Law: Income Tax Act, 1922

Section: 10(2)(vib)

Section 33, read with section 34, of the Income-tax Act, 1961 [Corresponding to section 10(2)(vib) of the Indian Income-tax Act, 1922] - Development rebate - Assessment year 1958-59 - Whether diesel engine fitted to lorry and electric stove are "machinery" for purpose of section 10(2)(vi) of 1922 Act - Held, yes - Whether therefore, assessee would be entitled to development rebate under section 10(2)(vib) of 1922 Act in respect of diesel engine fitted to their lorry and electric stove, used wholly for business purposes - Held, yes FACTS The assessee-firm derived income from the manufacture and sale of beedies. In the assessment year 1958-59, it purchased (i) a new electric stove; and (ii) a new Mercedes Benz lorry engine. The first was stated to be used for boiling gum powder in hot water for preparing pastes used in packing beedies in labels and wrappers and the second was fitted to the Dodge lorry used for the transport of the beedies and the raw materials. The assessee claimed development rebate on these items. The ITO refused to allow it. The AAC agreed with the ITO. The Tribunal following the decision of the Bombay High Court in Maneklal Vallabhdas Parekh v. CIT [1959] 37 ITR 142, refused to grant the development rebate. On reference : HELD Coming to the facts of the instant case, there was no difficulty about the electric stove. It could be held to be a "plant". Under any circumstances, it could certainly be held to be machinery. There could be no doubt that diesel engine was not a "plant". The question was whether it was a "machinery". On behalf of the assessee it was said that it was a machinery. But it was contended on behalf of the revenue that it was only a part of the machinery and not machinery as such. In ordinary parlance, "Diesel Engine" is considered as a machinery. It is in that sense that the word "machinery" has been used in section 10(2)(vi ) of 1922 Act as well as in rule 8 of the Rules framed under the 1922 Act. The Madras High Court in Mir Mohd. Ali v. CIT [1960] 38 ITR 413 held that a diesel engine was by itself 'machinery' within the meaning of section 10(2)(vi ) and (via) of 1922 Act and continued to be machinery even after it was…

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