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TMI Blog1971 (8) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant, is a private limited company carrying on the business of manufacture and sale of sugar. It has two sugar mills one at Maholi (Sitapur) and the other at Raja-ka-Sahaspur (Moradabad). The head-office of the assessee is at New Delhi. During the accounting period relating to the assessment year 1956-57, sums of ₹ 75,000 and ₹ 37,500 were paid by the assessee to the Cane Development Council of the Sugarcane Department of the Government of Uttar Pradesh by way of contribution for road development between the various sugarcane producing centres and the sugar factories of the assessee. The revenue authorities found that these contributions were intended to be applied for the construction and development of roads between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure was incurred for reasons of commercial expediency and for the benefit of the day to day business of the assessee. According to the High Court it was admitted on behalf of the assessee that if expenditure had been incurred by it for building roads of its own it would be capital expenditure. The High Court could see no difference if expenditure was incurred under compulsion or even without compulsion if the roads were built for facilitating transportation and improving the business and the flow of supply to and from the factories of the assessee. We are unable to agree with the reasoning or the conclusion of the High Court. The general principles governing the determination of the question whether an expenditure is in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee. The Government was not prepared to meet the expenses for the repair of the road. The assessee offered to contribute a certain amount for the improvement. The High Court had no difficulty in coining to the conclusion that the money was spent not so much to bring about any asset or advantage of enduring benefit to itself but it was incurred for its efficient and convenient running and therefore it was of revenue nature. This case has been sought to be distinguished on behalf of the revenue on the ground that the expenditure was incurred only to meet the expense of the repair and no asset or advantage of an enduring benefit accrued or resulted to the assessee. This distinction does not appear to be sound because in the diverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the present case. There the question was whether the expenditure on running a school for training of jockeys by the Royal Calcutta Turf Club could be claimed as a deduction under section 10(2)(xv) of the Indian Income-tax Act, 1922. It was pointed out that the business of the club was to run race meetings on a commercial scale for which it was necessary to have races of a high order. For the popularity of races and to make its business profitable it was necessary for the club to have jockeys of requisite skill and experience in sufficient numbers. It was for that purpose that the school had been started for training Indian jockeys. If there had not been sufficient number of Indian jockeys the interest of the club would have suffered. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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