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TMI Blog2001 (8) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that expenditure of Rs.2,05,509 incurred on office building was in the nature of capital expenditure and hence the same was not deductible as revenue expenditure? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that expenditure of Rs.29,392 incurred on borewell was in the nature of capital expenditure and hence the same was not deductible as revenue expenditure?" The assessment year is 1982-83 and the relevant accounting period is calendar year 1981. The assessee-company is a private limited company, carrying on a business of ginning of cotton waste and pressing of cott ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal therefore upheld the view of the Income-tax Officer that the expenditure incurred was capital in nature and hence could not be allowed as a business expenditure. Similarly, in relation to expenditure on borewell the Tribunal held that the expenditure was in the nature of capital expenditure and hence the claim of the assessee was rejected. Mr. M. K. Patel, learned counsel appearing on behalf of the assessee applicant, submitted that the assessee had merely converted the old hall, which was up to this point of time used as creche and water room, into premises where the office of the assessee was shifted. It was therefore urged that no new building or room had been brought into existence; that the fixed capital of the assessee rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises had been changed both internally and externally. It was submitted that in the light of the extensive changes carried out it was not possible to accept the contention that repairs were carried out, but a new asset had come into existence and along with the same the use of the asset had also changed significantly. It was further submitted that taking an overall view or a composite picture of the expenditure incurred and the nature of the so-called repairs, the only conclusion that was possible was that the assessee had derived an enduring advantage, which would be in the capital field and in no circumstances can it be termed to be revenue expenditure. In support of his submissions reliance was placed on the following decisions: (1) C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that rule be true on general principle, there is good reason why the scope of section 10(2)(xv) should be construed liberally. In our opinion, even if the expenditure made by the assessee in the present case cannot be described as 'current repairs', he is entitled to invoke the benefit of section 10(2)(xv)". The reference to section 10(2)(xv) in the aforesaid decision is to the provision under the Act of 1922, and the said provision is similarly worded to section 37 of the 1961 Act. The apex court has thereafter held that as no new asset had come into existence and no new advantage had been obtained, the expenditure incurred by the assessee in that case was revenue expenditure. In relation to the test of enduring benefit the settled leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent use, i.e., for purposes of the administrative office. In other words, the business asset has retained its character and only its use has changed. The use at both the points in time, i.e., before and after the expenditure was incurred, relates to the business of the assessee. The Tribunal in this context has observed in paragraph 14 that "We would like to observe that before the Income-tax Officer, the accountant of the respondent had admitted that the old godown was not used for any business activity". However, the Tribunal has unfortunately not appreciated the statement of the accountant in its entirety as can be seen from the paragraph of the assessment order wherein the remaining sentence recorded by the Income-tax Officer reads a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 10(2)(v) of the 1922 Act. The ratio laid down in this decision has been applied by the Bombay High Court in the case of Ballimal Navalkishore [1979] 119 ITR 292 and said decision has been confirmed by the Supreme Court in Ballimal Naval Kishore v. CIT [19971 224 ITR 414. Thus, as can be seen from both the decisions, the entire controversy rested on whether the expenditure incurred for renovation of the theatre premises was allowable as deduction being in the nature of "current repairs" or not. The court was nowhere called upon to decide the controversy by invoking the provision of section 37, i.e., section 10(2)(xv) of the old Act. In our opinion, therefore, it is not possible to apply the test formulated for determining whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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