P.B. MUKHARJI, J.

1. This income-tax reference under s. 66(1) of the IT Act raises the following question of law for decision :

"Whether, on the facts and circumstances of the case, the sum of Rs. 2,17,182 claimed as an expenditure on renovation was allowable as a deduction in computing the business income of the assessee-company ?"

2. The facts briefly are as follows :

The assessee-company, Humayun Properties Ltd., carries on business of cinema exhibitors. Amongst other houses, it is the owner of the two well-known show houses in Calcutta, called the Light House and the New Empire. The accounting year ended on 30th Sept., 1949. During that year of account the assessee incurred certain expenses which it called as "renovation expenses". Under the head "New Empire renovation", the expenditure amounted to Rs. 91,994-10-9 and under the head "Light House renovation", the expenditure amounted to Rs. 1,48,318. The ITO allowed 10% of the claim as current repairs and disallowed Rs. 82,796 for new Empire renovation and also disallowed Rs. 1,34,386 as Light House renovation. The total of these disallowed renovation expenditure amounted to Rs. 2,17,182. The AAC upheld the ITO's disallowance of Rs. 2,17,182. The Tribunal also affirmed the decision holding that the renovation was not in the nature of current repairs within the meaning of s. 10(2)(v) of the IT Act. The Tribunal expressly states that the only question before them was whether renovation was current repairs and whether in part it can be allowed as current repairs. It referred to the decision of Ramkishan Sunderlal vs. CIT (1951) 19 ITR 324 (All) : TC15R.319, a decision of the Allahabad High Court of Mallick C.J. and Bhargava J., and the Madras decision of Satyanarayana Rao J. and Raghava Rao J. in CIT vs. Sree Rama Sugar Mills Ltd. (1952) 21 ITR 191 (Mad).

The main question on this reference is the interpretation of the words "current repairs" in s. 10 (2)(v) of the IT Act which reads as follows :

"Such profits or gains shall be computed after making the following allowances, namely : In respect of 'current repairs' to such buildings, machinery, plant or furniture, the amount paid on account thereof."

3. As usual there are a number of conflicting decisions on the meaning and interpretation of the expression "current repairs". A brief review of them is both inevitable and essential. The first decision is that of the Allahabad High Court in Ramkishen Sunderlal vs. CIT (supra), a decision of the Division Bench of Mallick C.J. and Bhargava J. It quotes the well-known observations of Buckley L.J. in Lurcott vs. Wakely and Wheeler (1911) 1 KB 995 at 923-4 (CA), where it is said that the words "repair" and "renew" are not words of clear contrast, for repair always involves renewal and repair may be restoration by renewal or replacement of subsidiary parts of a whole, and where renewal, as distinguished from repair, is said to be reconstruction of the entirety, meaning by the word "entirety" not necessarily the whole but substantially the whole subject-matter. The Allahabad High Court in Ram Kishen's case (supra) observed :

"In the Indian IT Act the word 'repair' is further qualified by the word 'current' which would further restrict 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 a machine has been run for a number of years."

4. The next case is of the Madras High Court in CIT vs. Sree Rama Sugar Mills Ltd. (supra), a decision of a Division Bench of Satyanarayana Rao and Raghava Rao JJ. There in that case Satyanarayana Rao J. observed at page 197 as follows :

"Renewal is a repair if it is only restoration by renewal or replacement of subsidiary parts of a whole. If, on the other hand, it amounts to a reconstruction of the entirety or of substantially the whole of the subject-matter it is not a repair but a reconstruction. The test, therefore, which decides the question w