AI Drafter 
TaxTMI 
TaxTMI 
1955 (9) TMI 58
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....) and about 11% in the third instance (sublimer). It was not doubted that the replacements of the parts became necessary because of fair wear and tear. We held that the expenditure fell within section 10(2) and allowed its deduction in computing the assessable profits of the respondent company. We expressed our decision in the following words:- "The Appellate Assistant Commissioner says 'current repairs' in section 10(2)(v) means only petty repairs carried on periodically and will not include repairs or renewals costing a large sum of money which has to be spent after the machine has been run for a number of years. The section itself says nothing about the magnitude of the expenses. In this case, however, the cost of repairs is only a small fraction of the cost of machinery. There is no case here of renewal of the entire machinery. Where a worn out part is renewed, the effect on the machinery taken as a whole is only repair. The Appellate Assistant Commissioner does not explain what 'periodically' means. Is the period to be less than a year or may it be one or two or three years;....
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....he Commissioner has sent no reply. The assessee has no comments to offer. The statement of the case will now be submitted to the High Court. R. J. Bahadur, for the Commissioner. N. L. Untwalia, for the assessee. JUDGMENT RAMASWAMI, J.- In this case the assessee claimed before the Income-tax authorities that a sum of Rs. 17,256 was spent on machinery repairs and that the amount should be deducted from taxable income under section 10(2)(v) of the Income-tax Act. According to the assessee, a sum of Rs. 4,200 was spent for replacing a fire box for locomotive, a sum of Rs. 8,714 for replacing a cast iron head-stock for rollers and a sum of Rs. 4,336 for purchase of a cast iron sublimer (for generating sulphur gas). It was claimed that these replacements were necessary because of fair wear and tear. The Income-tax Officer held that the deduction was not permissible. The assessee took an appeal to the Appellate Assistant Commissioner. It was contended on assessee's behalf that the parts purchased were component parts of a larger plant and the replacement was necessary because the parts had become worn out and that the replacement did not enhance the value of the machine....
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....word "current"? I shall first take up the meaning of the word "repair". From the etymological standpoint, the word "repair" is derived from Old French reparer which in its turn is derived from the Latin word reparare, which means "to make ready or to put in order." According to the New Oxford Dictionary, the word "repair" means "to restore to good condition by renewal or replacement of decayed or damaged parts" or "to renew or renovate some thing or part," In an English case, Lurcott v. Wakely and Wheeler*, a question arose as to the interpretation of a covenant between landlord and tenant which required the latter to "substantially repair and keep in thorough repair and good condition the demised premises". At page 923 Buckley, L.J., states: "'Repair' and 'renew ' are not words expressive of clear contrast. Repair always involves renewal; renewal of a part; of a subordinate part. A skylight leakes; repair is effected by hacking out the putties, putting in new ones, and renewing the paint. A roof falls out of repair; the necessary work is to replace the decayed timbers by sound wood; to subs....
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....inistration. The fact that the wear although continuous is not and cannot be made good annually does not render the work of renewal when it comes to be effected necessarily a capital charge. The expenditure here in question was incurred in consequence of the rails having been worn out in earning the income of previous years on which tax had been paid without deduction in respect of such wear, and represented the cost of restoring them to a state in which they could continue to earn income. It did not result in the creation of any new asset; it was incurred to maintain the appellants' existing line in a state to earn revenue. The analogy of a wasting asset which appears to have affected the minds of the Special Court has really no application to such a case as the present." On behalf of the Income-tax Department, Mr. R.J. Bahadur referred to a decision of Rowlatt, J., in O'Grady v. Bullcroft Main Collieries Ltd.* In that case, the assessee had replaced a chimney which had become unsafe by a new chimney, erected on an adjacent site. The company claimed as a deduction in computing its profits that part of the cost of the new chimney which was charged in its accounts for the....
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....rule 3(d)" and "having regard to the size and importance of the new barrier in relation to the factory as a whole" the barrier itself must be regarded as an entirety. It is obvious that the decision of Donovan, J., in Phillips v. Whieldon Sanitary Potteries Ltd.* was given on the particular facts of that case and no principle of law can be extracted from that decision. I shall next examine the meaning of the word "current" in section 10(2)(v) of the Income-tax Act. According to the New Oxford Dictionary, the word "current" is derived from the Latin word currere "to run" and Old French word corant, which is present participle of courir. The word "current", therefore, literally means "running". According to the lexicographic meaning "current" must be interpreted as "running in time, belonging to the present time". I, therefore, think that the expression "current repairs to machinery" which occurs in section 10(2)(v) must be interpreted to mean repairs to machinery in the current accounting year. In other words, "current" is used in contradistinction to past or arrear repairs. In the Madras case, Commissioner of Income-tax and Excess Profits Tax, Madras v. Sri Rama Sugar Mills, Ltd....