1. This is a case stated under Section 66(1) of the Income-tax Act, 1922, hereinafter referred to as the Act.
2. The applicant is a private limited company carrying on business in the manufacture of tents, daris and other like materials. For the purpose ofits business it requires to maintain godowns, ware-houses, dye-houses, etc. The applicant entered into an agreement of lease effective from the 1st of January, 1958, for a period of ten years taking certain premises on lease for the purpose of its business. Under the terms of the lease the lessors were not bound to carry out any repairs of the leased premises. The deed of lease, dated February 28, 1958, provided that if any structural or other repairs of a substanial character were required, the lessees would have the right to vacate the leased premises in which case they would not be liable to rent thereafter. The relevant clause in the deed of lease is Clause (4) which runs as follows :
' That the lessee company will at all times maintain the demised premises in a good tenantable condition (accidents by tempest or earthquake or an act of God or act beyond the control of the lessee exempted) and shall carry out annual repairs and white-washing thereof at the cost of he lessee company without any claim or claim or demand thereof at any time from the lessor-landlords. The lessor-landlords will not be bound to carry out any repairs. If the premises require any structural repairs or other repairs of a substantial character which the lessor landlords are not prepared to carry out, the lessee company will have the right to vacate the leased premises and will give peaceful prossession to the lessor-landlords and in that case the lessee company will not be liable to pay rent for the unexpired lease period from the date of vacating and giving possession.'
3. During the previous year relevant to the assessment year 1958-59, the assessee effected certain repairs to its godowns at a cost of Rs. 15,774 and during the previous year for the assessment of 1960-61 the assessee again effected certain repairs to its dye-houses at a cost of Rs. 10,446. The Income-tax Officer disallowed these expenses on the ground that they were capital in nature, but he allowed depreciation on these amounts at the prescribed rates. It may be noted [that the assessee, being only a tenant of the premises and not the owner thereof, was not entitled to depreciation allowance which it never claimed. Clearly, the allowance of depreciation wrongly made by the Income-tax Officer would not be determinative of the nature of the expenditure.
4. An appeal to the Appellate Assistant Commissioner having proved unsuccessful, the assessee appealed before the Tribunal. It was submitted before the Tribunal that in both the relevant years the roofs of the godowns and the dye-houses had to be entirely replaced as the buildings had become very old. It was further submitted that, in the process of re-roofing, only inferior types of materials were used and no extra expenditure was incurred for improvement of the quality of the structures. The assessee further contended that it was bound to carry out these repairs in terms of the lease and that, as the business could not be carried on without such repairs, it was compelled to incur these expenses. The Tribunal found that the go-downs and the dye-houses were very old building and the roofs had caved in. The Tribunal also considered the submission of the assessee that the lease was only for a short period and that the assessee did not acquire any enduring benefit by incurring these expenses. The total cost of each of the buildings was found to be about Rs. 1,00,000 and, in the opinion of the Tribunal, the proportion of the expenditure on re-roofing was moderate. The Tribunal, it appears, was inclined to allow the expenditure incurred by the assessee in both the relevant years as revenue expenditure, but it felt bound by two decisions of the Allahabad High Court in Ramkishan Sunderlal v. Commissioner of Income-tax,  19 I.T.R 324 and L. H. Sugar Factories and Oil Milts Ltd., In re.,  21 I.T.R. 325 Following these decisions the Tribunal held that the expenditure incurred by the assessee was of a capital nature and it refused to allow the same as a deduction from the total income of the assessee for the respective years.
5. At the instance of the assessee the Tribunal has referred the following question for the opinion of this court :
' Whether, on the facts and in the circumstances of the case, the sums of Rs. 15,774 (1958-59) and Rs. 10,466 (1960-61) represented revenue expenditure deductible in computing the income of the assessee under Section 10?'
6. The question which has been referred to this court is wide enough to include Clauses (ii), (v) and (xv) of Sub-section (2) of Section 10 in its ambit. Sub-section (1) and Clauses (ii), (v) and (xv) of sub Section (2) of Section 10 are reproduced below ;
'10. (1) The tax shall be payable by an assessee under the head 'profits and gains of business, profession or vocation' in respect of the profits or gains of any business, profession or vocation carried on by him.(2) Such profits or gains shall be computed after making the following allowances, namely :--
(ii) in respect of repairs, where the assessee is the tenant only of the premises, and as undertaken to bear the cost of such repairs, the amount paid bn account thereof, provided that, if any substantial part of the premises is used by the assessee as a dwelling-house, a proportional part only of such amount shall be allowed ;....
