Commissioner of Income Tax v. Thiagarajar Mills Ltd.

1. FACTS OF THE CASE

Revenue challenged Thiagarajar Mills assessments for AYs 1999-00, 1997-98 and 1998-99 respectively. The disputes concerned turnover for section 80 HHC and additional exchange liability connected with machinery replacement already treated as revenue expenditure.

Source: PDF p. 2

2. DISCUSSION BY THE COURT

Revenue conceded the turnover issue in light of Lakshmi Machine Works. On exchange fluctuation, the Court followed the assessee’s earlier-year decision and noted the absence of a compelling reason to depart from it.

Source: PDF p. 3

3. JUDICIAL DECISION

All three Revenue appeals were dismissed as raising no substantial question of law; the connected miscellaneous petition was closed.

Source: PDF p. 4

4. OUTCOME

The Tribunal’s treatment of the disputed items remained undisturbed.

Source: PDF p. 4

5. Expert Comments

AKHB editorial analysis, distinct from the Court’s findings.

Tie exchange treatment to the expenditure actually considered

The replacement-machinery expenditure had previously been claimed as revenue expenditure. This reasoning does not make every foreign-exchange movement on acquisition of capital machinery deductible as revenue expenditure.

Source: PDF p. 3

Keep the turnover issue distinct

The section 80 HHC ground concerned the exclusions described in the question, including excise duty, sales tax and conversion charges. The Court disposed of it on the concession and precedent recorded; it did not conduct a fresh item-by-item computation.

Source: PDF p. 2

Precedent controlled this appeal

The earlier-year decision was central, and Revenue could provide no compelling reason for departure. The judgment is not a freestanding rule for all machinery or all later statutory regimes.

Source: PDF p. 4