*3989 Union Collieries Co.,3 B.T.A. 540">3 B.T.A. 540, followed.
*942 This is a proceeding for the redetermination of a deficiency in income and profits taxes for the year 1919 in the amount of $3,227.54, of which $2,973.03 is in controversy as the result of the disallowance as a deduction from gross income in the amount of $9,493.28 on account of certain expenditures made by the petitioner during the year 1919 and treated as expenses. The respondent disallowed the deductions on the ground that they were capital expenditures.
FINDINGS OF FACT.
During the year 1919 petitioner was engaged in operating a coal mine and during that year purchased the following items for the prices stated:
| Copper cable and trolley wire | $975.38 |
| Steel rails and ties | 3,403.19 |
| 20 mine cars | 1,613.70 |
| Jeffrey mining machine | 3,501.01 |
| Total | 9,493.28 |
The equipment so purchased was installed in the petitioner's mine. The copper cable and trolley wire was used in extending the motor hauls throughout the workings of the mine and in entering new *943 *3990 rooms. The steel rails and ties were installed in new rooms and in extending the motor hauls. The additional mine cars were purchased because the hauls within the mine were longer and more cars were needed to keep the same capacity of coal on the outside going into the hoppers. The Jeffrey mining machine was purchased and used because the switches in the mine were extended and because the mining machine which the petitioner already possessed could not be brought back from the motor haul on account of certain rules in the miners' organization, and further, because moving the machine over the switch would be expensive and dangerous. The life of a mining machine is several years, and the machine in question is still in operation in petitioner's mine.
The mine in question was opened in 1917 and was extended in 1918. During 1919 extensions were made of approximately 400 feet on the first and second north entry; approximately 400 feet on the third and fourth and fifth and sixth east entry; approximately 300 feet on the first and second east entry; approximately 500 feet on the third and fourth west entry; approximately 130 feet on the fifth and seventh east entry; and approximately*3991 70 feet on the fifth and sixth west entry. The installation of the equipment above was necessary to maintain and operate the mine and was occasioned by the increase of territory within the mine and by the increase of switches.
The petitioner produced tonnage from its mine as follows:
| 1917 | 927 |
| 1918 | 41,419 |
| 1919 | 47,478 |
| 1920 | 65,230 |
In its income and profits tax return for the year 1919, petitioner deducted as expenses the amount of $9,493.28 on account of the purchase of the equipment above set forth. In determining the deficiency in question in this proceeding, the respondent disallowed such amount as a deduction from gross income.
OPINION.
SIEFKIN: The petitioner in this proceeding relies upon article 222 of Regulations 45, and Treasury Decision 3107, issued December 29, 1920 (later included in Regulations 62 and Regulations 65), as authorizing the deduction from gross income of expenditures for items of equipment and plant "necessary to maintain the normal output," and rests its case upon the validity of those regulations. The position is identical with that considered in the *3992 Appeal of Union Collieries Co.,3 B.T.A. 540">3 B.T.A. 540, in which this Board said:
This Board must apply the statute directly to the facts and may not insert into the statute a classification which is not there expressly or by clear implication. *944 When the statute provides for the deduction of ordinary and necessary expenses, the Board will determine whether, all things considered, the expenses in question are such, and this determination should not be made to depend alone upon whether they are major or minor items. Such an inquiry would only inject into the problem an additional question no simpler than the primary question. The article also adds, as a factor of deductibility, that the item is "necessary to maintain the normal output." We think this is unauthorized and to the extent that the opinion in Appeal of Bruin Coal Co.,1 B.T.A. 83">1 B.T.A. 83, adopts this criterion, it is overruled. In the Winifrede Appeal the properties in question, including mining machines, which are also in issue here, had a useful life of several years, and the Board held them to be capital items and their cost not deductible as expenses.
We adhere to the decision in*3993 the above case, and our decision must be for the respondent, no evidence having been introduced which enables us to determine that the items in question were properly deductible in the year in question.
Judgment will be entered for the respondent.