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TMI Blog1992 (1) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... iture ? " The basic facts leading to this reference are : The assessee deals in the business of manufacturing and sale of fire crackers. It had an old petrol van which was used for the purposes of business. A sum of Rs. 20,908 was spent on the said vehicle. The old petrol engine was replaced by a new diesel engine and the old body by a new body. For the assessment year 1976-77, deduction of that amount was claimed under the head " Revenue expenditure ". The Income-tax Officer disallowed the claim on the ground that the expenditure was of capital nature. The disallowance was maintained by the Commissioner of Income-tax. The Tribunal, however, in second appeal, upheld the deduction as revenue expenditure but referred the question since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such expenditure was necessitated to increase the profitability of the business. There is thus no scope to hold the said expenditure to be of capital nature. In a somewhat similar background expenditure incurred for replacing a petrol engine by a diesel engine was held to be of revenue nature by this court in the case of CIT v. Polyolefins Industries Ltd. [1988] 169 ITR 538. We respectfully concur with the basic approach adopted in the above decision. In this context, our attention was drawn by Shri Thakar, learned counsel for the assessee, to section 31 of the Income-tax Act, 1961, which lays down that the amount spent for current repairs to the machinery used for the purpose of business shall be deductible in computing the total income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d old engine was of capital nature : (i) Decision of the Supreme Court in the case of CIT v. Mir Mohammad Ali [1964] 53 ITR 165, (ii) the decision of the Bombay High Court in the case of Maneklal Vallabhdas Parekh v. CIT [1959] 37 ITR 142, and (iii) the decision of the Madhya Pradesh High Court in the case of Ratlam Bone Mills v. CIT [1984] 147 ITR 148. The Supreme Court by a majority view has held that the assessee a transport operator--was entitled to deduction of the extra depreciation allowances under the second paragraph of clause (vi) and clause (via) of section 10(2) of the old Income-tax Act, treating diesel engine as " machinery " and replacement as " installation " as contemplated under the scheme of section 10(2). Almos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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