KANPUR AGENCIES PRIVATE LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a private limited company and during the accounting period July 12, 1953, to July 1, 1954, relevant to the assessment year 1955-56, it functioned as the sole selling agent of the Muir Mills Company Ltd.

(2.) THE assessee also claimed a deduction of a sum of Rs. 9,560 on account of repairs to the premises employed by it for the purpose of its business. THE premises did not belong to the assessee. It paid rent in respect of it. THE sum of Rs. 9,560 was claimed to have been spent by the assessee on the conversion of some manual latrines into flush latrines and on the replacement of the tiled roofs by cement roofs in some of the labourers quarters THE claim of the assessee was laid under section 10(2) (ii) of the Indian Income tax Act, 1922. It was rejected by the Income-tax Officer, who added the amount to the returned income.

(3.) THEN when we come to the question of the alteration of the main line itself, it must be kept in view that this is not a mere relaying of the line after the old fashion; it is not taking away rails that are worn out or partially worn out, and renewing them in whole or in part along with the whole line. That would not alter the character of the line; it would not affect the nature of the heritable property possessed by the company. But what has been done is to substitute one kind of rail for another, steel rails for iron rails. Now that is a material alteration and a very great improvement on the corpus of the heritable estate belonging to the company, and so stated is surely a charge against capital. All that is done, it will be observed from the details given on page 7 with reference to his matter, is to charge the price of the corpus of the rails and chairs. That is say, the weight in addition to what was the original weight to the rails and chairs. That is the whole charge, and that is a charge made entirely for the improvement of the property, the paramount improvement of the property. Now how that can be anything but a charge against capital I am unable to see, certainly, if you build a new House upon you land, that is an addition to the property, an improvement on the property and never becomes a charge against income. Just as little if you build up a railway upon the line which you possess, and which is a different railway and a much more valuable railway, than that which you remove, just as little can that be a charge against income. It is a material improvement in the subject and consequently must from a charge against capital.