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TMI Blog1988 (7) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... venue expenditure in computing its income for the assessment year 1982-83. The ITO treated this amount as capital expenditure and disallowed the whole of it. The assessee appealed to the Appellate Assistant Commissioner,Moradabad. The Appellate Assistant Commissioner agreeing with the observation of the ITO upheld the disallowance. Aggrieved by the order of the AAC, the assessee filed a further appeal before the Income-tax Appellate Tribunal. 2. we have heard the parties at sufficient length, pursued, the relevant details and the orders of the authorities below. We are of the opinion that the revenue is not justified in treating this expenditure as capital expenditure. The ACC was not justified in holding that it was section 30 of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court observed that "if certain repairs cannot be considered as 'current repairs' they can be considered for deduction on general principles under section 10(2)(xv) of the 1922 Act, equivalent to section 37 of the Income-tax Act, 1961. The Supreme Court held that if the renovation of the building, the re-conditioning of machinery and the removal of debris cannot be described as 'current repairs ', the case would be entitled to consideration under section 10(2)(xv) of the 1922 Act. The subject matter of section 10(2)(v) is current repairs and it appears difficult to agree that repairs which are not 'current repairs' should not be considered for deduction on general principles or under section 10(2)(xv). There must be very strong evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be of expenditure incurred in preserving or maintaining capital assets. This test is, therefore, clearly not one of universal application. " The Supreme Court further laid down : "When dealing cases where the question is whether expenditure incurred by an assessee is capital or revenue expenditure, it is necessary to bear in mind what Dixon, J. said in Hallstorm's Property Ltd. v. Fedral Commissioner of Taxation 72 CLR 634 'What is an outgoing of capital and what is an outgoing on account of revenue, depends on what the expenditure is calculated to effect from a practical and business point of view rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process.' The question mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... working condition, which enabled the assessee to carry on its business. This expenditure is thus for maintaining a business asset. I comes squarely within the principles laid down by the Supreme Court in the above case. It did not amount to any expenses on acquiring a 'new asset'. As we have already mentioned, the capacity of this chamber was not increased at all by this expenditure. 4. We may also refer to a recent case that came before Rajasthan High Court in CIT v. Shree Hari Industries [1986] 161 ITR 249. The assessee-firm there was carrying on business of crushing of oil seeds in a tin-shed factory, it had to incur huge expenditure in replacing the entire roof which was blown off on account of storm and the question was whether the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g cinema had resulted. The Delhi High court applied the principle laid down by the Supreme Court in Kalyanji Mavji & Co.'s case. Compulsory nature of these repairs was held to be an expenditure incurred for the purpose of the business. This principle applies, in our opinion, mutatis mutandis to the facts before us. We are, therefore, of the opinion that the authorities were not justified in disallowing the claim of the assessee. We direct that this amount be allowed as deduction. 5. There is another ground relating to the levy of interest under sections 139(8) and 217. It was pointed out, at the time of hearing, that the levy of interest under these two sections was consequential to the disallowance of the sum of Rs. 1,82,101 and if that s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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