COMMISSIONER OF INCOME-TAX,BOMBAY CITY-I, BOMBAY vs ASSOCIATED CEMENT COMPANIES LTD., BOMBAY

The Supreme Court upheld the Bombay High Court's decision that the expenditure incurred by the assessee for laying water supply lines was allowable as a deduction under the Income Tax Act. The Court clarified that the expenditure was revenue in nature as it did not result in the creation of a capital asset for the company, but rather provided an advantage of immunity from municipal rates and taxes. The ruling was based on the principles established in Empire Jute Co. Ltd. v. Commissioner of Income-tax, emphasizing that not all enduring benefits qualify as capital expenditures.