Law:

Section:

Section 57, read with section 30, of the Income-tax Act, 1961 (Corresponding to section 12(4), read with section 10(2)(v), of the Indian Income-tax Act, 1922) - Income from other sources - Deductions - Assessment year 1946-47 - Assessee was owner of a hotel premises which he leased out completely with furnishing and fittings for a period of 20 years - On account of several years' wear and tear and neglect resurfacing of whole of roadways of hotel became necessary - Assessee sought to deduct resurfacing cost from his income from hotel on account of repairs - Whether income of assessee from leasing of hotel premises was income from other sources - Held, yes - Whether cost of re-laying cement approach road to hotel was incurred in respect of 'current repairs' to hotel premises and was allowable as deduction under section 12(4), read with section 10(2)(v) of 1922 Act - Held, yes FACTS Besides carrying on business activities and possessing other sources of income the assessee was the owner of a hotel premises which he leased out completely with furnishings and fittings to a company for a period of 20 years at an annual rent of Rs. 50,000. In the account year in question the approach roads or drives had fallen into such a bad state that it was found necessary to repair them, and the repairs took the form of resurfacing with concrete the whole of the roadways, totalling more than one furlong in length. The entire resurfacing cost was sought to be deducted by the assessee, under the heading of his income from the hotel, on account of repairs. The ITO held that the whole expenditure could not be allowed in one year and that it should be spread over 10 years and allowed a deduction of that extent. On appeal, the assessee raised the objection that the ITO had erred in spreading the repair charges of the hotel over 10 years. However, the AAC added back even the sum allowed by the ITO, and held that the whole of the outlay on re-laying the roads was a capital expenditure. On further appeal, the Tribunal held that the case fell within section 12(4), read with section 10(2)(v), of the 1922 Act and that the expenditure on the roads must be allowed in full. On reference: HELD…

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