JUDGMENT Oak, C.J.
1. This is a reference under Section 66 of the Indian Income-tax Act, 1922. The assessee is a company. The assessment years are 1957-58 and 1958-59. The company uses certain calendering machines. Certain parts of calendering machines are known as cotton bowls. During the previous year relating to the first assessment year the company spent Rs. 36,186 for purchase of new cotton bowls. During the second year relevant to the second assessment year, the company spent Rs. 7,325 for cotton bowls. The company claimed deduction for these two sums under Section 10(2) (v) of the Act. The claim was disallowed by the Income-tax Officer on the ground that this expenditure was not for current regards. This view was upheld in appeal by the Appellate Assistant Commissioner. But, upon further appeal to the Appellate Tribunal, the assessee was able to persuade the Tribunal that both the items were covered by Section 10(2)(v) of the Act.
2. At the instance of the Commissioner of Income-tax, U.P., the Appellate Tribunal, Allahabad, has referred the following question of law to this court:
"Whether, on the facts and in the circumstances of the case, the expenditure of Rs. 36,186 and Rs. 7,325 incurred by the assessee in replacing the cotton bowls in the assessment years 1957-58 and 1958-59 respectively could be said to be an expenditure for current repairs and as such allowable under Section 10(2)(v) of the Act ?"
When the Tribunal took up the case in July, 1963, it was considered that certain facts relating to the machines must be ascertained for disposing of the assessee's claim for deduction. The Tribunal, therefore, called for a finding from the Income-tax Officer. The Income-tax Officer submitted a report giving certain facts and figures relating to calendering machines and replacement of cotton bowls. On receiving this additional information, the Tribunal proceeded to dispose of the appeal by the assessee on January 15, 1964. The conclusion of the Tribunal was that the assessee was entitled to deduction under Section 10(2)(v) of the Act.
3. Annexure "D" to the statement of the case is a copy of the remand report submitted by the Income-tax Officer. In this report he has given details of various calendering machines owned by the assessee and the replacement of cotton bowls from time to time. One such calendering machine has a width of 52 1/2". This machine was purchased in the year 1924 at a cost of Rs. 32,500. Seven bowls were replaced in five instalments between September, 1945, and July, 1956. The cost of replacement of bowls varied between Rs. 3,255 and Rs. 11,363. The report contains similar details about the cost and time of purchase of other calendering machines and the costs and time of replacement of the bowls relating to those machines.
4. In the light of this information the Tribunal concluded thus :
"Taking an overall picture that cotton bowls are required to be replaced very often, as cotton bowls form part of calendering machines and as the bowls come into constant contact with the cloth they are subject to heavy wear and tear and thus get worn out very often. On these facts the amount expended by the assessee on the replacement of the cotton bowls appears to be in the nature of current repairs ......"
It appears that a cotton bowl constitutes a part of a calendering machine. A cotton bowl is a big iron roller upon which cloth after its manufacture is rolled in order to get final finish. The cotton bowl is subject to constant wear and tear.
5. In Kanga's Commentary on Income-tax, 4th edition, volume I, there is a discussion on current repairs, at page 343 :
"'Repair' and 'renew' are not words expressive of a clear contrast. 'Repair' always involves 'renewal' ; renewal of a part; of a subordinate part... .Repair is restoration by renewal or replacement of subsidiary parts of a whole. Renewal, as distinguished from repair, is reconstruction of the entirety, meaning by the entirety not necessarily the whole but substantially the whole subject-matter under discussion."
In Ramkishan Sunderlal v. Commissioner of Income-tax, [1951] 19 I.T.R. 324 (All.) the assessee running a flour mill spent a sum of Rs. 1,554 in changing certain cables of the flour mill plant. It was found that the total value of the cables was only Rs. 4,537. It was held by this court that the amount spent could not be regarded as current repair and could not be deducted under Section 10(2)(v). The word "repair" is qualified by the word "current". The word "current" restricts its meaning to petty repairs usually carried out periodically and will not include repair or renewal costing a large sum of money which has to be spent after the machine has to be run for a number of years.
6. In the case of L. H. Sugar Factories, [1952] 21 I.T.R. 325 (All.) the assessee owning a sugar factory and oil mill business claimed that the expenditure incurred by it in the re-roofing of labourers' quarters by using new khaprails in place of old ones was revenue expenditure. It was held by this court that the expenditure was neither a revenue expenditure nor expenditure in respect of current repairs.
7. In Kanpur Agencies P. Ltd. v. Commissioner of Income-tax, [1968] 70 I.T.R. 337 (All) the assessee put up flush latrines in place of manual latrines, and fixed cement concrete roofs in place of tiled roofs. It was held that these were not repairs, but capital expenditure.
8. In Commissioner of Income-tax v. Mahalakshmi Textile Mills Ltd., [1967] 66 I.T.R. 710 (S.C.) the assessee carried on the business of manufacture and sale of cotton yarn. It spent Rs. 93,215 for introduction of the casablanca conversion system in its spinning plant. This involved replacement of roller stands and rollers fitted with rubber aprons, removal of ring frames from existing parts, introduction of ball-bearing jockey-pulleys for converting the original band-drivers to tape-drivers and other additions and alterations in the drafting mechanism. It was held by the Supreme Court that these were current repairs to the machinery and plant and the sum of Rs. 93,215 was deductible as expenditure for current repairs under Section 10(2)(v) of the Act.
9. In view of the decision of the Supreme Court in the case of Mahalakshmi Textile Mills Ltd., the view taken by this court in Ramkishan Sunderlal's case, to the effect that the expression "current repairs" must be confined to petty repairs cannot be accepted as good law. The extent of permissible repairs, for purpose of Section 10(2)(v) of the Act, will depend upon the nature of machinery employed by assessee. If a part of a machine becomes unserviceable due to wear and tear, replacement of such part will be covered by the expression "current repairs" for purposes of Section 10(2)(v) of the Act. In the instant case, cotton bowl is a part of a calendering machine employed by the assessee. It is true that a cotton bowl my last for many years. Even so, a cotton bowl becomes unserviceable due to wear and tear, and has to be replaced. Replacement of cotton bowls, under such circumstances is covered by the expression "current repairs". The Tribunal was right in holding that the present case in covered by Section 10(2) (v) of the Act.
10. We answer both the parts of the question referred to this court in the affirmative, and in favour of the assessee. The Commissioner of Income-tax, U.P., shall pay the assessee Rs. 200 as costs of this reference.