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Issues involved: Assessment of revenue vs. capital expenditure u/s 10(2)(xv) and u/s 10(2)(v) of the Indian Income-tax Act, 1922.
Judgment Summary: The High Court of Bombay addressed a case involving India United Mills Ltd. for the assessment year 1961-62. The company had incurred various expenditures, including replacing lighting with fluorescent tubes, substituting doors with fire-proof ones, and renewing the roof of the bleaching house. Legal expenses for income-tax appeals and solicitors were also involved. 1. The expenditure on replacing lighting with fluorescent tubes was deemed revenue expenditure under s. 10(2)(xv) by the Tribunal, as it provided better lighting conditions for workers without acquiring an enduring asset. The court agreed with this view, citing precedents where similar expenses were allowed as revenue deductions. 2. The cost of substituting old doors with fire-proof ones and renewing the roof of the bleaching house were considered current repairs under s. 10(2)(v) by the Tribunal, and the court upheld this decision as these were necessary maintenance expenses. 3. Legal fees for income-tax appeals and solicitors' appearances were allowed as deductions under s. 10(2)(xv) based on a previous court decision favoring such expenses as business expenditures. In conclusion, all five questions referred by the ITO were answered in favor of the assessee, confirming the deductibility of the mentioned expenditures under the relevant sections of the Indian Income-tax Act, 1922.
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