TMI Blog1969 (8) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... e they would not be liable to rent thereafter. The relevant clause in the deed of lease is clause (4) which runs as follows : " That the lessee company will at all times maintain the demised premises in a good tenantable condition (accidents by tempest or earthquake or an act of God or act beyond the control of the lessee exempted) and shall carry out annual repairs and whitewashing thereof at the cost of he lessee company without any claim or claim or demand thereof at any time from the lessor-landlords. The lessor-landlords will not be bound to carry out any repairs. If the premises require any structural repairs or other repairs of a substantial character which the lessor landlords are not prepared to carry out, the lessee company will have the right to vacate the leased premises and will give peaceful prossession to the lessor-landlords and in that case the lessee company will not be liable to pay rent for the unexpired lease period from the date of vacating and giving possession." During the previous year relevant to the assessment year 1958-59, the assessee effected certain repairs to its godowns at a cost of Rs. 15,774 and during the previous year for the assessment of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, on the facts and in the circumstances of the case, the sums of Rs. 15,774 (1958-59) and Rs. 10,466 (1960-61) represented revenue expenditure deductible in computing the income of the assessee under section 10 ? " The question which has been referred to this court is wide enough to include clauses (ii), (v) and (xv) of sub-section (2) of section 10 in its ambit. Sub-section (1) and clauses (ii), (v) and (xv) of sub section (2) of section 10 are reproduced below : " 10. (1) The tax shall be payable by an assessee under the head 'profits and gains of business, profession or vocation' in respect of the profits or gains of any business, profession or vocation carried on by him. (2) Such profits or gains shall be computed after making the following allowances, namely :-.... (ii) in respect of repairs, where the assessee is the tenant only of the premises, and as undertaken to bear the cost of such repairs, the amount paid on account thereof, provided that, if any substantial part of the premises is used by the assessee as a dwelling-house, a proportional part only of such amount shall be allowed ;... (v) in respect of current repairs to such buildings, machinery, plant or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also observed that the assessee was entitled to depreciation on the expenditure incurred by it in connection with the repairs. The court, therefore, held that such repairs could not be treated as current repairs and the expenditure was not allowable under section 10(2)(v) of the Act. The present case, however, stands on a different footing. As already noted, the roofs of the godowns and the dye-houses were replaced as they had become very old and had actually caved in and there is no material on record to warrant the view that the repaires effected to those buildings did, in fact, enhance their value. The expenditure incurred in such replacements merely made the buildings fit to be used for the purpose of the business of the assessee. As we have already said, the assessee was merely a lessee of the buildings in question for a period of ten years and it was not interested in enhancing the value thereof. The decision of this court in the two earlier cases is, therefore, clearly distinguishable. It may be stated here that the assessee did not base its claim before the Tribunal upon section 10(2)(v). Consequently, we do not propose to consider whether the expenditure incurred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he allowance of an expenditure under section 10(2)(xv) apply to the present case, namely, whether the expenditure is in the nature of capital or personal expense of the assessee and whether it was laid out or expended wholly and exclusively for the purpose of the assessee's business. The learned standing counsel for the department contended very strenuously that the expenditure was in the nature of a capital expenditure. He pointed out in this connection that the quantum of the expenditure was quite heavy. He argued that the expenditure of Rs. 15,774 in the first year and Rs. 10,466 in the second year should be considered to be very substantial and such expenditure resulted in the improvement of the structures to an appreciable extent. The learned counsel for the department, therefore, contended that these expenses should be considered to be capital in nature. The contention of the learned counsel cannot, however, be accepted. The test is not whether the expenditure is heavy or small. In the case of Commissioner of Income-tax v. Sri Ram Sugar Mills Ltd. a sum of Rs. 86,496 was allowed to be incurred on the replacement of an old boiler with a new one in a sugar mill under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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