1987 (11) TMI 34

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....a for construction of a road in each of the assessment years 1964-65 and 1965-66 was in the nature of capital expenditure and in not allowing deduction of such expenditure on that ground? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs. 5,125 and Rs. 3,481 contributed by the assessee to the Government of Kerala towards the cost of construction of tubewells in the assessment year 1965-66 was in the nature of capital expenditure and in not allowing the deduction of such expenditure on that ground ? " The material facts giving rise to this reference, briefly, are as follows : The assessee is a public limited company. In the returns filed by the assessee for th....

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....cation was allowed and that is how the aforesaid questions of law have been referred to this court for its opinion. Having heard learned counsel for the parties, we have come to the conclusion that this reference has to be answered in the negative and in favour of the assessee. The Tribunal has disallowed the expenditure incurred in connection with construction of road and tubewells on the sole ground that the expenditure was in the nature of capital expenditure. Therefore, the only question for consideration is whether the expenditure in question was in the nature of capital or revenue expenditure. The Tribunal has relied on the decision of the Supreme Court in Travancore-Cochin Chemicals Limited v. CIT [1977] 106 ITR 900. But as held b....