TMI Blog1987 (11) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in I.T.R. No. 721 of 1970 answering certain questions of law referred for the opinion of the High Court against the assessee. The assessee is a Hindu undivided family. The assessment years are 1954-55, 1960-61 and 1961-62. The principal controversy in these appeals pertains to the allowance of and deduction for " repairs " in respect of house property at Delhi leased out to the Chinese Embassy under a deed of lease dated May 30, 1952. Originally, the assessments were completed including therein the annual letting value of this property at Rs. 36,000 and allowing a deduction of Rs. 6,000 for repairs under section 24(1)(i)(a) of the Income-tax Act, 1961 (" the Act "), or the corresponding provisions of the Act of 1922. Subsequently, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, the assessments for the years 1954-55, 1960-61 and 1961-62 were validly reopened under section 147(a) of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the provisions of section 24(1)(i)(b) of the Income-tax Act, 1961, were applicable ? (3) Whether, on the facts and in the circumstances of the case, the expenditure which was not allowed while completing the original assessments could be considered for allowance in the course of the assessments reopened under section 147(a) ? As stated earlier, the High Court answered the questions against the assessee, but granted a certificate under section 261 of the Act as in its opinion two important questions arose out of the judgment. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, section 24(1)(i)(b) was not attracted and that in the circumstances, the benefit of section 24(1)(i)(a) was available to the assessee. Counsel relied upon CIT v. Parbutty Churn Law [1965] 57 ITR 609 (Cal). Section 24(1)(i)(b) of the Act provides that where a property is in the occupation of a tenant " who has undertaken to bear the cost of repairs ", the deduction towards repairs which the assessee-owner is entitled to is either the excess of the annual value over the amount of rent payable for a year by the tenant, or a sum equal to one-sixth of the annual value, whichever is less. There is no dispute that if section 24(1)(i)(b) is applicable, the computation would be correct. The only question, therefore, is whether, having regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to substitute new foundations..." (See Halsbury's Laws of England, 4th edn., paragraph 285). In regard to the standard of repairs, Halsbury, at paragraph 286, states: " If he has expressly covenanted to put a house into tenantable repair and to keep it in such repair, and it is not in tenantable repair at the commencement of the tenancy, the tenant must do the necessary repairs, notwithstanding that the building is thereby put in a better condition than when the landlord let it. The effect is the same if, without expressly covenanting to put it into repair, the tenant only covenants to keep the house in tenantable repair. Such a covenant presupposes putting the house in such repair, and keeping it in repair during the term. The constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venants if we did not hold that the defendants were liable under covenants framed as these are to make good the cost of repairing this wall in the only sense in which it can be repaired, namely, by rebuilding it according to the requirements of the county council." Having regard to the somewhat comprehensive nature of the obligations that go with and are attached to and recognised under the tenant's covenants for " repairs ", it must be held that the covenant in the present case is one under which the tenant has undertaken " substantial repairs " and it must, accordingly, be held to fall within section 24(1)(i)(b) of the Act and that the allowance for repairs must be one under, and limited to, that provision. The case of the assessee that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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