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TMI Blog1982 (8) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... 500 and he also incurred a sum of Rs. 3,854 towards the labour for fitting the new engine. The petrol engine was sold for Rs. 4,000 and after setting off this amount against the replacement expenditure of Rs. 26,359, he claimed the balance of Rs. 22,359 as a revenue expenditure in computing the income from profession for the previous year ended 15-5-1978, corresponding to the assessment year 1979-80. The ITO was of the opinion that the replacement was not by way of repairs and that it had brought into existence a new asset with benefit of enduring nature and, therefore, the expenditure should be disallowed as capital in nature. On appeal, the AAC followed the decision of the Andhra Pradesh High Court in the case of Nathmal Bankatlal Parikh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3.31 per litre, whereas the diesel engine would give 14 kms. per litre which cost only Rs. 1.39 per litre. The recurring expenditure of the assessee who in the practice of his profession had to travel by his own car from Erode to Madras, Trichy, Coimbatore, Salem and Mysore, etc., was thus considerably reduced and that was the sole benefit that the assessee derived, though it is possible that the value of the car had also been increased. The assessee did not capitalise the expenditure by adding it to the cost of the car but claims that the expenditure should be allowed as a deduction in computing the income from the profession. If the replacement can be considered to be for current repairs to the machinery, the expenditure incurred coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Madras High Court has observed in the case of CIT v. Mahalakshmi Textile Mills Ltd. [1965] 56 ITR 256, subsequently affirmed by the Supreme Court in CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710, as follows : "... The replaced part may be new and may be a new asset ; but having regard to the nature of the expenditure, one should consider the productive unit as a whole and not pick out parts therein which are new. If such a view is taken, then even the replacement of parts which are really in the nature of current repairs can be held to be not eligible for the allowance under section 10(2)(v), for as the part is undoubtedly new, it is a new asset and because of its newness it confers some advantage. That does not appear to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the cases of Nathmal Bankatlal, Addl. CIT v. Desai Bros. [1977] 108 ITR 14 (Guj.) as well as Hanuman Motor were concerned with the cases of replacement of old and unserviceable petrol engine by a new diesel engine which could be regarded as a repair or replacement whereas in the present case a new petrol engine was replaced by a new diesel engine which must be accepted to have given the assessee an added advantage. It was pointed out that in the case of C.P.A. Yoosuf, the Kerala High Court directed the Tribunal to find whether the petrol engines in that case had become disused and whether there was any need for substituting them by diesel engines for purposes of preserving and maintaining the existing buses. It was submitted that since in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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