Current repairs for worn-out lorry bodies remain deductible where replacement only restores vehicles to running condition.

Expenditure on fitting new lorry bodies in place of old, worn-out bodies was treated as current repairs because it merely restored the vehicles to roadworthy and usable condition. The distinction between repair and replacement was applied as one of degree, and the work did not bring into existence a new asset, increase the number of vehicles, or create an enduring addition. The cost was therefore deductible as current repairs and not capital expenditure.

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Issues: Whether the expenditure incurred in fitting new bodies in place of old worn out lorry bodies was allowable as current repairs under section 10(2)(v) of the Indian Income-tax Act, 1922.

Analysis: The expenditure was examined in the context of the nature of a transport business, the relative cost of the replacement compared with the cost of a new vehicle, and the function served by the lorry body in keeping the vehicle roadworthy and usable. The reasoning treated the distinction between repair and replacement as one of degree, and held that renewal of a worn out body, without acquisition of a new vehicle or addition to the number of vehicles, could still constitute current repairs where the work merely restored the vehicle to running condition.

Conclusion: The expenditure was allowable as current repairs and was not capital expenditure.

Final Conclusion: The reference was answered in favour of the assessee, holding that the cost of replacing the worn out lorry bodies was deductible as current repairs.

Ratio Decidendi: Expenditure incurred to restore a commercial vehicle to efficient running condition by replacing a worn out component, without bringing into existence a new asset or enduring addition, is allowable as current repairs rather than capital expenditure.

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