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Issues involved: Determination of whether the expenditure incurred on a dust extraction plant by the assessee should be treated as revenue expenditure or capital expenditure.
Summary: The High Court of Madras, in the case involving the assessee engaged in textile manufacturing, addressed the issue of categorizing the expenditure on a dust extraction plant as revenue or capital. The Tribunal had ruled in favor of the assessee, considering the installation of the plant as a welfare measure to protect the health of workers. The Court concurred with the Tribunal's view, emphasizing that the primary objective of installing the machine was to safeguard the workers' health from harmful dust particles generated during the manufacturing process. While acknowledging that some benefits could be construed as capital in nature, the Court highlighted that the key aspect was the promotion of health and welfare of the workers. Referring to the Supreme Court's stance that each case must be evaluated based on its unique circumstances, the Court concluded that the expenditure on the dust extraction plant should be treated as revenue expenditure. Consequently, the Court ruled in favor of the assessee, determining that the expenditure incurred was indeed revenue expenditure, not capital expenditure.
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