DCIT, Hyderabad v. M/s Suryavanshi Holdings Ltd., Secunderabad

ITA 1174/HYD/2009 | 2004-2005
Pronouncement Date: 31-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 117422514 RSA 2009
Assessee PAN AADCS0820J
Bench Hyderabad
Appeal Number ITA 1174/HYD/2009
Duration Of Justice 1 year(s) 1 month(s) 21 day(s)
Appellant DCIT, Hyderabad
Respondent M/s Suryavanshi Holdings Ltd., Secunderabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 31-01-2011
Assessment Year 2004-2005
Appeal Filed On 10-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.1173 /H/2009 ASSESSMENT YEAR 2003-04 THE DCIT CIRCLE 3(2) HYDERABAD VS. M/S SURYAVAMSHI SPINNING MILLS LTD. SECUNDERABAD (PAN AADCS 0820 J) (APPELLANT) (RESPONDENT) ITA NO.1174 /H/2009 ASSESSMENT YEAR 2004-05 THE DCIT CIRCLE 3(2) HYDERABAD VS. M/S SURYAVAMSHI HOLDINGS LTD. SECUNDERABAD (PAN AADCS 2804 C) (APPELLANT) (RESPONDENT) ITA NO.1175/H/2009 ASSESSMENT YEAR 2003-04 THE DCIT CIRCLE 3(2) HYDERABAD VS. M/S SURYA LATHA SPINNING MILLS (P) LTD. SECUNDERABAD (PAN AADCS 0823 N) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMLAN TRIPATHY RESPONDENT BY : SHRI C.N. PRASAD O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THESE THREE APPEALS PREFERRED BY THE REVENUE ARE DIRECTED AGAINST DIFFERENT ORDERS PASSED BY THE CIT(A) TIR UPATHI IN RESPECT OF ABOVE THREE DIFFERENT ASSESSEES AND PERTAINS TO TH E ASSESSMENT YEARS 2003-04 & 2004-05. SINCE CERTAIN ISSUES INVOLVED I N THESE APPEALS ARE ITA NOS.1173 1174 & 1175/H/2009 M/S SURYAVAMSHI SPINNING MILLS SURYAVAMSHI HOLDINGS & SURYA LALTHA SPINNING MILLS (P) LTD. S BAD. 2 2 COMMON IN NATURE THEY ARE CLUBBED TOGETHER HEARD TOGETHER AND DISPOSED OFF VIDE THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FIRST COMMON GROUND IN ALL THESE APPEALS IS THAT THE CIT(A) ERRED IN NOT APPRECIATING THE LEGISLATIVE IN TENTION IN INSERTING THE PROVISIONS OF SECTION 145A OF THE IT ACT. THE CIT( A) SHOULD HAVE SUSTAINED THE ADDITION ON ACCOUNT OF EXCISE DUTY ON CLOSING S TOCK AS THE PROVISION CREATED TOWARDS EXCISE DUTY PAYABLE ON CLOSING STOC K OF FINISHED GOODS IS ONLY A CONTINGENT LIABILITY AND NOT AS ASCERTAINED LIABILITY AS ON 31 ST MARCH OF THE ACCOUNTING YEAR. 3. AFTER HEARING THE BOTH THE PARTIES WE ARE OF THE OPINION THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THIS TRIBUNAL VIDE ORDER DATED 18.2.2010 IN THE CASE OF M/S SURYAVAMSHI COTT ON MILLS LTD. IN ITA NO.1176/H/2009 FOR THE ASSESSMENT YEARS 2003-04 WHE REIN THE TRIBUNAL DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDI NG AS FOLLOWS: 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT THE CASE OF THE REVENUE THAT THE FINISHED GOOD LEFT THE PREM ISES SO AS TO ADD THE EXCISE DUTY PAYABLE TO THE CLOSING STOCK. IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THE