COMMISSIONER OF INCOME TAX Vs. HARI INDUSTRIES

JUDGEMENT

(1.) IN this reference application, the following question of law has been referred for the opinion of this Court:

(2.) BRIEFLY stated, the facts of the case are that the assessee is a firm which crushes oil seeds and produces oil, khal, etc. It has its own tin shed factory stores and the boiler situated in the premises was owned by the firm. During the accounting year ending on July 22, 1970, corresponding to the asst. yr. 1971-72, the tin sheds were blown off on account of storm. Consequently, the firm incurred an expenditure of Rs. 31,108 in replacing the roof. During the course of assessment proceedings, the assessee claimed the aforesaid expenditure as being current repairs and requested deduction thereof. The assessing authority did not agree with the contention of the assessee and held the expenditure to be of capital nature and accordingly capitalised it and allowed depreciation thereon. The assessee went in appeal before the AAC but the appeal was also dismissed on similar grounds. The assessee further preferred an appeal before the Tribunal and contended that the said expenditure was incurred as part of its profit-earning process and not for enduring benefit or advantage. It was contended that the expenditure was either allowable as current repairs or under s. 37 of the Act. The learned Tribunal accepted the aforesaid contention of the assessee. The Revenue moved an application before the Tribunal for making a reference to this Court after framing the aforesaid question of law.