Revenue expenditure treatment for loom hour payments upheld as deductible in business income computation.

Payment for purchase of loom hours was treated as revenue expenditure, applying Supreme Court principles on the revenue capital distinction, and was therefore deductible in computing business income in favour of the assessee. Questions on the validity of reassessment were not decided and were left unanswered.

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Issues: Whether the amount paid for purchase of loom hours was revenue expenditure deductible in computing business income.

Analysis: Applying the principles laid down by the Supreme Court, the payment for loom hours was held to be expenditure incurred on revenue account and therefore allowable in the computation of business income. Questions relating to the validity of reassessment were not answered.

Conclusion: The amount paid for purchase of loom hours was deductible as revenue expenditure, in favour of the assessee and against the Revenue.

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