FINISHED GOODS LEF T THE PREMISES OF THE ASSESSEE IN OUR OPINION THE JUDGE MENT OF THE MADHYA PRADESH HIGH COURT IN THE CASE OF ACIT VS. D & H SECHERON ELECTRODES (P) LTD. (2008) (173 TAXMAN 18 8) WOULD BE SQUARELY APPLICABLE. A SIMILAR VIEW WAS TAKEN BY T HIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05. SINCE THE MADHYA PRADESH HIGH COURT DECIDED THE ISS UE AFTER CONSIDERING THE PROVISIONS OF SEC. 145A AS AMENDED WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION. ACCORDINGLY BY FOLLOWING THE ORDER OF THIS TRIBUNAL FOR THE ASSESSMENT YEAR 2004-05 IN THE ASS ESSEES OWN CASE AND FOR THE REASONS STATED HEREIN WE UPHOLD T HE ORDER OF THE CIT(A). ITA NOS.1173 1174 & 1175/H/2009 M/S SURYAVAMSHI SPINNING MILLS SURYAVAMSHI HOLDINGS & SURYA LALTHA SPINNING MILLS (P) LTD. S BAD. 3 3 4. IN VIEW OF THE ABOVE ORDER OF THIS TRIBUNAL W E ARE INCLINED TO DECIDE THE IMPUGNED ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY THIS GROUND RAISED BY THE RE VENUE IN ALL ITS APPEALS IS DISMISSED. 5. THE NEXT GROUND IN ITA NO.1173/H/2009 IS WITH REGARD TO DELETION OF DISALLOWANCE OF THE PROPORTIONATE INTER EST ON THE LOAN ADVANCED TO THE SISTER CONCERN. 6. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE COMPANY HAS ADVANCED MONIES TO ITS ERSTWHILE SUBSIDIARY COMPANY M/S SURYAVAMSHI TEXTILES LTD. AS ON 31.3.2003 RS.196 LAKHS IS OUTST ANDING AND NO INTEREST BY THE ASSESSEE COMPANY HAS BEEN CHARGED WHILE INTE REST IS BEING PAID ON THE BORROWED FUNDS BY THE ASSESSEE COMPANY. ACCORD INGLY THE ASSESSING OFFICER CALCULATED THAT INTEREST AT 14% PER ANNUM O N THE OUTSTANDING AMOUNT. ACCORDING TO THE ASSESSEE M/S SURYAVAMSHI TEXTILES LTD. HAS BECOME A SICK UNIT UNDER THE SIC(SP) ACT AND WAS RE FERRED TO BIFR AND IT WAS INCURRING LOSSES CONTINUOUSLY AND UNABLE TO PAY EVEN THE PRINCIPAL AMOUNT TO THE ASSESSEE COMPANY AND THE INTEREST CAN NOT BE CHARGED. ON APPEAL THE CIT(A) OBSERVED THAT THE SURAVAMSHI TEXT ILES LTD. BEING A SUBSIDIARY COMPANY OF THE ASSESSEE COMPANY WHICH IS A SICK UNIT AND THE ASSESSEE BEING A PARENT COMPANY IS OBLIGED TO BEAR THE LOSSES. ACCORDINGLY HE ALLOWED THE CLAIM OF THE ASSESSEE. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THERE IS NO COMMERCIAL EXPENDANCY TO ADVANCE LOAN TO THE SISTER CONCERN. ACCORDING TO HIM THE PRESENT ASSESSEE IS A DIFFERE NT ASSESSABLE UNIT FROM THE SUBSIDIARY COMPANY. THE ASSESSEE CANNOT BE USE D INTEREST BEARING ITA NOS.1173 1174 & 1175/H/2009 M/S SURYAVAMSHI SPINNING MILLS SURYAVAMSHI HOLDINGS & SURYA LALTHA SPINNING MILLS (P) LTD. S BAD. 4 4 FUNDS TO ADVANCE TO SISTER CONCERN AS FREE OF COST. HE RELIED ON THE FOLLOWING JUDGEMENTS: 1. PUNJAB STAINLESS STEEL INDUSTRIES VS. CIT & OTHERS (324 ITR 396) (DEL HC) 2. CIT VS. V.I. BABY & CO. (254 ITR 248) (KER.HC) 3. CIT VS. MOTOR GENERAL FINANCE LTD. (254 ITR 449) (DEL.HC) 4. CIT VS. H.R. SUGAR FACTORY (P) LTD. (187 ITR 363) (ALLAHABAD HC) 7. