In Brief
A textile manufacturing company claimed a deduction of Rs. 26,84,235 for replacement machinery as 'current repairs' revenue expenditure. The Income Tax Authorities and High Court allowed the deduction. The Supreme Court reversed this decision, holding that replacement of an independent machine—where each department performs distinct functions—does not qualify as 'current repairs' under Section 31(i) of the Income Tax Act, 1961. The Court held that 'current repairs' applies only to repair of parts of an existing machine, not substitution of entire independent machines, which constitute capital expenditure.
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