## Repairs & Insurance of Machinery, Plant & Furniture [Section 31]

### Deductible: Repairs and Maintenance

The assets must be used for the business of the assessee — passive usage (kept ready for use) also qualifies.
Repairs include renewals and renovations, but NOT complete replacements or reconstructions.
Only current repairs are deductible.
Capital-nature repairs are NOT deductible — they are added to the block of assets (and depreciation is claimed).
Arrears of repairs from prior years may instead qualify under the residuary Section 37(1).

### Deductible: Insurance Premium

Premium paid to insure the assets against damage or destruction is deductible.
Trade association contributions: Contributions to a trade association for insurance — where the loss is indemnified by the association — are deductible even if a part is returnable to the insured in certain circumstances.

Worked example

### Example 1

Repair vs replacement: Replacing worn parts of a machine to restore working condition costs ₹60,000 → deductible u/s 31 as current repairs. Replacing the entire machine with a new one → capital expenditure, capitalised to the block, not deductible u/s 31.

### Example 2

Passive usage: A standby generator kept ready but rarely run is repaired for ₹25,000. → Deductible u/s 31 because passive (ready-for-use) usage qualifies as 'used for business'.

⚠️ Common exam mistakes

Claiming the cost of complete replacement/reconstruction as 'current repairs' — only renewals/renovations qualify, not full replacement.
Treating capital repairs as deductible under Sec. 31 instead of capitalising to the block.
Overlooking that arrears of repairs of earlier years are claimed under Sec. 37(1), not Sec. 31.
Assuming insurance is non-deductible if part of the trade-association contribution is returnable — it is still deductible.

Reference: Section 31 (read with Section 37(1) for arrears) — Income-tax Act, 1961

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Repairs & Insurance of Machinery, Plant and Furniture [Section 31]

Worked example

⚠️ Common exam mistakes