(v) in respect of current repairs to such buildings, machinery, plant or furniture, the amount paid on account thereof ;....
(xv) any expenditure (not being an allowance of the nature describedin any of the Clauses (i) to (xiv) inclusive, and not being in the nature ofcapital expenditure or personal expenses of the assessse) laid out or expendedwholly and exclusively for the purpose of such business, profession or vocation.'
7. According to the Tribunal allowance for current repairs under Section 10(2)(v) can be made only to an assessee who is the owner of the depreciable asset. On reference to the language of Section 10(2)(v), however, it would be noticed that there is nothing therein to warrant the conclusion that expenditure incurred in respect of current repairs can be allowed only to an assessee who is the owner of the building, machinery, plant or furniture. The only condition which requires to be satisfied before an allowance can be made under this section is that such depreciable asset must have been used for the purpose of business during the relevant year and the repairs effected thereto must be in the nature of 'current repairs'. The connotation of the term 'current repairs ' has come in for interpretation in a number of cases. This court considered the question in the case of Ramkishan Sunderlal v. Commissioner of Income-tax. In that case it was held that the word 'current repairs ' means petty repairs. This is what the learned judges, who decided that case, observed :
' Jn the Indian Income-tax Act, the word ' repair' is further qualified by the word 'current' which would further restrict its meaning to petty repairs, usually carried out periodically, and will not include repair or renewal costing a large sum of money which has to be spent after the machine has been run for a number of years.'
8. This view was followed by the same Bench of this court in another case : L.H. Sugar Factories and Oil Mills Ltd. In re. In that case the assessee ran sugar factories at two places. During the relevant accounting year it was found that the roofs of 34 quarters were altagether replaced. In respect of seventeen of the quarters the old khaprails, were replaced by new khaprails, and, in respect of the remaining seventeen quarters, they were re-roofed with concrete. This court held in these circumstances, that re-roofing of the 34 quarters must have enhanced their value and added to the capital assets of the company. It was also observed that the assessee was entitled to depreciation on the expenditure incurred by it in connection with the repairs. The court, therefore, held that such repairs could not be treated as current repairs and the expenditure was not allowable under Section 10(2)(v) of the Act. The present case, however, stands on a different footing. As already noted, the roofs of the godowns and the dye-houses were replaced as they had become very old and had actually caved in and there is no material on record to warrant the view that the repaires effected to those buildings did, in fact, enhance their value. The expenditure incurred in such replacements merely made the buildings fit to be used for the purpose of the business of the assessee. As we have already said, the assessee was merely a lessee of the buildings in question for a period of ten years and it was not interested in enhancing the value thereof. The decision of this court in the two earlier cases is, therefore, clearly distinguishable.
9. It may be stated here that the assessee did not base its claim before the Tribunal upon Section 10(2)(v). Consequently, we do not propose to consider whether the expenditure incurred by the assessee in effecting, the repairs was in the nature of current repairs within the meaning of Section 10(2)(v). We propose to consider whether the expenditure is allowable under Section 10(2)(ii), or under Section 10(2)(xv), as claimed by the assessee, who is the applicant before us. The terms of Section 10(2)(ii) have, been quoted above. Under Section 10(2)(u) an expenditure is allowable in respect of repairs to business premises of which the assessee is only the tenant and he has also undertaken to bear the costs of such repairs. In the present case, the relevant terms of paragraph 4 of the lease have been quoted above. It would appear that under the terms of the lease the landlords were not bound to carry out any repairs, petty or substantial. There is, however, nothing in the terms of the lease to show that the lessee had undertaken to carry out any structural or other repairs of a substantial character, If the lessors were not prepared to carry out such repairs and the lessees were also not inclined to effect such repairs it was open to it to vacate the leasehold premises. It was no doubt open to the lessee to effect such repairs voluntarily, but if he did so, would not be within the specific terms of Section 10(2)(ii) nor entitled to the benefit thereof. We hold, therefore, that the expenses in question are not allowable under Section 10(2)(ii) of the Act,
10. The point which now remains to be considered is whether the expenditures are. allowable as a deduction under the provisions of Section 10(2)(xv). We have quoted above the terms of Section 10(2)(xv). It would appear therefrom that before an allowance can be made under that section, the following three pre-conditions must be satisfied :
(i) that the expenditure must not be in the nature of an . allowance described in any of the earlier clauses, viz., Clauses (i) to (xiv) ;
(ii) that it must not be in the nature of a capital or personal expenditure ; and
(iii) that it must be laid out expended wholly or exclusively for the purpose of the assessee's business.