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT AN AMOUNT OF RS.196 LAKHS WAS OUTSTA NDING AS ON 31.3.2002 AND THE SAME WAS ADVANCED TO THE SISTER C ONCERN IN EARLIER YEARS AND THIS IS OUT OF THE AMOUNT ADVANCED RS.255 LAKHS DURING THE FINANCIAL YEAR 1996-97 AND 1997-98. THIS WAS ADVAN CED OUT OF THE FUNDS GENERATED FROM ITS OWN OPERATIONS. HE DREW OUR ATT ENTION TO THE LEDGER EXTRACT OF M/S SURYAVAMSHI TEXTILES LTD. (LOAN ACCO UNT) FOR THE FINANCIAL YEAR 1996-97 AND 1997-98. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE THE AMOUNT ADVANCED WAS NOT OUT OF THE BO RROWED FUNDS AND THE MONEY WAS ADVANCED ON ACCOUNT OF COMMERCIAL EXPENDA NCY. THE SUBSIDIARY BECAME A SICK UNIT UNDER THE INDUSTRIAL COMPANIES (SUB PROVISIONS) ACT AND REFERRED TO THE BFIR AND RECOVE RABILITY OF THE AMOUNT IS DOUBTFUL AS SUCH NO INTEREST WAS CHARGED. HE RELIE D ON THE JUDGEMENT OF THE SC IN THE CASE OF SA BUILDERS LTD. VS. CIT (288 ITR 1) (SC) CIT VS. R.J. TRIVEDI & SONS (183 ITR 422) (MP HC). 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS ON RECORD AND CAREFULLY GONE THROUGH THE CASE LAW CITE D BY THE PARTIES. THE MAIN PLEA OF THE ASSESSEES COUNSEL HEREIN IS THAT M/S SVTL AS BECOME A SICK COMPANY AS SUCH INTEREST WAS NOT CHARGED. THE CONTENTION OF THE DEPARTMENT IS THAT THE ASSESSEE CANNOT FORESEE THE SICKNESS OF SVTL AND ITA NOS.1173 1174 & 1175/H/2009 M/S SURYAVAMSHI SPINNING MILLS SURYAVAMSHI HOLDINGS & SURYA LALTHA SPINNING MILLS (P) LTD. S BAD. 5 5 THEREBY CANNOT TAKE A PLEA THAT IT HAS NOT CHARGED THE INTEREST. IF THE SVTL GOING TO BECOME SICK UNIT THEN IT WILL VERY M UCH CLAIM THE SAME AS BAD DEBT. WE FIND FORCE IN THE ARGUMENT OF THE DEP ARTMENTAL REPRESENTATIVE. THE SEC.36(1)(III) OF THE IT ACT PROVIDES FOR DEDUCTION OF INTEREST ON LOANS RAISED FOR BUSINESS PURPOSES. ON CE THE ASSESSEE CLAIMS ANY SUCH DEDUCTION THE ONUS WILL BE ON THE ASSESSE E TO SATISFY THE ASSESSING OFFICER THAT WHATEVER LOANS WERE RAISED B Y THE ASSESSEE WAS USED FOR THE PURPOSE OF BUSINESS. IF IN THE PROCESS OF EXAMINATION OF SUCH DEDUCTION IT TRANSPIRES THAT THE ASSESSEE HAD ADV ANCED CERTAIN FUNDS TO SISTER CONCERNS OR ANY OTHER PERSON WITHOUT ANY INT EREST THERE SHOULD BE VERY ONUS ON THE ASSESSEE TO DISCHARGE BEFORE THE A SSESSING OFFICER TO THE EFFECT THAT IN SPITE OF BORROWING LOANS ON WHICH TH E ASSESSEE IS INCURRING LIABILITY TO PAY INTEREST THERE WAS JUSTIFICATION TO ADVANCE LOAN TO ITS SISTER CONCERN/SUBSIDIARY COMPANY WITHOUT ANY INTEREST AND ACCORDINGLY THE ASSESSEE SHOULD BE ALLOW DEDUCTION OF INTEREST BEIN G PAID ON BORROWED FUNDS TO THAT EXTENT. IF THE ASSESSEES FUNDS ARE USED TO LEND TO SUBSIDIARY