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TMI Blog1983 (9) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... ee felt that in the interest of its business certain repairs had to be carried out, and as the need for such repairs had accumulated for a long time, the assessee spent a sum of Rs. 47,186 for carrying out necessary repairs. Out of this the assessee capitalised a sum of Rs. 9,399 and claimed the balance of Rs. 37,787 as revenue expenditure. The break-up or the details of the expenditure are these: Rs. P. (i) Sanitary fittings 4,257.61 (ii) Designing supervision 750.00 (iii) Layout drawings sketches 300.00 (iv) Consultation fee for structural work 4,000.00 (v) Flooring 10,993.43 (vi) Cement 635.79 (vii) Painting 791.06 (viii) Wood work 5,417.31 (ix) Masonary work 3,513.82 (x) Electrical fittings 6,933.92 Miscellaneous 194.66 ------------------- 37,787.59 ------------------- At the time of framing the assessment, the ITO expressed the view that apart from construction expenses payments have been made for designing and supervision, layout drawings and sketches and consultation fee for structural work. The ITO concluded that the renovation consisted of additional and modified construction aimed to have long-term advantages and was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In the order of the ITO, there is a heading called " Building Repairs ". It is noticed that the total expenditure under this heading had increased from Rs. 7,035 of last year to Rs. 37,788. If the assessee had not undertaken the cost of the repairs to the premises under the lease, then the ITO would not have allowed the expenditure of Rs. 7,035 in the last year and Rs. 7,788 in the assessment year 1965-66. The AAC as well as the Tribunal proceeded on the basis that the assessee had undertaken to bear the cost of the repairs to the premises. It is also found as a fact that the assessee is engaged in the business of hire purchase of vehicles as well as dealing as agents for sale of Tata Mercedes Trucks in Western U.P. and the premises are located on the first floor of the building. The further fact found is that the renovation consisted of converting a large number of small rooms into one big hall more suited for office purposes. The AAC also records that the flat was only redesigned to suit the increased office need and of course better fittings and better material was used. The Tribunal after considering the nature of the work executed by the assessee, however, came to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case. " Applying these tests to the present case, we are of the opinion that the assessee has obtained an advantage in a commercial sense by redesigning the premises and providing better fittings, better material and marble flooring. The advantage obtained by the assessee is for the purposes of the business of the assessee and not for the acquisition of a capital asset. There is no doubt that an expenditure of Rs. 4,000 as consultation fee fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f wear and tear or damage. Repair would mean the restoration of the premises to its original condition and it would not by any stretch of imagination apply to a case where there have been structural additions or alterations and conversion of smaller rooms into one big hall. Reliance is placed on Humayun Properties Ltd. v. CIT [1962] 44 ITR 73 (Cal), wherein it was held that the words " repair " and renew " are not words of clear contrast; for, repair always involves renewal and repair may be restoration by renewal or replacement of subsidiary part of a whole and where renewal, as distinguished from repair, is said to be reconstruction of the entirety, meaning by the word " entirety not necessarily the whole but substantially the whole subject-matter. These observations were made by the Calcutta High Court at the time of construing the provisions of s. 10(2)(v) of the Indian I.T. Act, 1922. An interpretation was being given to the statute using the term " current repairs " made by a person other than a tenant. It is in those circumstances that the observations were made that " current repairs " includes repairs for ordinary wear and tear, and those which were needed for the maintena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invited our attention to CIT v. Kalyanji Mavji Co. [1980] 122 ITR 49 (SC), CIT v. Rama Krishna Steel Rolling Mills [1974] 95 ITR 97 (Delhi), Keshav Mills Co. Ltd. v. CIT [1965] 56 ITR 365 (SC), CIT v. S. Zoraster and Co. [1982] 133 ITR 559 (Raj) and the counsel for the Revenue invited our attention to Lakshmiji Sugar Mills Co. P. Ltd. v. CIT [1971] 82 ITR 376 (SC) and Addl. CIT v. Trikamji Punia Sons [1977] 106 ITR 597 (AP) [FB] to refute the arguments of the opposing counsel. We are not making any reference to the cases cited at the Bar. We are not called upon in this case and it is also unnecessary because of the view we have taken and, therefore, we do not wish to express our opinion whether or not the expenditure has been made in the course of the ordinary commercial activity of the assessee allowable as business expenditure under s. 10(2)(xv) of the 1922 Act or s. 37 of the Act. The finding of the Tribunal is: " It is not shown that incurring of this expenditure was necessary for the purpose of carrying on the business of the assessee. For the above reasons, we answer the question in the negative, i.e., in favour of the assessee, and against the Revenue. We make no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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