Extensive building repairs may still be revenue expenditure when they preserve existing assets without creating a new advantage.

Expenditure on extensive repairs to an existing office building was held to be revenue in nature because it preserved and maintained the asset without creating additional space, altering its character, or bringing into existence a new asset or enduring advantage. The use of guniting and the fact that the repaired portions appeared new did not change the character of the outlay. Repairs that keep an existing building in usable condition remain deductible as revenue expenditure when they do not amount to structural reconstruction or remodelling.

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Issues: Whether the expenditure incurred on extensive repairs to the assessee's office building was revenue expenditure allowable as a deduction.

Analysis: The expenditure was incurred to preserve and maintain an existing building and to prevent further deterioration. No additional space was created, no structural alteration or remodelling was made, and the process used did not bring into existence any new asset, new advantage, or benefit of an enduring nature. The mere magnitude of the expenditure, the use of guniting, or the fact that the repaired portions acquired a new look did not make the outlay capital in nature. A repair remains revenue expenditure where it keeps an existing asset in usable condition without changing its character or identity.

Conclusion: The expenditure was revenue expenditure and was allowable as a deduction; the answer to the reference was in the affirmative and in favour of the assessee.

Ratio Decidendi: Expenditure incurred for preserving and maintaining an existing building, without creating a new asset or enduring advantage or changing the building's character or identity, is revenue expenditure even if the repairs are extensive or involve a modern process such as guniting.

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