Law:

Section:

Section 30 of the Income-tax Act, 1961 (Corresponding to section 10(2)(v) of Indian Income-tax Act, 1922) - Rent, rates, taxes, repairs and insurance for buildings - Assessment years 1958-59 to 1960-61 - Whether where expenditure incurred by assessee on repairs of building did not bring into existence any benefit or advantage of an enduring nature or any new asset or new advantage, nor did it change nature of asset as a whole, or increase its accommodation or earning capacity it was revenue expenditure and was allowable as deduction - Held, yes FACTS The assessee-company purchased a building for using it as its office. At that time, there was no sign of its external deterioration. Later in year 1956, the company discovered that the building was severally damaged. The company carried out the repairs, by incurring expenditure without creating any additional space. Wherein some columns and beams were plastered with cement by the process of guniting. The assessee claimed the expenditure incurred as revenue expenditure. The ITO rejected the claim. On appeal, the AAC upheld the order of the ITO. On further appeal, the Tribunal found that the company carried out only those repairs which were absolutely necessary to preserve and maintain the building and to prevent its further deterioration. It was further held that the said process had not brought into existence any new or additional advantage or benefit of an enduring nature. The Tribunal accordingly, allowed the assessee's claim. On reference: HELD An expenditure may not be an allowable deduction under section 10(2)(v ) of 1922 Act on the ground that the repairs are not current repairs and yet, it may be allowed under section 10(2)(xv) of 1922 Act provided its conditions are fulfilled. In the instant case, merely because some columns and beams were repaired by the company it did not necessarily follow that the expenditure incurred on it was in the nature of a capital expenditure. That apart, it was not the finding of the Tribunal in the instant case that any structural alteration was made. By a mere patch work, the building would have lasted only for 5 to 10 years and the money that would have been spent in it would…

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