Ramaswami, J.

1. In this case the assessee is a public limited company. The assessment year is 1947-48 and the accounting year is from 1-1-1946 to 31-12-1946. During this accounting year the assessee incurred an expenditure of Rs. 8,582 for installing new electric connections to consumers. The assessee received in its turn a total sum of Rs. 8,520 from the respective consumers for having taken the new electric connections. In the course of assessment proceeding the assessee claimed that the expenditure of Rs. 8,582 was expenditure on capital account and that depreciation should be allowed on this amount. The assessee also made a claim that the receipt of Bs. 8,520 from the consumers was of capital nature and ought not to have been taken into account for the assessment of tax. The income-tax officer rejected both the contentions raised by the assessee.

The Income-tax Officer held in the first place that the receipt from the consumers for service connection was of revenue nature and was liable to be taxed. The Income-tax Officer further held that the expenditure of Rs. 8,582 was also revenue in nature. The Income-tax Officer rejected the claim of depreciation on this amount b