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TMI Blog1969 (11) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... year as an allowable deduction. The assessee also contributed in the relevant previous year a sum of Rs. 41,430 to the Government in pursuance of a scheme for development of roads in cane-growing rural areas. The assessee claimed deduction in respect of this amount on the ground that its business of manufacturing sugar depends chiefly on development of roads for transportation of sugar-cane into its manufactory. Hence, it was claimed that the expenditure in question must be considered to have been laid out wholly and exclusively for the purpose of its business. Both the claims were turned down by the Income-tax Officer. An appeal to the Appellate Assistant Commissioner against the consequential additions made by the Income-tax Officer prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-tax (I. T. R. No. 835 of 1963 decided by this Bench on 12-9-1969). That case related to assessment years 1956-57 and 1957-58. During the corresponding previous years the assessee had paid two sums of Rs. 40,000 and Rs. 3,000, respectively, as contribution to the Cane Centre Roads Development Fund. The assessee then claimed these two amounts as deduction under section 10(2)(xv) of the Act. The claim was disallowed by the Income-tax Officer as well as by the Appellate Assistant Commissioner and the Appellate Tribunal. On a reference, this court held that the deduction was not a permissible expenditure under section 10(2)(xv) of the Act and observed : " When new roads are constructed, a capital asset comes into existenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been indicated by the Supreme Court in the case of Badridas Daga v. Commissioner of Income-tax. In that case, their Lordships have pointed out that while section 10(1) of the Act imposes a charge on the profits or gains of a business, it does not provide how these profits are to be computed. Their Lordships have stated that profits and gains which are liable to be taxed under section 10(1) are what are understood to be such in ordinary commerce including losses which are incidental to the trade carried on by the assessee. In the present case we have held that the sum of Rs. 41,430 expended by the assessee towards the construction of new roads for development of its business in the manufacture of sugar is an expenditure of capital nature. Un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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