TMI Blog2008 (1) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... . JJ. K.V. Arvind for the appellant. Kumar for M/s. King and Partridge for the respondent. JUDGMENT The judgment of the court was delivered by K. L. Manjunath J.- This appeal is by the Revenue challenging the findings of the Income-tax Appellate Tribunal, Bangalore Bench "A" in I.T.A. No. 695/Bang/2000 for the assessment year 1996-97 wherein the Tribunal has reversed the findings of the Assessing Officer and also the order passed by the Commissioner of Income-tax (Appeals) raising the following substantial question of law. (i) Whether the Tribunal was correct in holding that the amount of Rs. 8,06,147 incurred by the assessee for replacing the old mono sound system with a new stereo system viz., dolby system should be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the Assessing Officer. He further contends that if the sound system is changed, it cannot be termed as a repair to the existing system and it has to be treated as an investment for acquiring a new machinery. Therefore he requests the court to allow the appeal. 5. Per contra, learned senior counsel appearing for the assessee relying upon the judgments of the hon'ble Supreme Court in CIT v. Ramaraju Surgical Cotton Mills [2007] 294 ITR 328 and in Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1 (SC) contends that even if a new machinery is replaced, the test has to be applied in order to consider whether the expenditure is of revenue in nature or capital. Considering that the old stereo system had been worn out and was beyond repair, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r replacing the sound system to its theatre amounts to revenue or capital in nature. This court has to consider whether the change of sound system has increased the revenue or not. Admittedly, the old sound system was in existence for several years and due to use of the very sound system for several years, the old system was worn out. If the assessee has provided certain amenities to its customers by replacing the old system with a better sound system and by introducing such system if the assessee has not increased its income in any way, we cannot consider such change of sound system as capital in nature. According to us, instead of repairing the existing old stereo system, the assessee has installed dolby stereo system. This has not benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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