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TMI Blog2011 (8) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... epair expenditures - capital expenditure or revenue expenditure - Held that: - assessee on the tenanted office building which is more than 60 years old, has incurred repairs to preserve and maintain an already existing assets and there is no material on record to show that by incurring such expenditure the new assets has come into existence or the assessee has obtained a new advantage. - in view of decision of Supreme court in CIT v. Saravana Spg. Mills (P.) Ltd. (2007 -TMI - 1775 - SUPREME COURT OF INDIA) - the question as to whether the expenditure incurred by the assessee conceptually is revenue or capital in nature is not relevant for deciding the question whether such expenditure comes within the etymological meaning of the expression "current repairs". In other words, even if the expenditure is revenue in nature, it may not fall in the connotation of "current repairs. - Decided in favor of assessee. - 5828 & 6128 (MUM.) OF 2008 - - - Dated:- 24-8-2011 - D.K. AGARWAL, RAJENDRA SINGH, JJ. D.S. Sunder Singh for the Appellant. Anil J. Sathe for the Respondent. ORDER D.K. Agarwal, Judicial Member. These cross-appeals by the Revenue and assessee are direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to pay the creditors has since ceased and accordingly he treated Rs. 10,85,531 as profit chargeable to tax under section 41(1) of the Act and added to the total income of the assessee. On appeal, the learned Commissioner of Income-tax (A) while observing that there is no proof that the appellant obtained any benefit in respect of these creditors, the liability has not been written back by the appellant, there is no remission of liability and following the decision of the Hon'ble Supreme Court in the case of CIT v. Sugauli Sugar Works (P.) Ltd. [1999] 236 ITR 518/102 Taxman 713 deleted the addition of Rs. 10,00,000 made by the Assessing Officer. 6. At the time of hearing, the learned D.R. submits that for the reasons as mentioned in the assessment order, the learned Commissioner of Income-tax (A) was not justified in deleting the addition of Rs. 10,00,000 made by the Assessing Officer under section 41(1) of the Act. 7. On the other hand, the learned counsel for the assessee while relying on the submissions made before the Assessing Officer and the learned Commissioner of Income-tax (A), also relied on the order of the learned Commissioner of Income-tax(A). The reliance was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of limitation prescribed under the Limitation Act could not extinguish the debt but it would only prevent the creditor from enforcing the debt, has been well settled. If that principle is applied, it is clear that mere entry in the books of account of the debtor made unilaterally without any act on the part of the creditor will not enable the debtor to say that the liability has come to an end. Apart from that, that will not by itself confer any benefit on the debtor as contemplated by the section .". Respectfully following the ratio of the above decision and the ratio of other decisions relied upon by the learned counsel for the assessee, we are of the view that the learned Commissioner of Income-tax (A) was fully justified in deleting the addition of Rs. 10,00,000 made by the Assessing Officer under section 41(1) of the Act. The grounds taken by the Revenue are, therefore, rejected. ITA No. 6128/Mum/2008 (By assessee) 10. The sole ground taken by the assessee in its appeal is against the sustenance of the disallowance of current repairs of Rs. 2,01,500. 11. Brief facts of the above issue are that the Assessing Officer noted that the assessee has debited an amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the year and out of it the amount of Rs. 2,01,500 was incurred on office repairs and in support, the assessee has also filed the copy of the bill for Rs. 2,01,500 to show that the above expenses for repairs have been incurred for breaking old plaster of beam wall; making new 6" brick wall for window; providing fixing new morbonite tiles etc. From the aforesaid details it is observed that the above expenses have been incurred on the existing office building which was taken on lease and stated to be old for more than 60 years. It is not the case of the Revenue that the above repairs have been incurred for acquiring any new asset or there was no such existence of wall, window and floor in the office. 14. In Ballimal Naval Kishore case (supra), relied upon by the learned Commissioner of Income-tax (A) it has been held that (penultimate para, pages 417-418) : "Applying the aforesaid test, if we look at the facts of this case, it will be evident that what the assessee did was not mere repairs but a total renovation of the theatre. New machinery, new furniture, new sanitary fittings and new electrical wiring were installed besides extensively repairing the structure of the build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is more than 60 years old, has incurred repairs to preserve and maintain an already existing assets and there is no material on record to show that by incurring such expenditure the new assets has come into existence or the assessee has obtained a new advantage. The mere fact that the expenditure has brought the benefit of a larger life to the assets and better services, would not make the expenditure an expenditure of capital nature as no enduring advantage was obtained by the assessee. This being so and keeping in view that there is no material on record to show that the assessee has made total renovation of the office, we are of the view that the decision relied on by the learned Commissioner of Income-tax (A) is distinguishable and not applicable to the facts of the present case. For the reasons as discussed above we hold that the repair expenditures incurred by the assessee are in the nature of current repairs allowable as business expenditure and accordingly, the disallowance of Rs. 2,01,500 made by the Assessing Officer and sustained by the learned Commissioner of Income-tax (A) is deleted. The ground taken by the assessee is, therefore, allowed. 17. In the result, Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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