LexMIS. BALLIMAL NA VAL KISH ORE AND ANR. versus COMMISSIONER OF INCOME TAX, BOMBAY
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) MIS. BALLIMAL NA VAL KISH ORE AND ANR. A v. COMMISSIONER OF INCOME TAX, BOMBAY JANUARY 10, 1997 [B.P. JEEVAN REDDY AND K.T. THOMAS, JJ.] B Income TaxAct, 1922: Section 10(2)(v). Income Tax-"Cwrent repaid' or "capital expenditure''-f?eduction of-Extensive repairs of cinema theatre by installing new machinery, new fwniture, new sanitmy fittings and new electlical wi1ing besides repair of stmcture bf building-Expenditure inc1l1Ted C Held: capital expenditure and not cwrent repair~Hence, High Cowt 1ightly held expe11diture not deductible-Test to detennine as laid down in New Shor- rock Spi1111ing & Manuf actuling Co. Ltd. Case approve~Jncome Tax Act, 1961, Ss. JO(a)(ii) and 31 (i) Words and Phrases: "Cwrent repairs''-Meaning of-In the context of S.10(2)(v) of the Income Tax Act, 1922. D The appellant-assessee purchased a ginning factory and converted it into a cinema theatre and exhibited films therein. During the period 1960 E to March 1961 the assessee spent a huge amount in extensively repairing the said cinema theatre by installing new machinery, new furniture, new sanitary fittings and new electrical fittings. Besides, the assessee also extensively repaired the structure of the building. In the assessment proceedings relating to the relevant assessment f year, the assessee claimed deduction of the aforesaid amount spent on "current repairs" under Section 10(2) (v) of the Income Tax Act, 1922. The High Court decided against the appellant-assessee. Hence this appeal. Dismissing the appeal, this Court HELD: 1. The test evolved in New Sho11'ock Spinning & Manufactu1ing Company Ltd. Case to determine what is "current repairs" is the ap- propriate one. Applying that test, it would be evident that what the assessee G did was not mere repairs but a total renovation of the theatre. New machinery, new furniture, new sanitary fittings and new electrical wiring H 179 180 SUPREME COURT REPORTS (1997] 1 S.C.R. A were installed besides extensively repairing the structure of the building. )_ By no stretch of imagination, can it be said that the said repairs qualify as "current repairs" within the meaning of Section 10(2)(v) of the Income Tax Act, 1922. It was a case of total renovation and has rightly been held by the High Court to be capital in nature. [182-G-H] B New Shon'Ock Spinning and Manufacturing Company Ltd. v. CIT, 30 ITR338 (Born.); C!Tv.Darbhanga Sugar Co. Ltd., (1956) 29 ITR21 (Pat.); CIT v. Sri Ram Sugar Mills Ltd., (1952) 21 ITR 191 (Mad.) and Liberty > Cinema v. cJT, 52 ITR 153 (Cal.), approved. c CIVIL APPELLATE JURISDICTION : Civil Appeal No. 646 of 1981. From the Judgment and Order dated 7.2.79 of the Bombay High Court in I.T.R. No. 105 of 1970. D Ms. AK. Verma and S. Ganesh, Advs. for M/s. JBD & Co., for the Appellants. Dr. R.R. Mishra, Ms. LaXIni Iyengar, B. Krishna Prasad, Advs. for the Respondent. E The judgment of the Court was delivered by · B.P. JEEVAN REDDY, J. Section 10(2)(v) of the Income Tax Act, 1922 allows deduction of the amount spent on "current repairs" to build- ings, machinery, plant, furniture employed in the business. The assessee- --.-- F appellant carries on the business of exhibiting films in a theatre called "Naval Talkies" at Panipat. He had purchased the said building in 1937. It ,, was a ginning factory then. He ran the factory till 1940. In the year 1945, he converted it into a cinema theatre and was exhibiting films therein. During the. period 1960 to March 1961, the assessee extensively repaired G the theatre by expending substantial amounts. The amounts spent by him are: on machinery Rs. 16,002, new furniture Rs. 27,889 sanitary fittings Rs. 5,225 and replacement of electrical wiring Rs. 13,604. In addition thereto, a total amount of Rs. 62,977 was spent on extensive repairs to walls, to the hall, to the flooring and roofing, to doors and windows and to the stage sides etc. Actually the theatre had to be closed during the aforesaid period H for effecting the repairs. ) M/S. BALLIMAL NAVAL KISH ORE v. C.I.T. [JEEV AN REDDY, J.] 181 In the assessment proceedings relating to the relevant assessment A year, the assessee claimed deduction of the aforesaid amount of Rs. 62,977. The Income Tax Officer disallowed the same. According to him it was capital expenditure. On Appeal, Appellate Assistant Commissioner af- firmed the view taken by the Income Tax Officer. On further appeal, however the Tribunal up
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