WITHOUT ANY INTEREST THEN THE INTEREST PAYABLE BY A SSESSEE ON ITS FUNDS CANNOT BE ALLOWED FULLY. THE ONE MORE CONTENTION O F THE ASSESSEES COUNSEL IS THAT THE ASSESSEE IS HAVING ITS OWN FUNDS ON WHI CH NO PAYMENT OF INTEREST. IN OUR OPINION THE ENTIRE MONEY IN A BU SINESS ENTITY COMES IN A COMMON KITTY. MONIES ARE RECEIVED AS SHARE CAPITAL OR AS TERM LOAN OR WORKING CAPITAL LOAN OR AS INTERNAL ACCRUALS DO NOT HAVE A DIFFERENT COLOUR. WHATEVER THE RECEIPTS IN THE BUSINESS HAVE THE COL OURS OF BUSINESS RECEIPTS AND HAVE NO SEPARATE IDENTIFICATION. THE ONLY THING SUFFICIENT IS TO DISALLOW THE INTEREST PAID ON THE BORROWING TO THE EXTENT OF AMOUNT LEND TO SUBSIDIARY COMPANY WITHOUT CARRYING ANY INTEREST WO ULD BE THAT THE ASSESSEE HAS SOME LOANS OR INTEREST BEARING DEBTS T O BE REPAID. IN CASE THE ASSESSEE HAD A SURPLUS WHICH ACCORDING TO IT CO ULD NOT BE REPAID IMMEDIATELY IT WOULD EITHER BE REQUIRED TO BE CIRC ULATED AND UTILIZED FOR ITA NOS.1173 1174 & 1175/H/2009 M/S SURYAVAMSHI SPINNING MILLS SURYAVAMSHI HOLDINGS & SURYA LALTHA SPINNING MILLS (P) LTD. S BAD. 6 6 THE PURPOSE OF BUSINESS OR TO BE INVESTED IN A MANN ER IN WHICH IT GENERATES INCOME AND NOT DIVERTED TOWARDS SUBSIDIAR Y FREE OF INTEREST. OTHERWISE IT AMOUNTS TO NOT PRESENTING THE TRUE AND CORRECT INCOME OF THE ASSESSEE AND THE SUBSIDIARY COMPANY WOULD BE ENJOYI NG THE BENEFIT AT THE COST OF ASSESSEE. IN OUR OPINION INTEREST INCURRE D BY THE ASSESSEE TO THE EXTENT AMOUNTS ARE DIVERTED TO SUBSIDIARY COMPANY O N INTEREST FREE BASIS ON WHATEVER REASON MAY BE ARE TO BE DISALLOWED. IF THERE IS ANY CHANCE OF RECOVERABILITY THEN THERE IS A PROVISION IN THE AC T TO CLAIM THE SAME AS BAD DEBT. VARIOUS CASE LAW RELIED BY THE ASSESSEES COU NSEL IS OF NO RELEVANCE TO THE FACTS OF THE PRESENT CASE. IN VIEW OF THIS W E ARE OF THE OPINION THAT CIT(A) NOT JUSTIFIED IN DELETING THE DISALLOWANCE P ROPORTIONATE INTEREST ON THE LOAN ADVANCED TO THE SISTER CONCERN. THIS GROU ND OF APPEAL OF THE REVENUE IS ALLOWED. 10. THE NEXT GROUND IN ITA NO.1173/H/2009 IS WITH REGARD TO ENTERTAINING OF THE ADDITIONAL FUNDS BY THE CIT(A). 11. THIS GROUND HAS BECOME IN FRUCTUOUS IN VIEW OF THE DISMISSAL OF THE FIRST GROUND IN THE REVENUE APPEAL IN ITA NO .1173/H/2009. HENCE THIS GROUND IS DISMISSED AS INFRUCTUOUS. 12. THE NEXT GROUND IN ITA NO.1174/H/2009 THAT TH E CIT(A) SHOULD HAVE ASCERTAINED THE ADDITION ON ACCOUNT OF DIMINUTION IN THE VALUE OF INVESTMENT TO THE BOOK PROFITS AS THE SAM E IS NOT AN ASCERTAINED LIABILITY. 