*593opinion.
Sternhagen :The expenditures made by petitioner for work and materials necessary to fit the freehold to its permanent use were not ordinary and necessary expenses of carrying on its trade or business within section 234 (a) (1) of the Revenue Act of 1918 and the Revenue Act of 1921. It may be that some part of the amount claimed was spent for ordinary recurring repairs, but such part is not in evidence and hence the entire amount must fall. The mere fact that a permanent improvement does not immediately cause an increase to be made in the assessed valuation for local property-tax purposes does not justify its treatment as an ordinary and necessary expense. The respondent allowed depreciation after treating the expenditure as capital. This is sustained both for 1920 and 1921. The same is true of the expenditures upon the leasehold property, and respondent is sustained.
The petitioner claims for 1921 a deduction in respect of bad debts which is not clear enough to act upon. From the evidence it is impossible to find the amount of deduction properly allowable to petitioner or whether any part thereof has been disallowed by respondent. Because of this uncertainty the respondent is sustained.
Judgment will be entered for the respondent.
Considered by Lansdon, Green, and Aeundell.