11. We have found above that the expenditures claimed by the assessee are not allowable under Section 10(2)(ii). The assessee does not also claim that the expenditure is allowable under Section 10(2)(v). Hence, the first of the aforesaid conditions is satisfied. Now, the question to be considered is whether the other conditions laid down for the allowance of an expenditure under Section 10(2)(xv) apply to the present case, namely, whether the expenditure is in the nature of capital or personal expense of the assessee and whether it was laid out or expended wholly and exclusively for the purpose of the assessee's business.
12. The learned standing counsel for the department contended very strenuously that the expenditure was in the nature of a capital expenditure. He pointed out in this connection that the quantum of the expenditure was quite heavy. He argued that the expenditure of Rs. 15,774 in the first year and Rs. 10,466 in the second year should be considered to be very substantial and such expenditure resulted in the improvement of the structures to an appreciable extent. The learned counsel for the department, therefore, contended that these expenses should be considered to be capital in nature. The contention of the learned counsel cannot, however, be accepted. The test is not whether the expenditure is heavy or small. In the case of Commissioner of Income-tax v. Sri Ram. Sugar Mills Ltd.,  21 I.T.R. 191 a sum of Rs. 86,496 was allowed to be incurred on the replacement, of an old boiler with a new one in a sugar mill under Section 10(2)(xv). The decision of the Madras High Court was cited with approval by a Bench of the Bombay High Court in the case of New Shorrock Spinning and . v. Commissioner of Income-tax,  30 I.T.R. 338. The test is whether the expenditure has resulted in the creation of an asset for the trade of the assessee. As laid down by Viscount Cave L.C. in the case of Atherton v. British Insulated and Helsby Cables Ltd.  A.C. 205in classical terms :
'When an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade....there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital'.
13. The test laid down by Viscount Cave in the above case has been approved by the Supreme Court in the case of Assam Bengal Cement Co. Ltd. v. Commissioner of Income-tax,  27 I.T.R. 34 (S.C.) and other cases. Hence, the point to be considered here is whether the expenditure incurred by the assessee has brought into existence an asset or an advantage for the enduring or permanent 'benefit of the business of the assessee. In this connection it should be remembered that the assessee is merely a lessee of the business premises for a period of ten years with effect from the 1st of January, 1958. The assessee could not, therefore, derive any benefit of a permanent or enduring nature by reason of the replacement af the roofs of the godowns and dye-houses. At the most, the assessee could enjoy such benefit only for the duration of the short period of its lease. It is not, therefore, correct to regard the expenditure in question as capital in nature.
14. As regards the second condition for the allowance of an expenditure under Clause (xv) of Section 10(2) as mentioned above, it was not seriously disputed that the expenditures were incurred wholly and exclusively for the purpose of the assessee's trade. The finding of the Tribunal is that the roofs of the godowns and the dye-houses had become very old and they had caved in. It was, therefore necessary for the assessee, in order that it might carry on its business of manufacture of tents, durries, etc., to ensure that the godowns and dye-houses were kept in a usable condition. Here, the assessee did no more than that and it follows, therefore, that the expenditure was incurred by the assessee for the purpose of its business and for no other consideration.
15. We would, therefore, answer the question in the affirmative and in favour of the assessee The amount of Rs. 15,774 expended by the assessee is allowable as a business expenditure for the assessment year 1958-59 and Rs. 10,466 is allowable as an expenditure of the business for the assessment year 1960-61. The assessee will get costs of this reference from the Commissioner of Income-tax, U.P., Lucknow. We assess such costs at Rs. 200.