Current repairs deduction for worn-out machinery parts allowed where replacement only restores working condition, not the whole asset.

Expenditure on replacing worn-out subsidiary parts of machinery was treated as "current repairs" where the work restored the asset's working condition in the ordinary course of use and did not amount to reconstruction of the whole machinery or a substantial part of it. "Repair" was construed to include renewal or replacement of subsidiary parts, while "current" referred to repairs arising during the machinery's working life; the size of the expenditure was not decisive by itself. On that test, replacement of the fire box, head-stock and sublimer was allowable as a revenue deduction because it did not create a new asset or enhance the machinery beyond restoration.

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Issues: Whether expenditure incurred on replacing worn-out parts of machinery constituted "current repairs" deductible under section 10(2)(v) of the Indian Income-tax Act, 1922.

Analysis: The expression "repair" was held to include restoration by renewal or replacement of subsidiary parts of a whole, but not reconstruction of the entirety or substantially the whole machinery. The word "current" was construed to mean repairs arising in the ordinary course of use during the currency of the machinery's life, and not merely petty or minor repairs. The magnitude of the expenditure was held not ative by itself. Applying that test, the replacement of the fire box, head-stock, and sublimer, each being worn-out component parts of larger machinery, did not amount to renewal of the entire machinery or any substantial part of it, and did not create any new asset or enhance the machinery beyond restoration of its working condition.

Conclusion: The expenditure of Rs. 17,256 was deductible as current repairs under section 10(2)(v), and the answer to the reference was in favour of the assessee.

Final Conclusion: The reference was answered by holding that replacement expenditure on worn-out subsidiary machinery parts, when incurred in the ordinary course of use and without reconstruction of the whole asset, is allowable as a revenue deduction.

Ratio Decidendi: "Current repairs" covers replacement of worn-out subsidiary parts of machinery in the ordinary course of use, provided the work does not amount to reconstruction or replacement of the entirety or a substantial part of the machinery.

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