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Section 37(1) of the income-tax act, 1961-Capital or revenue expenditure-Whether expenses incurred on repairs and replacements of urinals in cinema hall in compliance with district magistrate's directions were allowable as revenue expenditure-Held, on facts, yes-Whether expenses on repairs of boundary wall, which was found by tribunal to be a new construction could be allowed as revenue expenditure-Held, on facts, no Facts For the relevant assessment years the assessee-HUF, doing cinema exhibition business, at a cinema hall leased it, claimed certain expenses on repairs and replacement of urinals in the cinema hall, as revenue expenditure on the ground that they were carried out in compliance with the directors of the District Magistrate. The assessee also claimed an amount spent on repairs of boundary walls, for which 20,000 bricks were used, as revenue expenditure. The ITO disallowed the claims as being of capital nature. On appeal, the Tribunal also disallowed the expenditure on replacement of urinals and part of the expenditure on the boundary walls as on capital account. On reference: Held Prima facie the expenses incurred on replacement of urinals could not be treated as a revenue expenditure, as it was not an amount spent for the running of the cinema. However, as it was done under a direction issued by the District Magistrate, it had to be treated as a revenue expense, being a necessary expense incurred in furtherance of the District Magistrate's order. Therefore, the Tribunal was not justified on this point. As for repairs to the boundary wall, the finding was that this was a new construction, necessitated not due to the District Magistrate's order. The expenses incurred thereon could not, therefore, be allowed as a revenue expenditure. The disallowance made by the Tribunal on this account was, therefore, justified. IT REFERENCE NO. 280 OF 1975. B.B. Ahuja for the Applicant. Wazir Singh and Mukul Gupta for the Respondent. JUDGMENT KAPUR, J. - These two Income-tax Reference Nos. 208 and 281 of 1975 relate to the assessment years 1967-68 and 1968-69. The Tribunal has stated a common case under section 256(1) of the Income-tax Act, 1961 ('the Act'). The…

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