COMMISSIONER OF INCOME TAX Vs. MADRAS CEMENTS LIMITED

JUDGEMENT

(1.) THE principal question requiring our consideration in this reference which concerns the assessment year 1986-87 in respect of a cement company which carries on business of manufacturing cement, is as to whether the sum of Rs. 5,31,55,319 invested by it in installing a new cement mill known as "Combidan Cement Mill" during the year 1985, which mill was technologically superior to the four cement mills which it had installed in the years 1961 and 1963 and which four old mills were subsequently sold for Rs. 8,40,024, Rs. 8,75,223, Rs. 11,00,000 and Rs. 20,00,000, respectively, in the years 1987-88 can be regarded as an amount spent on "repairs" and claimed as a deduction under section 31(i) of the Income-tax Act, 1961, hereinafter referred to as "the Act".

(2.) SECTION 31(i) of the Act reads thus :

(3.) THE term "repair" has not been defined in the Income-tax Act. Though section 31(i) refers to "repair", it restricts the deduction allowable under that section to the amount paid on account of current repairs.