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Issues:
1. Classification of expenses as revenue or capital nature. 2. Determination of profits earned by an individual versus a firm. Analysis: 1. The first issue in this case revolves around the classification of expenses as revenue or capital in nature. The appellant firm claimed an expenditure of Rs. 15,398 for purchasing a starter, arguing it was revenue expenditure due to replacing an old starter. The tax authorities contended that this expense was capital in nature. The Appellate Tribunal found in favor of the assessee, stating that the new starter was purchased to replace the old one, making the expense revenue in nature. The Tribunal relied on precedents and established that the expense was allowable as revenue expenditure. 2. The second issue concerns the determination of profits earned by an individual versus a firm. The Income Tax Officer found that a transaction involving the purchase and sale of jow was entered into by the appellant firm in the benami name of an individual, resulting in profits added to the firm's income. The Appellate Tribunal, however, accepted the assessee's contention supported by evidence such as an affidavit and statements from the individual involved, indicating that the transaction was on behalf of the individual. The Tribunal concluded that the profits belonged to the individual and should not be added to the firm's income, based on the evidence and probabilities presented. In conclusion, the Appellate Tribunal allowed the appeal in part, ruling in favor of the assessee on both issues discussed in the judgment.
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