13. THE ASSESSEE AGITATED AGAINST THE ADDITION MA DE ON ACCOUNT OF DIMINUTION IN VALUE OF INVESTMENTS TO NET PROFIT FO R THE PURPOSE OF COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. THE AS SESSING OFFICER ITA NOS.1173 1174 & 1175/H/2009 M/S SURYAVAMSHI SPINNING MILLS SURYAVAMSHI HOLDINGS & SURYA LALTHA SPINNING MILLS (P) LTD. S BAD. 7 7 OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE FAILED TO ESTABLISH THAT THE PROVISION FOR DIMINUTION IN VALUE OF INVESTMENT S IS AN ASCERTAINED LIABILITY AND HENCE IT IS LIABLE FOR ADJUSTMENT U /S 115JB(1) ( C ). THE PROVISION SO CREATED IS ONLY A CHARGE ON PROFIT BUT NO ON APPROPRIATION OF PROFIT. ACCORDINGLY THE PROVISION MADE TOWARDS DI MINUTION IN VALUE OF INVESTMENTS AMOUNTING TO RS.15 LAKHS WAS ADDED TO T HE NET PROFIT FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/S 115JB. THE AS SESSEE SUBMITTED THAT THE INVESTMENTS ARE ASSETS AND NOT A LIABILITY AND THE DIMINUTION IN VALUE OF SUCH INVESTMENT IS A LOSS. THEREFORE CLA USE (C ) OF EXPLANATION TO S.115JB(1) HAS NO APPLICATION TO THE FACTS OF THE A SSESSEE AND THE ADDITION ON THIS COUNT WAS NOT WARRANTED. THE ASSESSEE FURT HER SUBMITTED THAT THE ASSESSING OFFICER CANNOT RECOMPUTED THE PROFITS AS PER PROFIT AND LOSS ACCOUNT IN THE LIGHT OF THE DECISION IN THE CASE OF APOLLO TYRES LTD. VS CIT (255 ITR 273 (S.C). 14. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. THERE IS A RETROSPECTIVE AMENDMENT TO THE PROVISIONS OF SEC.115JB BY FINANCE (2) ACT 2009 W.E.F. 1.4.2001 AND THEREBY CLAUSE (I) WAS ADDED TO EXPLANATION TO SEC.115JB (2) WHICH READS AS FOLLO WS: EXPLANATION (1) : FOR THE PURPOSE OF THIS SECTION BOOK PROFIT MEANS THE NET PROFIT AS SHOWN IN THE NET PROFIT AND LOSS ACCO UNT FOR THE RELEVANT PREVIOUS YEAR PREPARED UNDER SUB SECTION (2) AS IN CREASED BY : A) B) H). I) TO THE AMOUNT OR AMOUNTS SET ASIDE AS PROVISION FO R DIMINUTION IN THE VALUE OF ASSET. ITA NOS.1173 1174 & 1175/H/2009 M/S SURYAVAMSHI SPINNING MILLS SURYAVAMSHI HOLDINGS & SURYA LALTHA SPINNING MILLS (P) LTD. S BAD. 8 8 BEING SO THE NET PROFIT AND LOSS SHOWN IN THE PR OFIT AND LOSS ACCOUNT IN THE RELEVANT PREVIOUS YEAR TO BE INCREASED BY THIS AMOUNT AS SUCH THE CIT(A) IS NOT JUSTIFIED IN DECIDING THE ISSUE IN FA VOUR OF THE ASSESSEE ON THIS ISSUE. ACCORDINGLY WE DIRECT THE ASSESSING OFFICE R TO INCREASE THE BOOK PROFIT BY THE AMOUNT OF DIMINUTION OF VALUE OF INVE STMENT DEBITED TO THE PROFIT AND LOSS ACCOUNT FOR THE PURPOSE OF COMPUTAT ION OF BOOK PROFIT U/S 115JB OF THE ACT. THIS GROUND OF THE REVENUE IS ALL OWED. 16. THE NEXT GROUND IN ITA NO.1175/H/2009 IS THAT THE CIT(A) SHOULD HAVE APPRECIATED THE FINDINGS OF THE ASSESSI NG OFFICER IN DISALLOWING THE CLAIM OF THE REVENUE EXPENDITURE WHEN THE ASSES SEE ITSELF HAS CAPITALIZED THE SAME IN ITS BOOKS OF ACCOUNT. 