TMI Blog1992 (2) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... that expenditure claimed as repair and replacement charges under the head ' Machinery Maintenance ' in the Profit and Loss Account were of capital and not of revenue in nature as claimed by the assessee. While completing the assessment, the Income-tax Officer disallowed the claim of the assessee for deduction of expenditure in respect of--- (a) High Velocity Juice heater Rs. 1,20,000 (b) Sugar Grader Rs. 95,000 (c) Juice Sulphiter Rs. 2,23,200 (d) Vacuum Filter Drum Rs. 3,35,260 (e) Centrifugal machinery Rs. 18,37,853 (f) Pumps Rs. 91,800 (g) Meters Rs. 45,916 ----------------------- Rs. 27,49,029 ----------------------- Since the ITO did not allow the claim of the assessee, the assessee went in appeal to the CIT (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the sketch furnished by the assessee in respect of the machinery used for the manufacture of sugar, it is apparent that each machinery though doing distinct functions is only an integral part of the whole plant and they do not have independent existence. In other words, the several machineries form an integral part of the sugar plant. Further, the manufacturing operation itself is a continuous process in the case of sugar mills and the final product, the sugar crystal, and by-product, molasses, emerge only at the final stage. There is no scope for taking out the products in between. Therefore, we hold that the repairs and replacements done by the assessee are but only repairs and replacements of parts of an integrated machinery. By such r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " The idea of ' once for all ' payment and ' enduring benefit ' are not to be treated as something akin to statutory conditions ; nor are the notions of ' capital ' or ' revenue ' a judicial fetish. What is capital expenditure and what is revenue are not eternal varieties but must needs be flexible so as to respond to the changing economic realities of business. The expression ' asset or advantage of an enduring nature ' was evolved to emphasise the element of a sufficient degree of durability appropriate to the context. There is also no single definitive criterion which, by itself, is determinative whether a particular outlay is capital or revenue. The ' once for all ' payment test is also inconclusive. What is relevant is the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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