TMI Blog1954 (12) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... that the whole expenditure could not be allowed in one year and that it should be spread over to 10 years and allowed a deduction of ₹ 2,472 on this account. The assessee appealed to the Appellate Assistant Commissioner regarding a number of points in the assessment order including this item, regarding which, in his grounds of appeal, he simply raised the objection that the Income Tax Officer had erred in spreading the repair charges of Imperial Hotel amounting to ₹ 24,904 over 10 years. After considering the matter the Appellate Assistant Commissioner added back even the sum of ₹ 2,472 allowed by the Income Tax Officer, and held that the whole of the outlay on re-laying the roads was a capital expenditure. This matter was again raised by the assessee in his appeal to the Tribunal, which held that the case fell within section 12(4) read with section 10(2) (v) of the Act and that the expenditure on the roads must be allowed in full. On this the Commissioner of Income Tax preferred an application under section 66 (1) and the Tribunal has framed the following question for our consideration :- Whether in the circumstances of the case the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any kind certainly does not appear to fall under the definition of building given in any standard dictionary and it was argued that the fact that in these sub-sections the word buildings was strictly to be construed as buildings and nothing else was supported by the fact that section 9 relating to income from property did refer to any buildings or lands appurtenant thereto. It is pointed out that the allowance for repairs in sub-section (1) (i) where the owner is responsible for repairs to property occupied by a tenant is one-sixth of the annual rent or in other words two months rent. It is also contended that even if section 12(4) and section 10(2) (v) are applicable the resurfacing of the whole of the roadway in the hotel premises cannot be regarded as current repairs. On the other hand the learned counsel for the assessee has attempted to put forward a case which does not appear to have been raised before the Tribunal, which presumably decided the matter in his favour on the grounds which were urged before it. This case is that this item of the assessees income is neither from property under section 9, nor from other sources under section 12, but is ordinary income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that he will not enter into the hotel business himself in Delhi during the term of the lease. I accordingly hold that this item of the assessees income has been placed in the correct category by the Appellate Tribunal, i.e., it is under section 12(4), and he is entitled to the benefits of the relevant provisions of section 10. The next question is therefore whether the roadways which the assessee has resurfaced can be regarded as buildings within the meaning of section 12(4) and 10(2) (v). Here again I cannot help feeling that an entirely new point has been raised by the learned counsel for the Commissioner, since from the order of the Appellate Tribunal it would appear that the only arguments urged before it on this aspect of the case were on the point whether the expenditure on the resurfacing of the roadways was a capital expenditure, as held by the Appellate Assistant Commissioner, or covered by the term current repairs as found by the Tribunal, and there is nothing in the order to suggest that any argument was advanced on behalf of the Income Tax authorities that the expenditure was not incurred on the building leased. The use of the words hotel premises in the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenditure must be one which is constantly recurring and not one which may only recur after a few years and it seems to me that other factors must also be taken into consideration. The same two learned Judges were also responsible for the decision in In re L. H. Sugar Factories and Oil Mills Limited, in which they held that the expenditure incurred in the re-roofing of labourers quarters by using new tiles in place of old ones was neither a revenue expenditure nor an expenditure in respect of current repairs, and it was not therefore an allowable deduction. It does not appear to have been disputed that the roofs in question were merely restored to their original condition and again the sole criterion appears to have been that this particular expenditure was not likely to arise again for sometime. On the other hand there is a decision of the Lord President and two Lords of the Court of Session of Scotland in Samuel Jones Co. (Devonvale), Ltd. v. Commissioners of Inland Revenue, which relates to the case of a paper factory the chimney of which had fallen into a dangerous condition, with the result that the assessee company had demolished the chimney and replac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessable to Income Tax. The following passage from the judgment delivered by Lord Macmillan is of interest :- The periodical renewal by sections of the rails and sleepers of railway line as they wear out by use is in no sense a reconstruction of the whole railway and is an ordinary incident of the railway administration. The fact that the wear although continuous is not, and cannot be, made good annually does not render the work of renewal when it comes to be effected necessarily a capital charge. The expenditure here in question was incurred in consequence of the rails having been worn out in earning the income of previous years on which tax had been paid without deduction in respect of such wear and represented the cost of restoring them to the state in which they could continue to earn income. It did not result in the creation of any new asset; it was incurred to maintain the appellants existing line in a state to earn revenue. The analogy of a wasting asset which appears to have affected the minds of the Special Court has really no application to such a case as the present. Nor do their Lordships agree that expenditure in order to form a permissible deduction must h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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