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TMI Blog1961 (11) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... for replacing the sleepers. For the same accounting year the assessee incurred an expenditure of ₹ 7,511 for replacing certain parts of engine boilers. The assessee claimed that the expenditure required for changing the sleepers and for repairs of the boilers should be deducted under the provisions of section 10(2) of the Indian Income Tax Act. The claim was rejected by the Income Tax Officer, but on appeal the appellate Assistant Commissioner held that the expenditure should be deducted. The Income Tax department took the matter in appeal to the Appellate Tribunal which allowed the appeal and held that the expenditure incurred by the assessee for replacing the sleepers and for repairs of the boilers cannot be allowed as a deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-53 was revenue expenses permissible as a deduction within the meaning of section 10(2) of the Act ? In our opinion the order of the Appellate Tribunal is vitiated by an error of law. The reason given by the Appellate Tribunal for not allowing these deductions to the assessee is that replacement of sleepers cannot be treated as revenue expenditure and cannot be claimed by the assessee as expenditure incurred in respect of current repairs to building, machinery and plant. The interpretation of the statutory provision has recently been the subject-matter of examination by a division bench of this High Court in Commissioner of Income Tax v. Darbhanga Sugar Co. Limited. It has been pointed out in that case that the expression current re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for replacement of the parts of the boilers for the assessment year 1951-52 and for the cost of two new fire-boxes and for reconditioning of boilers of two old locomotives for the assessment year 1952-53. The view that this High Court has expressed in Commissioner of Income Tax v. Darbhanga Sugar Co. Ltd. with regard to section 10(2)(v) of the Income Tax Act has been followed by a division bench of the Bombay High Court in New Shorrock Spinning and Manufacturing Co. Ltd. v. Commissioner of Income Tax and also by the Nagpur High Court in R. B. Bansilal Abirchand Spinning and Weaving Mills v. Commissioner of Income Tax. The view expressed by this High Court in Commissioner of Income Tax v. Darbhanga Sugar Co. Ltd. is also borne out by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extend beyond the year of assessment, for very many repairs have the result of enabling income to be earned in future years as well as in the year in which they are effected. For these reasons we hold that all the three questions referred to the High Court in this case must be answered in favour of the assessee and against the Income Tax department. In other words, the assessee is entitled to deduct the expenditure of ₹ 31,955 and ₹ 11,400 incurred as cost of replacement of the sleepers for the assessment years 1951-52 and 1952-53, respectively, and deduct the expenditure of ₹ 7,511 for replacement of parts of the boilers for the assessment year 1951-52 and the expenditure of ₹ 15,921 incurred as cost of two new ..... X X X X Extracts X X X X X X X X Extracts X X X X
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