1. The Income-tax Appellate Tribunal has referred the following question under Section 66(1) of the Indian Income-tax Act, 1922 :
' Whether, on the facts and in the circumstances of the case, the sum of Rs. 15,300 spent on the construction of kachcha roads and one temporary culvert was revenue expenditure admissible under Section 10(2)(xv) of the Act '
2. The assessee, who is the respondent before us, is a private limited company engaged in the manufacture of sugar. In assessment proceedings for the year 1959-60, for which the relevant previous year ended on September 30, 1965, the assessee claimed the deduction of a sum of Rs. 15,300 spent on the construction of approach roads and a culvert. The Income-tax Officer did not allow the deduction on the ground that the expenditure was not verifiable and that it was of a capital nature. The Appellate Assistant Commissioner of Income-tax, on appeal by the assessee, confirmed the finding of the Income-lax Officer. The assessee preferred a second appeal before the Income-tax Appellate Tribunal. The Tribunal has allowed the, appeal holding, in substance, that the expenditure was verifiable and that it was of a revenue nature. At the instance of the Commissioner of Income-tax the present reference has been made.
3. It is urged on behalf of the Commissioner of Income-tax that the Tribunal has not given any finding that the expenditure was verifiable and, in the absence of such a finding, it eired in law in allowing the appeal of the assessee. That is not the question referred to us by the Tribunal, and, in any event, it can easily be inferred from the manner in which the Tribunal has dealt with the case that it came to a definite finding that the expenditure was verifiable. The case of the assessee before the Tribunal was that the payments were supported by receipts granted by the contractors, One of the two contractors was produced before the income-tax authorities, and he stated that his brother had executed the contract, that the brother could not be produced as he had died, and it was pointed out that no question of inflating the expenditure under this head could arise as the total expenditure under this head amounted merely to Rs 28,931 as against Rs. 36,000 incurred in the preceding year which had been entirely allowed by the income-tax authorities. The Tribunal considered the circumstances of the case and expressed the opinion that there was no justification for disallowing the deduction claimed. It is not possible to infer any conclusion other than that the Tribunal came to the positive opinion that the expenditure was verifiable.
4. The next question is whether the expenditure is of a capital or of a revenue nature. It was urged before the Tribunal on behalf of the assessee that during the season sugarcane was purchased at various centres and in order to expedite the supply of cane to the factory kachcha roads were repaired or occasional temporary link roads of short distance were constructed to join with the main road so that bullock carts conveying the sugarcane could reach railway stations in shorter time. It was stated that the lands on which these temporary roads were constructed were public lands and were not owned by the assessee. It was also pointed out that the cane season extended during the winter and summer and upon the conclusion of the season with the advent of rains and floods the temporary roads become unusable. The assessee contended that, in the circumstances, no asset or advantage of an enduring nature could be said to have been brought into being by this expenditure. The Tribunal, after noting the contention, held that there was substantial force in it. From this, we must infer that the Tribunal accepted the facts stated on behalf of the assesseeand in that view of the matter there can hardly be any dispute that the expenditure incurred on the construction of the kachcha roads and the temporary culvert must be held to be of a revenue nature. It is not a case where the assessee by the expenditure under consideration can be said to have brought into existence any asset or advantage of an enduring nature. The facts and circumstances set out, by the appellate order of the Tribunal point to the irresistible conclusion that the expenditure had of necessity to be incurred from year to year and that what was brought into existence consequent upon that expenditure was rendered unusable at the end of each season. There is no room, we think, for the finding that the expenditure is of a capital nature. Learned counsel appearing on behalf of the Commissioner of Income-tax, urges that there is no material on the record in support of the several facts asserted before the Tribunal on behalf of the assessee. Here again that question has not been referred to us.
5. Accordingly, we answer the question referred to in the affirmative, in favour of the assessee and against the Commissioner of Income-tax. The assessee is entitled to his costs which we assess at Rs. 200. Counsel's fee is also assessed at the same figure.