Replacement of Machinery Giving Enduring Benefit Is Capital Expenditure: Madras HC

Hon’ble High Court holds that replacement of machinery resulting in enduring benefit amounts to capital expenditure, not revenue expenditure The Income Tax Appellate Tribunal had allowed the assessee’s claim treating expenditure on replacement of machinery as revenue expenditure under “current repairs.” However, the High Court found that the Tribunal relied solely on a precedent that was subsequently overruled by the Supreme Court. The Madras Court observed that each machine in a textile unit is an independent entity and not part of a single composite system, and replacement of such ma...