decided: November 8, 1963.
STEWART SUPPLY COMPANY, INC., PETITIONER,
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
Before LUMBARD, Chief Judge, and MEDINA and FRIENDLY, Circuit Judges.
During the summer of 1956 there was a severe wind and rain storm in the vicinity of the taxpayer's business premises in Niagara Falls, New York. Some months later, in a stretch of cold weather, it was discovered that the front wall of the building was separated from the building and it became necessary to replace the entire wall. The sole issue before us is whether the cost of replacing the wall was an "ordinary and necessary" business expense, deductible from income pursuant to Section 162(a) of the 1954 Internal Revenue Code, as contended by the taxpayer, or as a capital expenditure to be recovered through periodic deductions for depreciation, as contended by the Commissioner and held by the Tax Court. Cases of this type, in which the taxpayer is denied the deduction as an expense, always involve some hardship; but we are persuaded that the substantial expenditure necessary to make the repairs resulted, at least to an appreciable extent, in an increase in the value of the building and prolonged its life. The Tax Court was not bound to accept at face value the testimony of the taxpayer's witnesses to the contrary. We are satisfied that the record supports the conclusions of fact and law arrived at by the Tax Court.
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