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Issues:
Whether expenditure on resurfacing the road within the factory premises is allowable as revenue expenditure for the assessment year 1975-76. Analysis: The case involved a private limited company engaged in the manufacture and sale of Ayurvedic and Unani medicines. The company paid Rs. 60,000 for repairs (resurfacing with concrete) of the existing road within the factory premises, claiming it as revenue expenditure. The Income-tax Officer initially disallowed the expenditure, deeming it to be of capital nature. The Appellate Assistant Commissioner acknowledged an enduring benefit from the expenditure but directed the Income-tax Officer to allow depreciation as the road was part of the factory building. The Appellate Tribunal, in its findings, likened the expenditure to refurbishing a subsidiary part of the factory premises, emphasizing that the expenditure did not substantially change the identity of the asset or effect a substantial improvement. Citing precedents such as Lakshmiji Sugar Mills Co. P. Ltd. v. CIT [1971] 82 ITR 376 and L. H. Sugar Factory and Oil Mills (P.) Ltd. v. CIT [1980] 125 ITR 293 (SC), the Tribunal concluded that unless a new tangible or intangible asset is created, or there is an addition to the profit-making apparatus, usual and routine repairs are revenue expenditures. The Tribunal's decision aligned with the principles from the cited cases, emphasizing that the expenditure did not result in the acquisition of a new asset or expansion of the profit-making apparatus. Therefore, the Tribunal upheld the claim of Rs. 60,000 as revenue expenditure, ruling in favor of the assessee and against the Revenue for the assessment year in question.
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