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TMI Blog1997 (1) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... chased the said building in 1937. It was a ginning factory then. He ran the factory till 1940. In the year 1945, he converted it into a cinema theatre and was exhibiting films therein. During the period 1960 to March, 1961, the assessee extensively repaired the theatre by expending substantial amounts. The amounts spent by him are : on machinery Rs. 16,002, new furniture Rs. 27,889, sanitary fittings Rs. 5,225 and replacement of electrical wiring Rs. 13,604. In addition thereto, a total amount of Rs. 62,977 was spent on extensive repairs to walls, to the hall, to the flooring and roofing, to doors and windows and to the stage sides, etc. Actually, the theatre had to be closed during the aforesaid period for effecting the repairs. In the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot for the purpose of renewal or restoration but which is only for the purpose of preserving or maintaining an already existing asset and which does not bring a new asset into existence or does not give to the assessee a new or different advantage. The learned Chief Justice observed that they are such repairs as are attended to as and when need arises and that the question when a building, machinery, etc., requires repairs and when the need arises must be decided not by any academic or theoretical test but by the test of commercial expediency. The learned Chief Justice observed : "The simple test that must be constantly borne in mind is that as a result of the expenditure which is claimed as an expenditure for repairs what is really being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an advantage of enduring nature cannot qualify for deduction under section 10(2)(v). In our opinion the test involved by Chagla C. J., in New Shorrock Spinning and Manufacturing Co. Ltd.'s case [1956] 30 ITR 338 (Bom) is the most appropriate one having regard to the context in which the said expression occurs. It has also been followed by a majority of the High Courts in India. We respectfully accept and adopt the test. 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 bui ..... X X X X Extracts X X X X X X X X Extracts X X X X
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