1. By this application u/s 256(2) of the Income Tax Act, 1961, (hereinafter referred to as " the") the revenue seeks a direction to the Tribunal to state the case and refer the following question, in respect of the assessment year 1982-83, for the opinion of this court:

"On the facts and in the circumstances of the case and in law, whether the Tribunal has erred to hold that the expenditure incurred on replacement of moulds is a revenue expenditure"

2. During the relevant previous year ending on 31-12-1981 the assessed spent a sum of Rs. 3,99,580 on the purchase of moulds for manufacturing the glass and debited the same to the profit and loss account. While completing assessment for the relevant assessment year the assessing officer treated the said amount as capital expenditure and, accordingly, allowed only depreciation on the said amount. The assessors appeal before the Commissioner (Appeals) was unsuccessful. Aggrieved, the assessed carried the matter in further appeal to the Tribunal. The Tribunal, following the decision of the Karnataka High Court in Commissioner of Income Tax Vs. Mysore Spun Concrete Pipe Pvt. Ltd., , wherein it was held that replacement of moulds was not in the nature of replacement of capital machinery but was for replacing a part of the machinery, which does not have the effect of bringing into existence some new asset or increase in production capacity, accepted the claim of the assessed and allowed the said expenditure on replacement of moulds as the revenue expenditure. The revenues application u/s 256(1) for reference on the afore noted question to this court having been dismissed, the present petition has been filed,

3. We have heard Mr. R.D. Jolly, the learned senior standing counsel for the revenue.

4. Whether on given set of facts, replacement of certain items forming an integral or important part of the machinery would be revenue expenditure or capital expenditure is primarily a question of fact to be decided in the context of the business carried on by an assessee. Merely because the benefit accruing by the expenditure is of enduring nature is by itself not a conclusive test to hold it as a capital expenditure [see Empire Jute Co. Ltd. Vs. Commissioner of Income Tax, ]. Normally initial investment on machines and their parts will be in the nature of capital expenditure but expenditure on replacement of parts of an existing machinery in the course of their working will be a revenue expenditure.

5. In the instant case, having regard to the nature of the business of the assessed and applying the principle of law enunciated in Mysore Spun Concrete Pipe (P) Ltds case (supra), the Tribunal had reached a conclusion that the moulds in question do not enhance the capacity of the existing machines and are mere replacements for the moulds damaged during the process of manufacture of glass. It is also evident from the format of the question, proposed by the revenue, that the finding of the Tribunal to the effect that the expenditure in question was incurred by the assessed on the replacement of the moulds is not under challenge.

6. In view of the afore noted finding recorded by the Tribunal, to which no challenged is laid, we do not find any infirmity in its order declining to refer the proposed question.

7. There is no merit in the petition and the same is, accordingly, dismissed.