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Issues involved: Determination of whether an expenditure of Rs. 12,000 under the "repairs account" was allowable as revenue expenditure for the assessment year 1964-65.
Summary: The assessee, a tea-growing company, incurred an expenditure of Rs. 26,643 under the "repairs account," which included fencing costs of Rs. 19,748. The Income-tax Officer disallowed Rs. 12,000 as capital expenditure, considering the fencing to be a major portion of the expenditure. The Appellate Assistant Commissioner upheld this decision, leading to an appeal before the Tribunal. The Tribunal, after considering the necessity of fencing for the tea gardens and the direct nexus of the expenditure with the day-to-day business, concluded that the disallowance was not justified and directed its deletion. The High Court analyzed the nature of the repairs and the purpose of the expenditure. It was observed that the expenditure was directly related to the day-to-day business of tea growing, as proper fencing was essential for protecting the tea leaves and carrying on the business effectively. While the expenditure did provide an enduring advantage to the property, the primary intention behind it was for the business's continuity. Therefore, the Court agreed with the Tribunal's decision that the expenditure should be treated as revenue expenditure. In conclusion, the High Court answered the referred question in the affirmative and in favor of the assessee, stating that the Tribunal's conclusion was correct based on the facts and applicable principles. Each party was directed to pay its own costs. *Judge(s): SABYASACHI MUKHERJEE, PYNE*
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