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Issues:
1. Deductibility of expenditure on changing cables of flour mill plant under Section 10(2) of the Indian Income-tax Act. 2. Determination of loss incurred in connection with alleged manufacture without stock register. 3. Commencement of working of starch factory in the accounting year. 4. Allowability of loss in sulphur and depreciation claimed in the business of manufacturing starch. 5. Allowability of expenditure on boarding and lodging of partners during business tours under Section 10(2) of the Act. Issue 1: The first issue revolves around the deductibility of the expenditure incurred on changing cables of the flour mill plant under Section 10(2) of the Indian Income-tax Act. The Tribunal questioned whether the expenditure of &8377; 1,554 could be considered as a current repair and thus allowable under Section 10(2)(v) of the Act. The Court analyzed the distinction between repair and renewal, emphasizing that repair involves renewal of subsidiary parts, while renewal reconstructs the entirety. The Court highlighted that the term "repair" in the Act is further qualified by "current," limiting it to petty repairs periodically carried out. The Court noted that since one-third of the cables were replaced, the expenditure did not qualify as a current repair and could not be deducted under Section 10(2)(v) of the Act. Issue 2 and 3: The second and third issues pertain to the determination of loss incurred in connection with alleged manufacture without a stock register and the commencement of working of the starch factory in the accounting year. The Tribunal found that the loss was indeterminable due to the absence of a stock register and that the factory had not commenced manufacturing in the relevant year. The Court concurred that without proper records, the loss could not be determined, and as there was no entry of starch manufacture, the factory was not operational during the accounting year. These issues did not raise any legal questions for the Court to address. Issue 4: The fourth issue concerns the allowance of loss in sulphur and depreciation claimed in the business of manufacturing starch. The Tribunal held that since no starch was manufactured in the accounting year, there could be no loss or depreciation related to starch manufacturing. The Court agreed that in the absence of starch production, no loss or depreciation could be attributed to the manufacturing of starch. This issue did not present a legal question necessitating a response from the Court. Issue 5: The final issue involves the allowance of expenditure on boarding and lodging of partners during business tours under Section 10(2) of the Act. The Tribunal disallowed the expenditure, deeming it personal to the partners rather than for business purposes. The Court examined Section 10(2)(vii) and concluded that boarding and lodging expenses of partners could not be considered wholly and exclusively for business purposes. The Court reasoned that such expenses, necessary for sustenance, could not be solely attributed to business needs. Consequently, the Court answered this question in the negative and awarded costs to the revenue. In conclusion, the judgment addressed various issues related to deductibility of expenditures, determination of losses, operational status of the factory, and allowance of partner expenses, providing detailed analyses and interpretations of relevant provisions under the Indian Income-tax Act.
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