TMI Blog1994 (4) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... placement of plant and machinery worth ₹ 1,30,000 was on account of current repairs and was revenue in nature and was based on any relevant evidence or partly relevant and partly irrelevant evidence and is otherwise arbitrary and perverse ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the expenditure of ₹ 1,77,708 made for the maintenance and replacement of plant and machinery worth ₹ 1,30,000 was in the nature of revenue and thereby deleting the addition of ₹ 1,77,708 made under the head ? 3. Whether, on the facts and in the circumstances of the case and having regard to the finding of the Assessing Officer and the Commissioner (Appeals), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls) referred to the several decisions of different High Courts as well as the decisions of the Supreme Court in CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 and held that the expenditure on replacement of CTC Segment, Motors and Conveyer Belt was nothing but a revenue expenditure. On appeal by the revenue, the Tribunal held and observed that the replacement of some of the parts of a machine is nothing but in the nature of current repairs and the expenses in question must be treated as revenue in nature. We find that an almost identical issue came up before this Court in CIT v. Tea Estate (P.) Ltd. [1992] 198 ITR 535 . In that case, the petrol engine of a truck was replaced by a diesel engine. This Court held that it was only repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not perverse. The last two questions in this reference relate to the change in the method of stock valuation. The assessee-company had all along been valuing its closing stock of made tea at 'since realised or estimated realisable value'. But, with effect from the previous year relevant to the assessment year 1984-85, now in reference before us, the assessee-company changed its method of stock valuation to 'estimated cost' basis. The Assessing Officer found that the average cost price of tea for this year was ₹ 11.29 per kg. as against the average sale price of ₹ 17.68 per kg. The Assessing Officer felt that had the closing stock of tea been valued by the respondent-assessee at 'realisable value', th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous year relevant to the assessment year 1984-85. The bona fides of the assessee cannot be doubted since the changed method of valuation was being consistently followed by the assessee-company in future too and that the method of valuing stock at cost was one of the recognised methods. 3. The assessee-company is engaged in the business of manufacture and sale of tea. The stock of tea at the end of the year can be valued either at cost or at market price or at cost or market value, whichever is lower. All these three methods of stock valuation are well recognised. In the earlier years, the assessee-company was valuing its closing stock at 'since realisable value'. In other words, the closing stock of tea was being valued by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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