Current repairs on existing assets allowed, but depreciation on land denied absent proof of actual deterioration.

Expenditure on waterproofing and building repairs was treated as current repairs because it preserved and maintained the existing asset, created no new asset, and did not confer an enduring advantage; the disallowance was deleted and the amount was allowed as revenue expenditure. Depreciation on land used for installation of wind energy generators was disallowed because no material showed actual depreciation or deterioration of the land from such use, and land ordinarily does not depreciate in value on that basis; the disallowance was upheld. The appeal therefore succeeded only on the repair expenditure and failed on the depreciation claim.

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Issues: (i) Whether the expenditure incurred on waterproofing and building repair was capital expenditure or allowable revenue expenditure as current repairs. (ii) Whether depreciation of Rs. 9,216 on land used for installation of wind energy generators was allowable.

Issue (i): Whether the expenditure incurred on waterproofing and building repair was capital expenditure or allowable revenue expenditure as current repairs.

Analysis: The expenditure was incurred to preserve and maintain the existing asset and did not result in creation of a new asset or an enduring advantage. The Tribunal applied the principle that waterproofing and similar repairs, when meant to maintain the asset in usable condition, fall within current repairs and cannot be treated as luxury repairs merely because they involve substantial outlay. The reliance placed on a precedent treating the expenditure as capital was found inapposite on the facts.

Conclusion: The expenditure of Rs. 7,96,187 was allowable as revenue expenditure under current repairs and the disallowance was deleted, in favour of the assessee.

Issue (ii): Whether depreciation of Rs. 9,216 on land used for installation of wind energy generators was allowable.

Analysis: No material was shown to establish that the land had suffered depreciation or deterioration because of the installation of plant and machinery. The Tribunal noted that land ordinarily does not depreciate in value by such use and no factual basis existed to support the claim.

Conclusion: The disallowance of depreciation of Rs. 9,216 was upheld, against the assessee.

Final Conclusion: The appeal succeeded only to the extent of the waterproofing expenditure and failed on the depreciation claim.

Ratio Decidendi: Expenditure incurred to preserve and maintain an existing asset, without creating a new asset or enduring advantage, is allowable as current repairs, whereas depreciation cannot be allowed on land absent proof of actual depreciation or deterioration.

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