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TMI Blog1970 (10) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... nitures and deliver possession to the lessor without any damage to the building whatsoever. (10) That the lessee will keep the fixture, decoration, etc., in good condition and in order and will allow the lessor or his nominee to inspect his property any time except at the time of actual show. The lessee will replace all shortages, breakages, etc., with due expedition. (11) That the repairs of the building will be made by the lessee and the annual white-washing and painting, etc., will be made by the lessee at his own cost according to their taste, but the lessor will contribute Rs. 120 (one hundred and twenty) annually towards white-washing and painting to the lessee. " During the relevant previous year the lintel near the stage of the cinema hall collapsed as a result of which damage was caused to the screen and the stage. The lintel was reconstructed by the assessee in pursuance of the aforesaid terms of the lease deed. While reconstructing the stage and the screen, the assessee increased the dimensions. Rs. 11,418 were spent by the assessee on the above construction and he claimed that amount as a permissible deduction. In answer to the query of the Income-tax Officer regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred for anything beyond current repairs would be of a capital nature, while in case of premises held by an assessee as a tenant repair expenses incurred in pursuance of a term of the lease deed cannot, speaking broadly, be said to be of a capital nature inasmuch as the assessee does not normally thereby acquire any interest or benefit of an enduring nature. Such a repair would appear to form a part and parcel of the consideration of rent agreed to be paid for the use and occupation of the property. " It was further observed : " The only point that remains to be considered is whether the repair expense, even to a limited extent, can be said to be of a capital nature. It has been pointed out that the stage has been widened and the screen has been enlarged. Unless the construction brings a benefit of an enduring nature to the assessee, or unless it changes the identity of the property, it cannot be categorised as a capital construction. So far as the question of the change of the identity of the property is concerned, one has to look to the building as a whole and not to the part which is reconstructed. It is not possible to say in the present case that the cinema theatre has lost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itimately be held to have been incurred on the repairs. Any amount which was spent over and above that for the purpose of the widening of the screen and the stage cannot be held to have been expended on repairs. The dictionary meaning of the word " repair ", as given in Shorter Oxford English Dictionary, is " the act of restoring to a sound or unimpaired condition ; the process by which this is accomplished. Restoration of some material thing or structure by the renewal of decayed or worn out parts, by refixing what has become loose or detached ". In the case of Highland Railway Co. v. Balderston, the railway had relaid a portion of the main line and in doing so had substituted steel rails of greater weight for the previous iron rails. No question was raised as to the cost of relaying the rails except as regards the additional weight and cost of the improved rails as compared with the original rails. The railway company claimed to deduct the additional cost as a proper charge against the revenue on the ground that no permanent improvement of their property had been effected by the substitution of the heavier and costlier steel rails, and that they derived no additional revenue from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cinema building the above amount would have been characterised as capital expenditure. The same would have been the position if the assessee, though not an owner of the cinema building, was to retain its possession as a lessee for some years after the year in which the amount was spent. Where, however, as in the present case, the expenditure was incurred for the widening of the screen and stage in the last year of the lease, the expenditure cannot be held to be one in the nature of capital expenditure. There is nothing to show that the lessee was entitled to remain in possession of the cinema building on the expiry of the period of the lease or that he in fact continued in possession of that building after the expiry of the above period. It has also not been shown to us that the lessee was entitled to any compensation from the lessor for the improvement effected by the assessee in the widening of the stage and screen. As the expenditure made for the widening of the screen and stage did not bring into existence an asset or advantage for the enduring benefit of the business of the assessee it cannot be deemed to be a capital expenditure. The borderline between revenue and capital ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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