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In the case of Bharat Forge Co. Ltd. V. CIT (107TAX379) the assessee spent a sum of RS. 10Lac during the previous year relevant to A.Y. 1982-83 for converting kuccha road into tar road. The CIT (A) and the ITAT held that new asset came into being in the form of pucca road resulting into a capital expenditure. The Bombay High Court following its earlier ruling in CIT v. Chemaux Ltd. (74TAX201) held that the expenditure incurred by the assessee was revenue in nature. In disregard of the higher quantum of expenditure incurred by the assessee the Court held that the object of the expenditure was not to bring a new asset into existence. The Supreme Court however in the case of Balimal Naval Kishore v. CIT (224ITR414) in the context of theatre renovation expenditure incurred by the assessee held that the expenditure (approximately RS. 120000 in 1960-61) was very high compared to the cost of acquisition (around RS. 17000 in 1937) and in view of the same further held that what the assessee undertook was not mere repairs but a complete renovation of the theatre. The Delhi High Court in the case of CIT v. Hindustan Times Ltd (107TAX442) upheld the view of the Tribunal that the expenses of RS. 31,56,117 spent by the assessee during the previous year relevant to A.Y. 1985-86 on repairs and replacements of Central Air-conditioning Plant and insulated chilled water piping rerouting were of revenue nature in as much as the expenditure was incurred by the assessee to preserve and maintain an already existing plant and no new asset was brought into existence.

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