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Issues:
1. Whether the expenditure incurred on changing the projector head by the assessee is capital or revenue expenditure. 2. Whether the fitting charges of the projector head are allowable as revenue expenditure. Analysis: 1. The main issue in this case was whether the expenditure of Rs. 29,580 incurred by the assessee on changing the projector head should be treated as capital or revenue expenditure. The Income Tax Officer (ITO) disallowed the expenditure, considering it as capital expenditure. However, the Commissioner (Appeals) allowed it as revenue expenditure. The primary argument was that changing the projector head, a major part of the projector, provided an enduring benefit to the assessee. The tribunal analyzed the nature of the projector and its various components, emphasizing that the projector head was just one part of the whole system. The tribunal concluded that replacing the projector head was essential for the continued operation of the cinema theatre and did not result in any enduring benefit to the assessee. Therefore, the expenditure was deemed allowable as revenue expenditure based on precedents and the specific circumstances of the case. 2. Additionally, the tribunal addressed the issue of fitting charges amounting to Rs. 1,500 for the projector head. It was determined that these charges were also allowable as revenue expenditure, further supporting the decision of the Commissioner (Appeals) in allowing the deduction. The tribunal found that these fitting charges were directly related to the replacement of the projector head, which was considered a repair to the existing machinery, and did not create any new asset or enduring benefit for the assessee. Consequently, the fitting charges were treated as revenue expenditure and deemed allowable. In conclusion, the tribunal upheld the decision of the Commissioner (Appeals) and dismissed the appeal, ruling in favor of the assessee regarding the treatment of both the expenditure on changing the projector head and the fitting charges as revenue expenditure. The judgment was based on the specific facts of the case, the nature of the asset involved, and established legal principles governing the distinction between capital and revenue expenditure.
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