TMI Blog1977 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... another AAC. The parties then went to the Tribunal. A consolidated order was passed by the Tribunal in all those appeals. The relevant facts found by the Tribunal may now be briefly stated. At the time the company purchased the " Crescent House " for Rs. 15.5 lakhs there was no sign of its external deterioration. In 1956 the company discovered that the building was severely damaged. It was surveyed by architects and engineers. They opined that extensive repairs were absolutely necessary and advised that concrete works, some columns and beams should be plastered with cement by the process of guniting in order to prevent further deterioration and corrosions. The company carried out the repairs under the supervision of Mr. B.K. Banerji, an engineer, by incurring the aforesaid expenditure without creating any additional space. No remodelling was done nor any structural alteration was made. Some columns and beams were plastered with cement by the process of guniting. The repairs were made to preserve and maintain the building and to prevent further deterioration and corrosions as far as possible. The condition of the building was not improved from its original condition, nor its origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process of guniting it would last for many more years, it should be held that a part of the expenditure which has been laid out or expended in connection with the process of guniting is a capital expenditure although the expenditure incurred in connection with other repairs may be a revenue expenditure; and (v) The instant case is not covered by the decision in the case of CIT v. Oxford University Press [1977] 108 ITR 166 (Bom), because no major or heavy structural repairs was done to 'Oxford House', whereas major or heavy structural repairs were done to the 'Crescent House'. Dr. Debi Pal, learned counsel for the company, disputes the aforesaid arguments of Mr. B. L. Pal. Dr. D. Pal also argues that Mr. B, L. Pal is not entitled to urge that the repairs were not current repairs. To us it does not appear that the Commissioner of Income-tax in his application for reference before the Tribunal has raised any question relating to current repairs or s. 10(2)(v) of the Act. Therefore, we cannot entertain the two pleas of Mr. Pal noted in points (i) and (ii) in view of the narrow scope of the question before us. Even if the repairs were not current repairs, we are not convinced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he " Crescent House " and to prevent its further deterioration. By a mere patch work, the " Crescent House " would have lasted only for 5 to 10 years and the money that would have been spent in it would have been a complete waste. Therefore, plastering of certain portions of the concrete works with cement and some columns and beams by the process of guniting became absolutely essential. No doubt, this process has extended the life of the " Crescent House " by many more years, but not exceeding its original life. Further, the repairs have not improved its original condition. The repair by the process of guniting extended the original life of the " Oxford House " by 15 years and yet it was held that the expenditure incurred in connection with such repair was not a capital expenditure. Therefore, it is by itself not a decisive factor. Moreover, the repair by the process of guniting has not extended the original life of the " Crescent House " It is an admitted fact that " Crescent House " needed an extensive repair. The company has, no doubt, made extensive repairs by incurring a huge expenditure. But the magnitude of the repair goes with the magnitude of wear and tear, and not w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re visible underside of the slabs and on the floors, and some of the steel reinforcement in the slab had little or no cover. The amount already spent in patch work was a waste and plastering by means of an ordinary method was found to be of no use. In those circumstances, the repair was carried out by the process of guniting. Other facts are not relevant for our present purposes. The ITO rejected the assessee's claim that the expenditure incurred in it was a revenue expenditure. His finding was that those repairs had extended the life of " Oxford House " by at least 15 years and had thereby created an enduring benefit. He also held that those repairs were not current repairs. The AAC sustained the disallowance, but the Tribunal allowed it as a revenue expenditure and also under the head " Current repairs." The question before the Bombay High Court was whether the expenditure incurred in connection with the repair was a revenue expenditure. Mr. Justice Tulzapurkar (as he then was), at pages 170-171 (of 108 ITR) of the report, says this: " The question as to what is the proper meaning of the expression 'repairs' and what test should be applied for determining the question wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural repair was done, whereas in the present case before us, major or heavy structural repairs were done. But, this distinction does not make any difference, for, in our opinion, major or heavy structural repair to a building is by itself not a decisive factor for the reasons already stated. Accordingly, the contention of Mr. Pal must fail. It has been found by the Tribunal that the expenditure was incurred by the company with the object of maintaining and preserving the " Crescent House " and also to save the recurring expenditure on repairs and not with a view to bring into existence an advantage or benefit of an enduring nature. It is also the finding of the Tribunal that no additional space was created. The Revenue has accepted the aforesaid finding by not challenging them by an appropriate question. We also agree with the finding of the Tribunal, namely, that the process of guniting has not brought into existence any new benefit or advantage of an enduring nature to the company. In the premises, we answer the question in the affirmative and in favour of the assessee. We, however, do not propose to make any order as to costs. C. K. BANERJI J.-I agree. - - TaxTMI - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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