TMI Blog1992 (1) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts are that the assessee-firm claimed deduction of Rs. 59,888 as expenditure for repairs of the house property at Tiljala Road, and 39, Dr. Sundari Mohan Avenue, Calcutta, for the assessment year 1977-78. The Income-tax Officer disallowed the claim of the assessee on the ground that the amount was spent by the assessee for renovation of the buildings referred to above. The assessee appealed to the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) after going through the details of the expenses found that in fact a sum of Rs. 35,000 only was incurred for bringing the dilapidated building at Tiljala Road, Calcutta, into use and the rest on repair to the house at Dr. Sundari Mohan Avenue, Calcutta. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an admissible deduction. Both the Revenue and the assessee relied on several decisions in support of their respective contentions. The Tribunal held that it was not in dispute that the amount of Rs. 35,000 was spent by the assessee for renovation of the building and replacement of sanitary fittings, etc. The Tribunal observed that it is well settled that the sum expended for renovation of building cannot be regarded as revenue expenditure. The Tribunal further observed that it is true that the expenditure on current repairs is allowable as revenue expenditure but it is necessary to understand what the expression "current repairs" means. The Tribunal followed the decision of the Calcutta High Court in the case of Humayun Properties Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only current repairs which are allowable as revenue expenditure. It appears that, by renovation, the Tribunal has meant repairs other than current repairs which take place with periodicity. But it is now well accepted that even where a sum of money is spent for repairs in a particular year because of the fact that regular repairs are allowed to fall into arrears and repairs on an extensive scale have to be undertaken to remedy the effect of several years' negligence, the expenses for such arrear repairs are allowable. It may possibly happen that large-scale repairs had to be carried out to restore the property to a habitable or usable state. Such cost of arrear repairs would also be on the revenue account. The repairs may not be allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repairs required by the dilapidated condition of the property, such renovation could not be said to be capital expenditure in so far as it did not result in the creation of any new asset. It is only a case of the existing asset being brought to a habitable state, otherwise uninhabitable. The Tribunal's finding is further marked by an ambivalence in that the Tribunal found as a fact that the expenditure was for renovation or extensive repairs of the house. The nature of the renovation is thus admitted by the Tribunal to be of the nature of extensive repairs not bringing into existence any new asset. Where the renovation is also describable as extensive repairs, the cost of such repairs need to be allowed as general revenue expenditure, even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are many gaps on the factual plane and the Tribunal apparently hastened to the view that the amount of Rs. 35,000 was not expenditure on repairs simpliciter. No materials have been brought on record to show that the expenses had more effect than restoring the property to its habitable state. Rather, the words "extensive repairs" as used by the Tribunal indicates that there was no substantial improvement to the preexisting property so as to add to its value that pertains to the capital field as happened in the case of Humayun Properties Ltd. [1962] 44 ITR 73 (Cal). On the facts and in the circumstances as were present before the Tribunal or which have been brought on record, it cannot be concluded that the expenditure incurred is capital in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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