - TMI - 34189 - SUPREME COURT - the expenditure of the assessee in this case is capital in nature as it amounts to an enduring advantage for the business - replacement, in this case, amounts to bringing into existence a new asset and also an enduring benefit for the assessee – against assessee. Additional Ground raised challenging the chargeability of interest under section 234B and 234C of the Act – Held that:- Since the ground was not before the lower authorities it is fit and proper to restore this issue back to the file of the Assessing Officer, who shall pass a speaking order with regard to chargeability of interest.
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