17. BRIEF FACTS OF THE ISSUE ARE THAT THE DISALLO WANCE OF EXPENDITURE OF RS.17 33 592/- TOWARDS DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF DEFERRED REVENUE EXPENDITURE. AS PER TH E ASSESSMENT ORDER THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE COMPANY CLAIMED AN EXPENDITURE TO THE EXTENT OF RS.17 33 592/- IN THE COMPUTATION OF INCOME MENTIONING THAT THE EXPENDITURE HAD BEEN INCURRED T OWARDS COST OF PARTS FOR REPLACEMENT IN MACHINERY AND DEVELOPMENT CHARGE S PAID TO CPDL OF AP LTD. FOR ADDITIONAL LOAD OF ELECTRICITY. IT WAS CL AIMED THAT SINCE THE SAID EXPENDITURE WAS IN THE NATURE OF REVENUE EVEN THOU GH TREATED AS DEFERRED REVENUE EXPENDITURE IN BOOKS THE SAME WAS ALLOWABL E. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAD CLAIMED THE EXPENDITURE AS DEFERRED REVENUE EXPENDITURE TO BE WRITTEN OFF OVER A PERIOD OF 3 YEARS IN ITS BOOKS OF ACCOUNTS FOR THE PURPOSE OF COMPANIES ACT ALSO IN ITS PROFIT AND LOSS ACCOUNT. THE DOUBLE TREATMENT AT THE EXPEND ITURE ADOPTED BY THE ASSESSEE WAS NOT ACCEPTABLE BY THE ASSESSING OFFICE R AND ACCORDINGLY THE EXPENDITURE WAS DISALLOWED AND ADDED. ITA NOS.1173 1174 & 1175/H/2009 M/S SURYAVAMSHI SPINNING MILLS SURYAVAMSHI HOLDINGS & SURYA LALTHA SPINNING MILLS (P) LTD. S BAD. 9 9 18. WE HAVE HEARD BOTH THE PARTIES AND PERUSED T HE MATERIALS AVAILABLE ON RECORD. OUT OF A TOTAL EXPENDITURE OF RS.17 33 592/- RS.6 84 352 WAS INCURRED ON BREAK OF RINGS RS.1 49 239/- WAS INCURRED FOR SYNTRAVERE DRUMS MEANT TO REPLACE THE OLD AND WORN OUT PART OF MACHINERY. RS.9 LAKHS WAS INCURRED TOWARDS DEVELOP MENT CHARGES PAID TO CPDCL OF AP FOR PROVIDING ADDITIONAL LOAD OF ELECTR ICITY TO RUN THE BUSINESS SMOOTHLY. IN OUR OPINION THE EXPENDITURE INCURRED FOR REPLACING THE WORK OUT PARTS IS ON ACCOUNT OF REPAIR AND MAINTENANCE A ND AMOUNT OF RS.9 LAKHS IS TOWARDS ADDITIONAL POWER SUPPLY WHICH IS I N THE REVENUE FIELD AND THE TREATMENT GIVEN TO THIS EXPENDITURE IN BOOKS CA NNOT BE A CONCLUSIVE EVIDENCE TO DISALLOW THE EXPENDITURE OR TREATED AS CAPITAL EXPENDITURE. WE PLACE RELIANCE ON THE SC IN THE CASE OF KEDARNATH JUTE MGF. CO. LTD. VS. CIT (82 ITR 363) (S.C) . IN OUR OPINION THE EXPEN DITURE IS TO BE CONSIDERED AS REVENUE EXPENDITURE AND IS TO BE ALLOWED. 5. IN THE RESULT THE REVENUE APPEALS IN ITA NO. 1173 & 1174/H/2009 ARE PARTLY ALLOWED AND IN ITA NO.1175/H /2009 STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 31.1.2011 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 31 ST JANUARY 2011 ITA NOS.1173 1174 & 1175/H/2009 M/S SURYAVAMSHI SPINNING MILLS SURYAVAMSHI HOLDINGS & SURYA LALTHA SPINNING MILLS (P) LTD. S BAD. 10 10 COPY FORWARDED TO: 1. THE DCIT CIRCLE 3(2) HYDERABAD 2. M/S SURYAVAMSHI SPINNING MILLS LTD. 105 6 TH FLOOR SURYA TOWERS SP ROAD SECUNDERABAD. 2. M/S SURYAVAMSHI HOLDINGS LTD. 105 6 TH FLOOR SURYA TOWERS SP ROAD SECUNDERABAD 3. M/S SURYALATHA SPINNING MILLS LTD. 1 ST FLOOR SURYA TOWERS SP ROAD SECUNDERABAD. 3. CIT(A)- TIRUPATHI 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP