Law:

Section:

Section 31 of the Income-tax Act, 1961 [Corresponding to section 10(2)(v) of Indian Income-tax Act, 1922] - Repairs and insurance of machinery, plant and furniture - Assessment year 1961-62 - Assessee, a co-operative society, engaged in transport of goods and passengers, completely renovated body of some motor vehicles by putting in a new body on old chassis - Whether assessee would be entitled to claim deduction of expenditure of such current repairs - Held, yes Section 32 of the Income-tax Act, 1961 - Depreciation - Allowability/Rate of - Assessment year 1961-62 - Co-operative societies were made liable to tax for first times in relevant year - Assessee-society engaged in transport of goods and passengers filed its return claiming depreciation - Whether in view Supreme Court's decision in case of CIT v. Straw Products Ltd. [1966] 60 ITR 156 depreciation was to be allowed on original cost of assets - Held, yes FACTS The assessee was a co-operative society, engaged in transport of goods and passengers was made liable to be assessed to tax for the first time in the relevant year. The assessee claimed deduction of depreciation on the original cost of assets and also expenditure for current repairs. The claim was disallowed by the revenue. On reference : HELD In view of the Supreme Court's decision in the case of CIT v. Straw Products Ltd. [1966] 60 ITR 156 (SC) the depreciation was to be allowed on the original cost of asset. On question of repairing expenditure, the finding of the Tribunal was that the assessee completely renovated the body of a certain motor vehicle by putting in a new body on an old chassis. The broad test to find out whether it is a repair is to see whether what has been done is to an existing asset and that by doing the thing, the result is not the creation of a new asset. In CIT v. Sheikhupura Transport Co. Ltd.[1961] 41 ITR 336 (Punj.), the bodies of lorries were renewed and the decision was that in amounted to current repairs within the meaning of section 10(2)(v). That case had direct application here. In Hanuman Motor Service v. CIT [1967] 66 ITR 88 (Mysore) the Mysore High Court pointed out that in finding out whether a given case…

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