Law:

Section:

section 33 of the income-tax act, 1961-development rebate-allowance/rate of-whether new machinery installed for construction of bodies for buses, motor trucks, etc., was entitled to higher rate of development rebate under items 10 and 20 of fifth schedule-held, yes Facts The assessee-company, engaged in the business of construction of bodies for buses, motor trucks, etc., on chassis supplied by its customers, purchased and installed a new machinery for this purpose and claimed development rebate at the higher rate under items 10 and 20 of the Fifth Schedule, applicable to machinery used for manufacture, construction or production of motor-trucks and buses and automobile ancillaries. The ITO negatived this claim and allowed development rebate only at the usual rate, but the Tribunal, in second appeal, accepted the assessee's claim. On reference: Held A bus-body can be regarded either as an automobile ancillary or the end result of the construction of the body of a motor truck or a bus on the very skeleton of a chassis. In either event the items of machinery engaged in this kind of process would be entitled to higher rate of development rebate. Hence, the assessee was entitled to development rebate at higher rate. JUDGMENT BALASUBRAHMANYAN, J. - The assessee in this income-tax reference is a company called Simpson & Co. Ltd., Madras. It is engaged in the construction of bodies for buses, motor trucks, etc., on chassis supplied by the customers. For the purposes of this business, the assessee had purchased various items of new machinery like 1 and 3 HP Kirloskar motor, brake press and various other machines and instruments. On the cost of these items of machinery which were newly purchased and newly installed in the assessee's plant, the assessee claimed development rebate at the higher percentage granted under section 33(1)(b)(B )(i) of the Income-tax Act, 1961 ('the Act') read with the Fifth Schedule to the Act. The ITO, however, granted development rebate only at the usual rate and rejected the claim of the assessee for the special higher rate. The Tribunal, in appeal, allowed the assessee's claim, not after an independent consideration of the claim, but…

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