SIR SHADI LAL AND SONS, SHAMLI versus COMMISSIONER OF INCOME-TAX, KANPUR

Citation: [1988] 2 S.C.R. 87 · Decided: 27-11-1987 · Supreme Court of India · Bench: M.H. KANIA · Disposal: Dismissed

Judgment (excerpt)

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SIR SHADI LAL AND SONS, SHAMLI 
A 
v. 
COMMISSIONER OF INCOME-TAX, KANPUR 
NOVEMBER 27, 1987 
[M.H. KANIA AND M.N. VENKATACHALIAH, JJ.] 
B 
Income Tax Act, 1961: Section 24(1)(i)(a) and (b)-Tenant 
undertaking to 'bear cost of repairs'-Deduction towards cost of 
'repairs'-Whether owner entitled to claim deduction on assessable 
income-Idea of 'repair' -Meaning of. 
Words & Phrases: 'Repair'-Meaning. 
c 
The appellants, a Hindu undivided family, leased out a house 
owned by them. The covenant in the lease deed stated that the tenant 
will maintain and keep the demised premises in good and habitable 
condition, tenantable, repair, execute all repairs including annual D 
white washing, repairs of electric and sanitary fittings etc. at the 
lessee's expenses, and that the lessors shall undertake at their own cost 
major repairs such as repairs against collapse of the house. 
Originally in the assessments for the years 1954-55, 1960-61 and 
1961-62, the annual letting value of the properly was arrived at E 
Rs.36,000 and a deduction of Rs.6,000 was allowed for repairs under 
s. 24(1)(i)(a) of the Income Tax, Act, 1961. Subsequently, the assess-
ments were re-opened on the ground that the assessee had got excess 
relief. 
In the re-assessments, the Income Tax Officer held that as the F 
lessee had undertaken to keep the premises in good and habitable 
condition, execute all repairs, the deduction of Rs.6,000 was imper-
missible. He accordingly determined the annual letting value of the 
property at Rs.40,000 and allowed a deduction of Rs.4,000 towards 
repairs under s.24(1)(i)(a) of the Act. In the reopened assessment for 
the year 1954-55, the assessee's claim for deduction of Rs.5,645 being G 
the cost of the repairs undertaken by them was disallowed on the 
ground that this was a case where the tenant bad undertaken to bear 
the cost of the repairs and, therefore, the allowance for repairs was 
limited to the limit permissible under s. 24(1)(i)(b). The Appellate 
Assistant Commissioner and the Income Tax Appellate Tribunal 
affirmed the above view. 
H 
87 
A 
B 
88 
SUPREME COURT REPORTS 
[ 1988] 2 S.C.R. 
At the instance of the assessee, the Tribunal stated a case and 
referred it to the High Court which though answered against the 
assessee, granted a certificate under s. 261 of the Act, regarding the 
applicability of s. 24(l)(i)(b) and reconsideration of deduction of the 
expenditure which was not allowed in the original assessment in the 
course ofreopened assessments. 
c 
In the appeal by special leave, it was urged that the covenant for 
repairs embodied in lease deed did not cast the burden to carry out the 
repairs exclusively on the lessee and that since the lessor had also 
undertaken to carry out some of the repairs, s. 24(l)(i)(b) was not 
attracted and the benefit of s. 24(1)(i)(a) was therefore available. 
On the question whether, having regard to the terms of the 
covenant, it could be said that the tenant had undertaken to bear the 
cost of repairs within the meaning, and for purposes, of s. 24(l)(i)(b) 
of the Act. 
r 
D 
Dismissing the appeals, 
HELD: 1.1 This is clearly not a case where the burden of carry-
ing out repairs as understood in the context of s. 24(l)(i)(b) of the 
Income Tax Act, 1961 is shared between the lessor and the lessee. The 
obligation is on the lessee alone. The obligation under the latter part of 
y 
E the covenant does not relate to such repairs. l93G-H] 
1.2 The idea of 'repair' may include replacement or even a 
renewal. But the converse may not be true. All replacements or 
renewals need not necessarily be 'repairs'. In the case of a building, 
restoration of stability of safety of a subordinate or subsidiary part 
F 
of it or any portion of it can be considered as repair while the re-
construction of the entirety of the subject matter may not be so 
regarded. [93B-C] 
A general covenant to repair without any such words as tenan-
table or habitable or good repair is satisfied if the premises are kept in 
G a substantial state of repair. l92H] 
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+ 
Having regard to somewhat comprehensive nature of the obliga-
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lions that go with and are attachment to and recognised under the 
tenant's covenants for 'repairs', it must be held that the covenant in 
the present case is one under which the tenant has undertaken 'snb-
H stantial repairs' and it must, accordingly, be held to fall within clause 
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SHAD! LAL v. COMMR. OF INCOME-TAX (VENKATACHALIAH, J

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