Judgment

GUPTA, J. :- The question for decision in this case is whether the money contributed by the assessee, a public limited company, for the construction of a new road in the area where its factory is located to improve transport facilities is capital expenditure or revenue expenditure. The assessment year in question is 1964-65, the relevant accounting period being the financial year ended March 31, 1964. The assessee company is engaged in the manufacture of chemicals; it had been receiving and despatchng materials required for and produced in its factory through lorries. The assessee along with three other public undertakings approached the Government of Kerala for laying a new road from Kalamasseri to Udyogamadal; this area where the assessee factory is situate was not at the material time served by pucca roads. It was agreed that the Government of Kerala would bear the cost of the acquisition of the land and 25 per cent of the cost of construction. The total cost to be shared by the four companies was Rupees 1,04,550/- and the assessees share came to Rs. 26,100/-. The assessee company sought to deduct this amount from its total income claiming this as revenue from its total