9911796707
TMI Blog2007 (6) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996-97, the assessee started a new industry at Pondicherry for manufacture of Rack and Pinion Steering Gears and incurred an expenditure of Rs.2,08,00,000/- during the assessment year 1996-97 and Rs.9,48,405/- during the assessment year 1997-98, for the following:- 1. Interest on Exim Bank Loan 2. Various Raw material consumed 3. Stores consumed 4. Tools consumed 5. Travel Expenses (for foreign & Domestic travel of Employees on training & other official purposes) 6. Salaries & Wages 7. Printing & Stationery 8. Computer Stationery 9. Freight inward 10. Freight outward 11. Power & Fuel 12. Insurance 13. Repairs & Maintenance 14. Central Overheads Madras Plant 15. Other various Miscellaneous expenses. 3. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioning of internal thread grinding and external thread grinding machines at UK was disallowed by the assessing officer on the ground that it will have an enduring benefit to the assessee and accordingly, treated the same as capital expenditure. The Commissioner of Income-tax (Appeals), by his order dated 30.1.2001, allowed the appeal filed by the assessee holding the same as revenue expenditure, which was confirmed by the Tribunal by the impugned common order dated 20.1.2006. Aggrieved by the same, the Revenue has raised another substantial question of law, which reads as follows:- " (iii) Whether in the facts and circumstances of the case, the Tribunal was right in allowing a deduction of the amounts spent on reconditioning o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factual aspect of the case is relevant to decide whether the industry started at Pondicherry for manufacture of Rack and Pinion Steering Gears is an extension of the existing units at Madras and Mysore or is totally a new unit by itself. 8. Both the appellate authorities below have concurrently found that while the existing units at Velachery and Mysore are engaged in recirculating ball type steering gears, in the new industry at Pondicherry, the assessee proposed to manufacture rack and pinion steering gears. It is not in dispute that in both the units, viz., existing units at Velachery and Mysore and new unit at Pondicherry, the assessee manufactures the steering gears, while at Velachery and Mysore, it manufactures ball type stee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [(1989) 175 I.T.R. 215] and in Commissioner of Income-tax v. Hindustan Machine Tools Ltd. [(1989) 175 I.T.R. 212]; as well as the decision of the Delhi High Court in Additional Commissioner of Income-tax v. Rewari Electric Supply & Industries [(1982) 138 I.T.R. 473]; Bombay High Court in Additional Commissioner of Income-tax v. Aniline Dyestuffs & Pharmaceuticals (P) Ltd. [(1982) 138 I.T.R. 843]; this Court in South India Viscos Ltd. v. Commissioner of Income-tax [(1998) 229 I.T.R. 203] and the decision of Madhya Pradesh High Court in Commissioner of Income-tax v. Bilai Iron & Steel Ltd. [(1998) 234 I.T.R. 667], referred supra. 10. In view of the above, we do not see any substantial question of law that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was an advantage for the enduring benefit of the business and thus, the expenditure was revenue in character. 14. The Bombay High Court in Commissioner of Income-tax v. Chowgule and Co. Pvt. Ltd. [(1995) 214 I.T.R. 523], held that if the existing units and the new unit, even though independent, are interlacing and interconnected with the management, financial, administrative and production aspects, the reconditioning of the existing machineries is nothing but a replacement by new parts and therefore, the expenditure incurred in that regard has to be treated as a revenue expenditure, as the same is intended for putting the machineries in a working condition and did not result in emergence of a new asset. 15. Accordingly, we also do not se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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