Judgement

GROVER, J.:- This is an appeal by special leave from a judgment of the Delhi High Court in an Income-tax Reference. The assessee, which is the appellant, is a private limited company carrying on the business of manufacture and sale of sugar. It has two sugar mills one at Maholi (Sitapur) and the other at Raja-ka-Sahaspur (Moradabad). The head office of the assessee is at New Delhi. During the accounting period relating to the assessment year 1956-57 sums of Rupees 75,000/- and Rs. 37,500/- were paid by the assessee to the Cane Development Council of the Sugarcane Department of the Government of Uttar Pradesh by way of contribution for road development between the various sugarcane producing centres and the sugar factories of the assessee. The revenue authorities found that these contributions were intended to be applied for the construction and development of roads between the sugarcane producing centres and the sugar mills and held that these amounts constituted capital expenditure and could not be allowed as an admissible deduction while computing the total income of the assessee. The Appellate Tribunal upheld the order of the departmental authorities. On an application