Current repairs include replacement of subsidiary parts when restoring an existing asset for continued use, allowing deduction.

Expenditure on replacing railway sleepers, boiler parts and fire-boxes was treated as deductible revenue expenditure because "current repairs" is not limited to minor patchwork. The Patna HC applied the test whether the work merely restores defective subsidiary parts of an existing asset for continued use, rather than replacing the whole or substantially the whole asset. On that footing, replacement of subsidiary parts of machinery or plant can qualify as current repairs under section 10(2)(v), and the assessee's claim was allowed.

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Issues: Whether the expenditure incurred for replacement of railway sleepers, boiler parts and fire-boxes was deductible as revenue expenditure or current repairs under the Income-tax Act.

Analysis: The Tribunal had disallowed the deductions on the view that replacement of sleepers and related parts was not revenue expenditure and did not qualify as current repairs. The Court held that the expression "current repairs" in section 10(2)(v) of the Income-tax Act is not confined to petty repairs and does not exclude replacement of subsidiary parts of machinery or plant. The governing test is whether the work amounts in substance to restoration or replacement of defective subsidiary parts of the existing asset, as distinct from replacement of the whole or substantially the whole of the asset. Applying that test, the replacement of sleepers, boiler parts, and fire-boxes in the relevant assessment years was held to be deductible.

Conclusion: The expenditure was allowable as revenue expenditure and the questions referred were answered in favour of the assessee.

Ratio Decidendi: Replacement of subsidiary parts of an existing asset, if undertaken to restore it for continued use and not amounting to replacement of the whole or substantially the whole asset, is deductible as current repairs or revenue expenditure.

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