JUDGMENT

1. In this reference u/s 66 (1) of the Indian Income Tax Act the Tribunal referred to us a number of questions and it will be convenient to take up each question separately.

2. The assessee is a registered firm and runs the New Kanpur Flour Mills. That the firm had extensive business will be evident from the fact that the turnover for the relevant accounting period, 22nd July, 1943, to 22nd June, 1944, was as much as Rs. 15,38,895.

3. In that year the assessee firm had to spend a sum of Rs. 1,554 in changing certain cables of the flour mill plant.

4. The first question referred to us is:

Whether in the circumstances of the case, the expenditure of Rs. 1,554 on the change of cables of the flour mill plant could be said to be an expenditure over their repairs and as such allowable u/s 10 (2) of the Act?

5. Section 10 (2) of the Act gives a list of the expenses which have to be deducted when computing the profits and gains of the assessee. Section 10 (2) (v) provides for deduction of money spent in respect of current repairs to buildings, machinery, plant or furniture and the amount paid on account thereof.

6. The answer to the question will depend on the view whether the amount spent was in respect of " current repair " or not. In paragraph 6 of the statement of the case the Tribunal has purported to give the facts, but they do not really carry us any further. The Tribunal seem to draw a distinction between renewal and repair and seem to think that when a part is replaced it is not current repair. This view is clearly wrong. The parts that get constantly worn out and have to be frequently changed may be included in current expenditure. The answer would depend in each ease upon the facts of that case. The facts that will have to be taken into consideration are the nature of the repairs, the amount of money spent on it and whether it was a replacement or repair of a part which gets constantly worn out and has to be changed frequently. As was pointed out by Buckley, L.J., in Lurcott v. Wakely & Wheeler [1911] 1 K.B. 905:

'Repair' and 'renew' are not words expressive of a clear contrast. Repair always involves renewal; renewal of a part; of a subordinate part. A skylight leaks ; repair is effected by hacking out the putties, putting in new ones, and renewing the paint. A roof falls out of repair; the necessary work is to replace the decayed timbers by sound wood; to substitute sound tiles or slates for those which are cracked, broken or missing; to make good the flashings, and the like.

...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.

7. In the Indian Income Tax 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.

8. We have already said that no facts are sot out in the statement of the case which are of any assistance, but we find from the order of the Income Tax Officer that the total value of the cables was Rs. 4,537 and the replacement cost Rs. 1,554. That means probably one-third of the cables were replaced by new ones. The question whether the expenditure of Rs. 1,554 amounted to a "current repair" or not was primarily a question of fact and it should not have been referred to us, but since it has been referred we may say that, in our view, the amount could not be deducted u/s 10(2) (v) of the Act.

9. The third and fourth questions referred to us do not also raise any questions of law. The third question is as follows:

Whether in the circumstances of the case, when no entry of the manufactured stock existed in the account as against the expenditure over raw materials, a loss