J U D G M E N T

(Judgment was delivered by R. MAHADEVAN, J.)

This tax case appeal has been filed by the appellant / Revenue, calling in question the correctness of the order dated 21.12.2010 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai, in I.T.A.No.976/Mds/2009, relating to the assessment year 2000-01.

2.On 26.09.2011, this Tax Case Appeal is admitted on the following substantial questions of law:-

"1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the expenditure on replacement of dies and moulds were to be allowed as revenue expenditure, contrary to the decisions of the Supreme Court in the case of Saravana Mills Ltd. (293 ITR 201) and similar other decisions especially when such expenditure was not debited in the Profit and Loss Account, but only claimed in the Income Tax Adjustment Statement?

2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that 100% depreciation on the cost of civil works in connection with the Reverse Osmosis Plant as well as ceilings and partitions?"

3.When the matter was taken up for consideration, the learned counsel for the appellant / Revenue submitted that the first substantial question of law has already been considered and decided by this court in favour of the assessee by judgment dated 09.01.2014, passed in TCA.Nos.173 and 174 of 2009, in respect of the assessee's own case. The relevant passage of the said judgment is usefully extracted hereunder:

“29. As regards the expenditure on dies & moulds, the assessee pointed out that it debited an amount of Rs.11,17,68,169/- towards dies and moulds only to replace them in the place of worn out dies and moulds. The assessee in the memorandum of income added this amount to the total income and claimed the cost of dies and moulds of Rs.22,66,52,504/- under Section 31 of the Act. The assessee stated that within a period of one year of installation, the life of the dies and moulds would become obsolete and this was due to high production involved. Thus, replacement of the new dye in the place of old dye would quality for current repairs under Section 31 of the Act. The Assessing officer, however, rejected the contention of the assessee and the Assessing Officer pointed out that the assessee was claiming depreciation upto 1999-2000 under Section 32 of the Act and only in the year under consideration, it started claiming deduction under Section 31 of the Act. The Tribunal pointed out that the dies and moulds were not plant and machinery, yet the replacement of dies and moulds were not in the nature of installation of machinery in the factory. Such moulds and dies were normally attached to the machines to suit the individual requirement of particular product. So holding, the Tribunal held that expenditure incurred on replacement of dies and moulds was revenue in nature. It relied on the decision of Karnataka High Court in the case of Mysore Spun Concrete Pipe Pvt. Ltd., reported in 194 ITR 159.

30. As far as this issue is concerned, learned counsel appearing for the assessee placed reliance on the decision of this Court reported in (2013) 357 ITR 720 (Mad) in the case of Super Spinning Mills Ltd., Vs. Assistant Commissioner of Income-tax related to the expenditure on replacement of the machinery parts. The assessee therein engaged in the business of manufacture and trading in cotton yarn and allied products and the assessee incurred expenditure in respect of replacement of certain textile machinery. On a question as to whether such replacement of parts would be current repairs of capital in nature, this Court considered the decisions in the case of CIT Vs. Saravana Spinning Mills P; Ltd., reported in (2007) 293 ITR 201 (SC), CIT Vs. Ramaraju Surgical Cotton Mills reported in (2007) 294 ITR 328 (SC) and CIT Vs. Mangayarkarasi Mills P.Ltd., reported in (2009) 315 ITR 114 (SC) and pointed out that the ques