S. Ranganathan, J.
1. At the request of the Addl. CIT, the I.T. Appellate Tribunal has referred to us the following two questions which arise out of the assessments of M/s. Dyer's Stone Lime Co. (P.) Ltd., for the assessment years 1970-71 and 1971-7 :
'Assessment year 1970-7 :
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the expenditure of Rs. 27,714 incurred by the assessed on the kilns this year would be covered by the term 'current repairs' occurring in section 31(i) of the Income-tax Act, 1961 Assessment year 1971-7 : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the expenditure of Rs. 23,977 incurred by the assessed on the kilns this year would be covered by the term 'current repairs' occurring in s. 31 (i) of the Income-tax Act, 1961 ?'
2. The two questions arise in exactly similar circumstances. The assessed-company carries on the business of manufacture and sale of lime from limestone. It had in all six kilns. During the accounting year which ended on June 20, 1969, it incurred an expenditure of Rs. 27,714.45 in respect of kilns Nos. 3 and 4 and in the subsequent year which ended on June 30, 1970, it incurred an expenditure of Rs. 23,977.45 on kilns Nos. 5&6.
3. The ITO observed that these kilns had originally been lined with ordinary bricks but that the expenditure had been incurred to line them with fire bricks which were 'superior to ordinary bricks both in respect of achieving the quantity of heat and of restoring the normal productive capacity of the kilns'. In his view, thereforee, the expenditure was capital in nature. The AAC confirmed the disallowance by the ITO of the two items of expenditure for more or less the same reasons. He also was of opinion that the assessed had done a complete relining of the kilns with fire bricks of a very superior quality giving an entirely new shape to the kiln enhancing its value as a capital asset and also its efficiency.
4. The assessed filed an appeal before the Tribunal. Before the Tribunal it was urged for the assessed that the ITO and the AAC had failed to appreciate the true nature of the expenditure incurred by the assessed and that they had ignored the fact and details that had been submitted by the assessed. The Tribunal found that the following facts had been placed before the AA :
'(i) Lime Kiln is a cylindrical construction. Lime stone and coal are put into the kiln from the top. The kilns are 40 ft. (in) height, the internal diameter being 12 ft. The outermost layer is of reinforced concrete of thickness of 1'. Next to it is a layer of masonry of about 2' - 6' thickness. Inside this comes the insulation layer of the thickness of 9' thickness. Then comes the innermost layer of the kiln, viz., the lining of refractory bricks of a thickness of 9'. Roughly the top 1/3rd of the kiln is the pre-heating zone. Immediately below, to the same extent, is the calcination zone wherein the temperature of the kiln ranges between 1100 DC to 1300 DC. Beneath this calcination zone is the cooling zone.
(ii) There are openings at the bottom round the kiln from which the claimed lime is taken out. As and when calcined lime is taken out in the space falling vacant limestone is put in at the top. That is to say as the kiln is full all the time, to the extent of the quantity of lime removed from the bottom, further limestone and cola are put in from the top. The process is a continuous one, removal of lime from the bottom taking place along with filling from the top.
(iii) In the process as noted above most of the limestone and coal (filing the 12 feet diameter space) necessarily has to descend by its own weight. In doing so it strikes against the lining on the sides causing damage to the lining. If this is not attended to, the inner insulation layer will be affected and heat cannot be maintained to the extent required for the purpose of conversion of limestone into lime.
(iv) Kilns. Nos. 3 and 4 had been lined in the preceding years with a special type of bricks called red bricks and not ordinary bricks. Lining is done with either high-fired clay material (red bricks) or fire-proof clay material (refractory bricks). Prior to the development of the refractory industry in India, red bricks were being used for lining kilns.
(v) In recent years because of coal shortage and probably the demand for bricks, the quality of red bricks had gone down. But at the same time the price had gone up. Hence, the assessed decide to use refractory bricks for lining. The process of relining is to tear out the old red bricks and replace them with new refractory bricks. Such a process did not contribute to any increased production. The purpose of the lining was purely to protect the insulation and other layers.'
5. It was also stated on behalf of the assessed that kilns Nos. 3 and 4 had been constructed in 1965 and were relined for the first time in 1969, and that kilns Nos. 5 and 6 which had been constructed in 1966-67 had been relined during the accounting year which ended on June 30, 1970. On the strength of the above facts it was contended that the expenditure in question had been incurred not with a view to bringing into existence any asset of an enduring nature but merely to protect and preserve the existing equipment for the manufacture of lime. It was submitted that the mere fact that the expenditure was substantial could not be a circumstance for treating it as capital in nature.
6. The Tribunal, after referring to the decisions of the Supreme Court in CIT v. Mahalakshmi Textile Mills Ltd. : 66ITR710(SC) and CIT v. Atherton West and Co. Ltd. : 82ITR352(All) , observed that the facts placed by the assessed before the authorities below showed that the expenditure had been incurred to protect an preserve the insulation layer of the kiln and that the innermost lining of the red bricks had to be replaced because of the constant wear and tear to which it was subjected in the process of manufacture. The Tribunal also held that in the circumstances of the case the replacement of the lining either with red bricks again or with superior refractory bricks did not bring into existence any enduring advantage or asset. The Tribunal also pointed out that the productive capacity of the kilns had not improved very substantially as a result of these repairs. In the light of these facts and circumstances, the Tribunal came to the conclusion that the expenditure was allowable as current repairs within the meaning of s. 31(i) of the I.T. Act, 1961. The Commissioner is in reference before us.
7. We are of opinion that the conclusion of the Tribunal is essentially a conclusion of fact. We have set out at length the detailed facts of the case as explained by the assessed, before the AAC, and accepted by the Tribunal. This is a case in which the brick kiln is the plant of the assessed. Portions of this plant were getting worn out and damaged on account of coming into contact with high temperature and also as a result of the material being dumped down with force. Periodical repairs were necessary to keep the plant in working order. It has been pointed out that the expenditure in question has been incurred after a period of four or five years. It was only a question of some current repairs having been carried out by the assessed. It has also been pointed out that, in the process, the assessed had not laid out any expenditure with a view to improve the quality of the kiln or its efficiency. Red bricks were replaced by fire bricks or refractory bricks because of the shortage of red bricks. The expenditure had really been incurred only for the purpose of relining the kilns which was necessary to maintain them in working condition. In these circumstances, the Tribunal having accepted the facts urged by the assessed, was clearly right in coming to the conclusion that the expenditure was in respect of current repairs. As pointed out by the Tribunal, the decision of the Supreme Court in Mahalakshmi Textile Mills' case  66 ITR 710 (SC) is directly in point. There are decided cases that the cost of reconstruction of a chimney in a factory, expenses on renovating roofs and flooring expenses, for paneling walls with wood, expenditure for replacing the engine of a bus and the cost incurred by a railway company for reconditioning the engine boilers, etc., are allowable as expenditure on repairs. In the light of these decisions, it is clear that the expenditure in this case, where there has only been a substitution, in a plant maintained by the assessed, of old and worn out parts by new parts, which has not substantially changed the identity of the plant or effected any improvements in its efficiency, is an expenditure on 'current repairs' and hence allowable.
8. We, thereforee, answer the questions referred to us in the affirmative and in favor of the assessed. As the assessed has succeeded, it will be entitled to the costs of these references. Counsel's fee Rs. 350.