TMI Blog1966 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... this court under section 66(1) of the Indian Income-tax Act, 1922, to be referred to as the Act hereinafter, reads thus : " Whether the amount of Rs. 14,485 being the cost of installation of diesel engines in place of petrol engines of the existing buses was an allowable deduction as revenue expenditure ? " Concisely stated, the facts are as follows : The assessee is a firm of bus operators. Previously their buses were run with petrol engines. In the accounting year relevant to the assessment year (1957-58), the assessee replaced the petrol engines of some of their buses with diesel engines. The cost of installation of the diesel engines amounted to Rs. 14,485. This amount was claimed as a permissible deduction either under section 10( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to deduction under section 10(2)(xv). At present, we have not considered the assessee's case under section 10(2)(xv). as, in our opinion, the Tribunal has not properly considered the assessee's case under section 10(2)(v). The claim under section 10(2)(xv) will arise for consideration only if we reject the assessee's claim under section 10(2)(v). Therefore, the first question to be decided is whether the assessee has justified his claim under section 10(2)(v). In considering a claim for deduction under section 10(2)(v), we do not think that the question whether the expenditure is capital expenditure or revenue expenditure is relevant. Section 10(2)(v) nowhere says that expenditure of a capital nature cannot be brought within the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xv). If the substitution of the new boiler for the old by the assessee can aptly be described as a 'repair' of the machinery, the claim for allowance must be upheld under clause (v) of section 10(2) and no further question whether it is in the nature of capital expenditure or expenditure which is to come out of revenue arises for consideration. It has been held by this court very early in Ratan Singh v. Commissioner of Income-tax that these clauses are disjunctive and even if an assessee fails to establish his claim under clause (v), he would still be entitled to rely upon clause (xv) in support of the deductions claimed by the assessed-company. " In our opinion, the Tribunal erred in addressing itself to the question whether the expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the latter, it should be considered as a replacement or renewal. This is the crux of the matter. But this aspect was completely lost sight of by the Tribunal and it is not possible for us to pronounce on the same without a further statement of facts in this regard. " For the reasons mentioned above, we direct the Tribunal under section 66(4) of the Act, to submit a further statement of facts on the points raised above. If the material on record is not sufficient to submit a statement of facts in this regard, the Tribunal may further enquire into the matter or direct the Income-tax Officer or the Appellate Assistant Commissioner to enquire into that aspect and submit the relevant data to the Tribunal. The further statement of facts wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned are buses and not the petrol engines that were replaced. The replacement of worn out parts of a machinery does not by itself bring a new asset into existence. The fact that an old part of a machinery is replaced by a new part does not mean that a new asset has been brought into existence. In the application of section 10(2)(v) the focus is on the current repairs to buildings, plants or machineries used for the purpose of business and not to any part of them. While effecting current repairs to any machinery old parts may have to be replaced by new parts, sometimes by more efficient parts. If we look at the engines by themselves, there is no doubt that new assets had been brought into existence. But in relation to the bus concerned, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
