DEHRI ROHTAS LIGHT RAILWAY COMPANY LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this case the assessee is a railway company which runs a railway known as Dehri Rohtas Light Railway over a distance of 37 miles from Dehri-on-Sone to Rohtas in the Shahabad district. During the accounting year ending on the 31st March, 1951, the assessee renewed 5,518 sleepers on this railway line and incurred an expenditure of Rs. 29,927. The assessee also incurred an expenditure of Rs. 2,028 as railway freight for transporting materials for replacing the sleepers. For the same accounting year the assessee incurred an expenditure of Rs. 7,511 for replacing certain parts of engine boilers. The assessee claimed that the expenditure required for changing the sleepers and for repairs of the boilers should be deducted under the provisions of section 10(2) of the INdian INcome-tax Act. The claim was rejected by the INcome-tax Officer, but on appeal the appellate Assistant Commissioner held that the expenditure should be deducted. The income-tax department took the matter in appeal to the Appellate Tribunal which allowed the appeal and held that the expenditure incurred by the assessee for replacing the sleepers and for repairs of the boilers cannot be allowed as a deduction under section 10(2) of the INcome-tax Act.

(2.) FOR the assessment year 1952-53 the assessee had incurred an expenditure of Rs. 15,921 being the cost of two new fire-boxes and the cost of reconditioning the boilers of two old locomotives. During this assessment year the assessee also incurred an expenditure of Rs. 11,400 for the replacement of sleepers. The Appellate Assistant Commissioner allowed these deductions, but on appeal the Appellate Tribunal took the view that these amounts should not be deducted from the income of the assessee as revenue expenditure.