Reviewed by the Special Division. The parties further stipulated in this connection that this Court's decision in Farmers Creamery Co. of Fredericksburg, Va., Docket No. 20716 (14 T.C. 879)—treated $6,280.99 of the petitioner's excess profits tax liability as determined without the benefit of Section 722 for the calendar year 1945 to be nonassessable until after the final disposition of the petitioner's application for relief under section722 by virtue of the privilege of deferment provided for in section 710(a)(5) of the Internal Revenue Code and the petitioner's action in claiming the benefit of such deferment provision on its original excess profits tax return for the calendar year 1945. * * * In the event that the Court should find that the petitioner's applications for relief under section 722 are allowable in whole or in part with respect to any of the calendar years 1942 to 1945, inclusive, the decision to be entered herein should recite that petitioner's correct excess profits tax liability as determined without the application of section 722 is the amount shown in the following schedule: FINDINGS OF FACT.

We agree that Vanalco’s multi-year replacement activities weighs in favor of treating its expenditures as depreciable under § 263. To the extent that the repairs were part of an overall plan, this would also distinguish the present situation fromFarmers Creamery Co. v. Comm’r, 14 T.C. 879 (1950),acq., 1954-1 C.B. 4,nonacq., 1954-1 C.B. 8, which Vanalco cites. In that case, although the tax court held that costs to repair less than half of a floor were deductible, it specifically noted that they "were not made in accordance with any overall plan."Id.at 880.

The Court finds that from the nature of this work it constituted the repair of deteriorated parts of the building and such did not appreciable prolong the original useful life of the property. Farmers Creamery Company of Fredericksburg, Virginia, Petitioner v. Commissioner of Internal Revenue, Respondent, 14 T.C. 879.         Items (1), (2) and (3) above, represent the significant issues of this litigation and will now be treated in that order.

However, similar estimates have been used in diverse other circumstances in which the taxpayer has not clearly shown the proper figure to be used by the Court. See Duke Power Co., 49 T.C. 14, 25-26 (1967), involving a power company's constructive average base period net income; Henry B. Mikelberg, 23 T.C. 342, 352 (1954), affd. 234 F.2d 34 (C.A. 3, 1956), certiorari denied 352 U.S. 968 (1957),involving the amount of a taxpayer's cash hoard; Prosperity Co., 17T.C. 171 (1951), affd. 201 F.2d 499 (C.A. 2, 1953), involving the basis of property; and Farmers Creamery Co. of Fredericksburg, Va., 14 T.C. 879, 883 (1950), involving the amount of loss of depreciated items in inventory. Although the Cohan rule is no longer applicable to the deductibility of expenditures for travel and entertainment (sec. 274(d), it may still be applied in other situations.

However, similar estimates have been used in diverse other circumstances in which the taxpayer has not clearly shown the proper figure to be used by the Court. See Duke Power Co., 49 T.C. 14, 25-26 (1967), involving a power company's constructive average base period net income; Henry B. Mikelberg, 23 T.C. 342, 352 (1954), affd. 234 F.2d 34 (C.A. 3, 1956), certiorari denied 352 U.S. 968 (1957), involving the amount of a taxpayer's cash hoard; Prosperity Co., 17 T.C. 171 (1951), affd. 201 F.2d 499 (C.A. 2, 1953), involving the basis of property; and Farmers Creamery Co. of Fredericksburg, Va., 14 T.C. 879, 883 (1950), involving the amount of loss of depreciated items in inventory. Although the Cohan rule is no longer applicable to the deductibility of expenditures for travel and entertainment (sec. 274(d)), it may still be applied in other situations.

We allowed the deduction even though the soil erosion was not at all the unusual, unexpected, or sudden factor which respondent claims is requisite. See also Farmers creamery Co. of Fredericksburg, Va., 14 T.C. 879; Buckland v. United States, 66 F.Supp. 681 (D. Conn.). We have given full consideration to the entire factual context of the instant case.

There is no magic in labels, and we do not deem it necessary to decide here whether liability under section 16(b) is ‘penal’ or ‘punitive’ or is merely ‘civil’ in nature, as such decision would not be determinative of the issue before us. National Brass Works v. Commissioner, 182 F.2d 526 (C.A. 9); Jerry Rossman Corporation v. Commissioner, 175 F.2d 711 (C.A. 2), reversing 10 T.C. 468; Farmers Creamery Co. of Fredericksburg, Va., 14 T.C. 879. There is nothing in the 1939 Code which per se makes such terminology the touchstone of deductibility or nondeductibility.

Where a violation of the Price Control Act is unintentional, payment in settlement of the alleged violation is a fully deductible expense under section 23(a)(1)(A) of the Code. Pacific Mills, 17 T.C. 705 (1951), affd. 207 F.2d 177 (C.A. 1, 1953); Jerry Rossman Corporation v. Commissioner, supra; Farmers Creamery Co. of Fredericksburg, Va., 14 T.C. 879 (1950). The essential question presented here is whether or not petitioner's violation of the Price Control Act was willful.

The one is a maintenance charge, while the others are additions to capital investment which should not be applied against current earnings. * * * This Court, in applying the above principles, has held that expenditures on property which have been rather large in amount, which were for the purpose of overcoming and correcting a physical fault in land such as ‘cavitations in the overburden‘ which caused cave-ins of the land and structures above the cave-ins, American Bemberg Corporation, 10 T.C. 361, affirmed per curiam 177 F.2d 200; and the seepage of water and other liquids through the earth into buildings, Midland Empire Packing Co., 14 T.C. 635; Farmers Creamery Co. of Fredericksburg, Va., 14 T.C. 879, were essentially in the nature of repairs rather than improvement or replacement. We conclude that the expenditure in question here, for moving earth into ridges and channels to overcome the condition of water erosion which developed in petitioner's five farms after they had been in cultivation for a long time was no more capital in nature than were the expenses in the American Bemberg, Midland Empire, and Farmers Creamery cases, supra.

The petitioner advances a theory that there was an external condition which caused damaged to its floor and that this condition made it necessary to put in a new floor in order to permit it to continue the use of its building in its business. In support of its claim that the expense in question is deductible, petitioner relies on the following cases: American Bemberg Corporation, 10 T.C. 361, affd. 177 F.2d 200; Midland Empire Packing Co., 14 T.C. 635; and Farmers Creamery Co. of Fredericksburg, Virginia, 14 T.C. 879. The petitioner has failed to establish that there was an accelerated deterioration of the original floor caused by an external condition.