- (1.) By way of this appeal, the department has assailed the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal preferred by the department.
(2.) The brief facts of the case are that the assessee company is the cement manufacturing industry which involves heavy vehicles movement for supply of raw material as well as clearance of finished goods. The assessee company has WBM Road which requires frequent repairs and patch up due to rains and heavy vehucular use. This caused problems in the operation of the assessee company to make the road more efficient. It was converted into concrete road for which the assessee company incurred an expenditure of Rs. 32,08,085/-. The AO held that the assessee company has derived the advantage of enduring nature for converting the WBM Road into concrete road. Therefore, it was a capital expenditure and this addition was added to the income of the assessee company.
(3.) Two questions which are posed for consideration are as under: "1. Whether the Tribunal was legally justified in deleting the addition of Rs. 1,31,24,053/- made on account of disallowance of proportionate interest on borrowed funds relatable to investment in equities and in other tax free instruments despite the fact that the share capital and surplus fund has to be first invested in the main business which is the cement business as per the memorandum and article of association of the company and thereby leaving almost no interest free funds or very low interest free funds for other activities particularly the investment in equities and in other tax instruments and also despite the fact that the assessee has failed to prove reverse of it 2. Whether the Tribunal has legally justified in holding that the expenditure incurred by the assessee company for laying concrete road over the WBM road, is a revenue expenditure instead of capital expenditure despite the fact that assessee in its books of accounts has itself treated it as capital expenditure and also despite the fact that new asset in the form of concrete road has come into existence and moreover despite the fact that it is giving advantage of enduring nature ;