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Issues:
1. Apportionment of loss under section 24(1) of the Indian Income-tax Act, 1922. 2. Classification of expenditure as revenue or capital under section 10(2) of the Act. Analysis: 1. The first issue pertains to the apportionment of a loss by a registered firm that owns a textile mill. The firm contended that a specific income amount should not be set off against the loss for apportionment among partners. The Tribunal accepted the firm's contention, leading to the question of whether the loss to be apportioned amounted to a certain figure. The court held that the loss to be apportioned indeed amounted to the higher figure, emphasizing that the right to set off loss against profits lies with the assessee under section 24(1) and not the Department. 2. The second issue involves expenditure incurred by the assessee on replacing a cylinder and renovating wooden flooring in the mill. The Tribunal, concurring with the tax authorities, categorized these expenses as capital expenditure. The question arose whether these expenses should be considered revenue or capital expenditure. The court analyzed the nature of the work done, distinguishing between repairs and reconstruction. It was established that the expenditure was for maintaining and preserving existing assets, not creating new ones, thus qualifying as revenue expenditure under section 10(2) of the Act. In conclusion, the court ruled in favor of the assessee on both issues, affirming the higher loss amount for apportionment and classifying the expenditure as revenue rather than capital. The judgment provides clarity on the interpretation and application of relevant provisions of the Indian Income-tax Act, 1922, ensuring proper assessment and treatment of financial matters for registered firms.
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