Law:

Section:

Section 33 of the Income-tax Act, 1961 (corresponding to section 10(2)(vib) of the Indian Income-tax Act, 1922) - Development rebate - Whether development rebate can be allowed on reconditioned machinery imported into India and used for first time in India provided test as to new machinery laid down by Supreme Court in Cochin Co. v. CIT [1968] 67 ITR 199 stands satisfied - Held, yes FACTS The dispute was as to whether development rebate could be allowed on reconditioned machinery imported into India and used for the first time here. The ITO, while dealing with this question, held that the development rebate would be granted in respect of the reconditioned plant and machinery of the value of Rs. 2.68 lacs less Rs. 20,014, being the cost of the two items of machinery and plant ineligible for the grant of development rebate. He, however, in the operative part of his order, disallowed the development rebate in respect of the entire sum of Rs. 2.68 lacs. The Tribunal dealt with as many as twelve items of machinery for the purpose of development rebate and came to the conclusion that only six items of machinery which had been reconditioned could be treated as new within the meaning of the rule laid down in Cochin Co. v.CIT [1968] 67 ITR 199 (SC). Therefore, the Tribunal concluded that looking to the extent, type and manner of reconditioning, the machines which fulfilled the test laid down in Cochin Co.'s case (supra) were of the value of Rs. 1.62 lacs. Regarding the other items, which were also reconditioned to a substantial extent, the Tribunal took the view that after a lapse of so many years it was not possible to indicate with complete certainty whether all the tests laid in Cochin Co.'s case (supra) were fulfilled. On reference : HELD The test in Cochin Co.'s case (supra), was definitely satisfied so far as the first three items were concerned. On the basis of the facts found by the Tribunal and particularly the fact that the cost of acquiring the plant or machinery so far as these three items were concerned, was insignificant compared to the amounts spent on reconditioning it. Therefore, no legitimate objection could be taken to the first three items. So far as…

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