Law: Income Tax Act, 1961

Section: 31,37,37(3A),43,43(3),37(3B)

Income-tax-----Business expenditure---Repair---Ceiling on expenditure---Scope of S.37(3A)---Section 37 applies only to expenses not falling under Ss.30 to 36---Expenditure on repair of-plant and machinery is deductible under S.31-­Motor cars constitute plant---Expenditure on repair of cars is not subject to ceiling prescribed by S.37(3A)----- Indian Income Tax Act, 1961, Ss.31 & 37-­[CIT v. Navodaya (1997) 225 ITR 399 (Ker.) overruled and CIT v. Travancore Cements Ltd. (1999) 240 ITR 825 (Appendix) (infra) reversed]. Section 31 of the Income Tax Act, 1961, allows deduction of expenditure on repairs and insurance of machinery, plant and furniture. 'Plant' is defined in section 43(3) of the Act. It includes all motor vehicles including motor car. A plain reading of subsection (1) of section 37 would make it clear that the deductions referred to under sections 30 to 36 are excluded from the purview of section 37(1). Section 37(3A) of the Act provides that notwithstanding anything contained in subsection (1), 20 per cent. of any expenditure in excess of Rs.1 lakh incurred by an assessee in respect of one or more of the items specified in subsection (3B) shall not be allowed as deduction in computing the business income. Clause (ii) in subsection (3B) specifies one such expenditure as "running and maintenance of aircraft and motor cars". The expenditure on repairs contemplated under section 31 is entirely different from the expenditure towards maintenance contemplated in section 37(3B). From the dictionary meaning of these two expressions it is very clear that the expression "repair" presupposes certain injury or partial destruction. But the expression "maintenance" does not do so. It means to keep a particular thing in its similar state. Hence, the expenditure on "repairs" dealt with under section 31 of the Act is entirely different from the expenditure on maintenance covered by subsections (3A) and (3B) of section 37. The non obstante clause in section 37(3A) cannot have any overriding effect in respect of the other provisions pertaining to the allowances of expenditure under sections 30 to 36 of the Act. The expenditure towards repairs and premium paid…

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