Current repairs may include substantial resurfacing costs where an existing asset is restored without creating a new asset.

Expenditure on resurfacing hotel approach roads was treated as current repairs rather than capital expenditure because it restored an existing asset to efficient working condition after wear and tear without creating a new asset or involving reconstruction. The fact that the work was substantial and would not recur for some time did not prevent it from qualifying as repair. The assessee was therefore entitled to the relevant allowance in respect of income from the leased hotel premises, and the deduction was allowed.

---

---

Issues: Whether the cost of resurfacing the approach roads to the hotel was allowable as current repairs under section 12(4) read with section 10(2)(v) of the Income-tax Act, or was capital expenditure.

Analysis: The income from the leased hotel premises was held to fall under section 12(4), and the assessee was therefore entitled to the relevant allowances under section 10. The decisive question was whether the resurfacing of the roads, though substantial and not likely to recur for some years, was still a repair. Applying the principle that repair expenditure may be allowable even where it is heavy and arises after accumulated wear and tear, the Court held that the work restored the existing asset to a condition in which it could continue to earn income and did not create a new asset or amount to reconstruction.

Conclusion: The expenditure was current repairs and not capital expenditure, and the deduction was allowable in favour of the assessee.

Ratio Decidendi: Expenditure incurred to restore an existing asset to an efficient working condition after wear and tear may be allowed as current repairs even if the amount is substantial and the need for further repair may not arise for some time, so long as no new asset is created and there is no reconstruction.

---