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TMI Blog1971 (8) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 ? " The assessment year in question is 1964-65, the accounting period being the financial year ended March 31, 1964. The assessee is a public limited company engaged in the manufacture of chemicals. The assessee along with three other public undertakings, namely, the Fertilisers and Chemicals Travancore Ltd., the Indian Rare Earths Ltd. and the Hindustan Insecticides Ltd., approached the Government of Kerala for laying a new road from Kalamasseri to Udyogamandal where the assessee's factory is situated. The assessee was supplying a portion of its products to Hindustan Insecticides Ltd., and the assessee was receiving and despatching materials required for and produced in its factory through lorries. The area in which the assessee-compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax v. Hindusthan Motors Ltd. that the claim was an allowable deduction in that it was commercially expedient for the assessee to incur the same for several reasons. The Tribunal held that the assessee was entitled to deduct the amount contributed for the construction of the road as revenue expenditure. In Bombay Steam Navigation Co. (1953) Private Ltd. v. Commissioner of Income-tax the Supreme Court observed that the question whether a particular expenditure is revenue expenditure incurred for the purpose of business must be determined on a consideration of all the facts and circumstances, and by the application of the principles of commercial trading, and that the question must be viewed in the larger context of business necessit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses of the factory owners. The question was whether the assessee can claim deduction of the amount under section 10(2)(vi) of the Act of 1922. The court held that the amount was capital expenditure. The court distinguished its earlier decision in Commissioner of Income-tax v. Hindusthan Motors Ltd. In that case the assessee, which was manufacturing motors cars, had its factory near Uttarpara. There was an approach road connecting the factory to a main trunk road. On account of lack of repairs for a long period the condition of the road had deteriorated and caused transportation difficulties to the assessee. The Government was not prepared to meet the expenses of the 'repairs of the road unless the assessee had contributed towards the cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. In Lakshmi Sugar & Oil Mills Ltd. v. Commissioner of Income-tax, it was held that a payment made to Government in pursuance of a scheme for development of roads in cane-growing rural areas, and for improving transport facilities, brought into existence an advantage of an enduring nature, and was, therefore, capital expenditure. In H. R. Sugar Factory (P.) Ltd. v. Commissioner of Income-tax, it was held that a payment of Rs. 25,000, made by the assessee to the Government towards road development fund, for the conversion of kachcha roads into pucca roads, was capital expenditure as the pucca roads brought into existence an advantage of enduring nature. In Lakshmji Sugar Mills Co. Ltd. v. Commissioner of Income-tax, the Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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