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Issues: Whether the expenditure incurred by the assessee for repairing and renovating the business premises was allowable as a revenue deduction.
Analysis: The expenditure was incurred to restore the premises to a safe and usable condition after a demolition notice, and the repairs were directed to preserving the existing income-earning asset rather than acquiring a new asset or making an improvement in the capital field. The fact that the assessee was a tenant did not alter the character of the expenditure where the repairs were undertaken to maintain the premises for business use. Such repair outlays, even if substantial and involving replacement of structural components, remain allowable where they are incurred to remedy wear and tear and preserve the continued usability of the business premises. The principles governing current repairs and allowable repairs under section 30(a)(i), and alternatively section 37, support deduction where no new asset or enduring capital advantage is brought into existence.
Conclusion: The expenditure was allowable as revenue expenditure and the answer to the referred question was in the affirmative, in favour of the assessee.
Ratio Decidendi: Expenditure incurred by a tenant to restore business premises to a serviceable condition and preserve the existing income-earning apparatus, without creating a new asset or capital advantage, is allowable as revenue expenditure.
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