Business expenses – S. 37(1) – Capital or Revenue expenses
Shefali Bajpai
Author
Court :
Brief :
Expenditure on replacement of manual cone winders by auto cone winders in textile mill – No cost advantage on such replacement and no increase in installed capacity – Expenditure incurred was revenue notwithstanding large amount was spent - A.Y. 2002-03
Citation :
ACIT vs. Prabhu Spg. Mills (P) Ltd. (2008) 2 DTR 77 (Chennai); Order dated 30-11-2007
Expenditure incurred by assessee in auto cone winders in textile mill in place of manual cone winders, was for survival in the business neither affecting cost factor nor installed capacity and thus was revenue in nature, notwithstanding the fact that a large sum was spent. This decision has distinguished the decision of Supreme Court in CIT vs. Saravana Spinning Mills (P) Ltd. (2007) 293 ITR 201 (SC).
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