Commissioner of Income Tax vs Chemaux Ltd.

Dr. B.P. Saraf, J.—By this reference u/s 256(1) of the income tax Act, 1961 (''the Act''), the Tribunal has referred the following question of law to this Court for its opinion :

Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the expenses of Rs. 28,203 and Rs. 72,450 incurred by the assessee on (i) the repairs of the approach road, and (it) resurfacing of the kaccha roads inside its factory premises are allowable as revenue expenditure ?

On perusal of the question itself, it is evident that expenditure on repairs and resurfacing of roads cannot be treated as capital expenditure. It is a revenue expenditure. This position is also not disputed by the counsel for the revenue in view of the decisions of the Supreme Court and this Court. We, therefore, answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the revenue.

Dr. V. Balasubramaniam, the learned counsel for the revenue, how ever, submits that the assessee might have claimed or got depreciation on these amounts treating the same as capital expenditure. If that is so, the assessee cannot have both deduction as revenue expenditure and depreciation thereon. We appreciate the anxiety of the counsel. We, therefore, make it clear that if depreciation has been allowed on these amounts, the Tribunal shall make suitable directions for withdrawal of the same in the light of the above answer. The question is answered accordingly. No order as to costs.