During the year of assessment 2020, the control panel of one of the lifts at Damelin Braamfontein campus broke down, thus, resulting in students and lecturers continuously ending up on the wrong floors and missing lectures. The parts required to repair the control panel are no longer available in the market. Accordingly, the taxpayer (Damelin Braamfontein) installs a new control panel at a cost of R200 000. The old control panel had a carrying amount of R80 000 for accounting purposes on the date of its replacement.

For accounting purposes, the old control panel is derecognised as an asset in accordance with IAS 16 resulting in a loss on disposal of R80 000. The new control panel has a cost that can be reliably measured, and it is probable that future economic benefits associated with the control panel will flow to the entity, hence it is recognised as an asset at R200 000. Subsequently it is depreciated over its estimated useful life. Assume the depreciation on the new asset for the year is R20 000.

2.1 You are required to determine whether the installation of the new control panel would constitute a repair or improvement as defined. Furthermore, you are required to apply relevant case law in support of your answer (Just a summary of 1 or 2 cases).

2.2 Show how the adjustments for this transaction will be computed for tax purposes in the 2020 year of assessment.