(Judgment of the Court was delivered by K.RAVIRAJA PANDIAN,J.) The revenue has come up on appeal against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench, dated 28.1.2004 passed in I.T.A.No.16 /Mds/1997 in respect of the assessment year 1993-94 by formulating the following substantial questions of law:
"(1). Whether in the facts and circumstances of the case, the Tribunal was right in allowing a deduction of the amounts spent on new machinery as revenue expenditure?
2. Whether in the facts and circumstances of the case, the Tribunal was right in allowing a deduction of the amounts spent on replacement of machinery as current repairs?
3. Whether in the facts and circumstances of the case, replacement of independent complete machinery can be treated as revenue expenditure?
4. Whether in the facts and circumstances of the case the tribunal is right in holding that the deduction under Section 80I had to be computed by allocating the expenditure based on the spindlage and not on turnover pertaining the mill B?"
2. The facts of the case are as follows:
The assessee company is a textile mill. For the assessment year 1993-94, the assessee filed its return and the assessing officer inter alia disallowed the claim of the assessee in respect of replacement expenditure of autoconer etc. The assessing officer has found that the claim of the assessee that it had sold the old machinery and brought a new one was found to be false. Assessing Officer held that the purchase of new machinery cannot be treated as a revenue expenditure. Since the assessee had two mills, the assessing officer recomputed the deduction under Section 80I for the mill B by reducing the expenditure proportionate to mill B's turnover (incurred towards Administration, employees, interest donation etc.,) from the profit. Aggrieved by the disallowances in the assessment order, the assessee filed an appeal before the CIT (Appeals). The CIT (Appeals) allowed the appeal holding that the claim of the assessee for treating such huge expenditure year after year as revenue expenditure can be allowed. The CIT (A) also directed the assessing officer to allow the deduction under Section 80I allocating the expenditure based in the number of spindles and not based on the turnover. Aggrieved by the order of the CIT (A), the revenue filed an appeal before the Income-tax Appellate Tribunal and the Tribunal dismissed the appeal holding that the expenditure incurred is with respect to replacement and the same is revenue expenditure. The Tribunal also upheld the decision of the CIT(A) with respect to the computation of the deduction under Section 80I. Aggrieved by the order of the Income-tax Appellate Tribunal, the present appeal is filed by the revenue.
3. It is submitted by the learned counsel on either side that the first three questions of law are covered by the decisions of the Supreme Court in the case of COMMISSIONER OF INCOME-TAX VS. RAMARAJU SURGICAL COTTON MILLS reported in (2007) 294 ITR 328 and COMMISSIONER OF INCOME-TAX VS. SARAVANA SPINNING MILLS PRIVATE LIMITED reported in (2007) 293 ITR 201. Learned counsel for the assessee also produced the latest judgment of the Supreme Court in Civil Appeal No.7297 of 2009 arising out of S.L.P.(C) No.2037 of 2009, dated 3.11.2009 in the case of COMMISSIONER OF INCOME TAX VS. M/S.HINDUSTAN TEXTILES, wherein also after referring to the judgment of COMMISSIONER OF INCOME-TAX VS. SRI MANGAYARKARASI MILLS PRIVATE LIMITED reported in (2009) 315 I.T.R. 114, remitted the matter back to the High Court for consideration by following dictum laid down by the Supreme Court in the case of COMMISSIONER OF INCOME-TAX VS. RAMARAJU SURGICAL COTTON MILLS reported in (2007) 294 ITR 328 and COMMISSIONER OF INCOME-TAX VS. SARAVANA SPINNING MILLS PRIVATE LIMITED reported in (2007) 293 ITR 201.
4. In the light of the order passed by the Supreme Court in the above said decision, in respect of the three questions of law, the order of the Tribunal is set aside and the matter is remitted back to the Commissioner of Income-tax (Appeals) to re-consider the issue as directed by the Supreme Court in the above said judgment. As regards the 4th question of law, it is seen that the issue has been remitted back to the authorities to consider the issue afresh and when that being the position, from the order of the Tribunal, the said question of law does not arise for consideration. Hence, the said question of law is not answered.
The tax case appeal is disposed of in the above terms.