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2009 (12) TMI 105 - HC - Income TaxRevenue expenditure versus Capital Expenditure - Replacement of machinery - The Company is a Public Limited Company,which is engaged in the business of manufacture and sale of cotton and blended yarn. The assessee filed its return of income on 27.11.1996 with a total income of Rs.6,06,370/- after claiming deduction of Rs.6,19,43,673/- on account of "Replacement of plant & machinery claimed as revenue expenditure". The scrutiny assessment was initiated by issuing notice under Section 143(2) on 17.3.2007. The assessment was made vide order under Section 143(3) dated 26.3.1999, wherein machinery replacements to the extent of Rs.6,19,43,673/- was disallowed – CIT(A) partly allowed the claimed – ITAT disallowed the deduction of expenditure following the decision of supreme court in the matter of MANGAYARKARASI MILLS (P) LTD [2009 -TMI - 34189 - SUPREME COURT] – held that - . When the matter is remitted to the first appellate authority, there is no harm in allowing the assessee to give additional materials about the additional machinery, for which they are claiming benefit under Section 37 of the Income-tax Act. Even in the case of Ramaraju Surgical Cotton Mills reported in [Ramaraju Surgical Cotton M] such a direction is given to the authorities to re-consider the issue on the basis of the materials produced before the authorities by both the parties – matter remanded back
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