SENGUPTA, J. - (1.) IN this reference under S. 256(1) of the IT Act, 1961 ('the Act') for asst. yr. 1963-64 the following question of law has been referred to this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the expenditure of Rs. 24,846 incurred for the purchase of pumps, electric cables, C.D. sheets, etc., did not represent an expenditure of a capital nature but that it represented an expenditure of a revenue nature?"
(2.) THE facts shortly stated are that the assessee, an unregistered firm, carrying on contract business, had claimed deduction for Rs. 24,846. The ITO held the said expenses to be of capital nature being purchase of pumps, electric cables, C.D. sheets, etc., The AAC also confirmed the disallowance. When the matter came before the Tribunal it was explained that the expenses of Rs. 24,846 were incurred by the assessee for the purchase of pumps, electric cables, C.D. sheets, etc., which were consumable stores whose life was quite short and they had to be replaced from time to time and there was nothing to indicate that they brought any capital asset in existence. The Tribunal agreed with the contention of the assessee and held that the expenses of Rs. 24,846 were of revenue nature.
(3.) ACCORDING to the ITO, the assessee has acquired assets like pumps, electric cables, etc., by incurring such expenses. The ITO in his order did not give any reason at all. He has merely stated as follows: "Expenses of capital nature, the assessee has debited certain expenses made on pumps, electric cables, C.D. sheets, etc., to contract account. These are of capital nature. Therefore they are disallowed." ;