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Issues involved: Interpretation of revenue expenditure for repairs and resurfacing of roads under the Income-tax Act, 1961.
Summary: The High Court of Bombay, in a reference u/s 256(1) of the Income-tax Act, 1961, addressed the question of whether expenses incurred on repairs of the approach road and resurfacing of kaccha roads inside a factory premises are allowable as revenue expenditure. The Court affirmed that such expenses are revenue expenditure and not capital expenditure, a position undisputed by the revenue's counsel based on previous court decisions. The Court ruled in favor of the assessee, stating that the expenses are allowable as revenue expenditure. The revenue's counsel raised a concern that if the assessee had claimed depreciation on these amounts as capital expenditure, they cannot simultaneously claim deduction as revenue expenditure. The Court acknowledged this concern and directed that if depreciation had been allowed on these amounts, the Tribunal should provide suitable directions for its withdrawal in light of the Court's decision. In conclusion, the Court answered the question in favor of the assessee, emphasizing that the expenses on repairs and resurfacing of roads are revenue expenditure. No costs were awarded in this matter.
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