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Issues:
Claim for initial depreciation on diesel engines installed in motor-lorries under section 10(2) (vi) paragraph 2. Analysis: The assessee claimed initial depreciation on diesel engines installed in motor-lorries under section 10(2) (vi) paragraph 2. The Income-tax Officer disallowed the claim, which was upheld by the Appellate Tribunal. The assessee contended that since normal depreciation was granted under section 10(2) (vi) clause (1), initial depreciation should also be allowed under clause (2). The argument was supported by referring to rule 8 in the schedule framed under the Indian Income-tax Act. The court noted a significant difference between normal and initial depreciation schemes. While normal depreciation is prescribed, initial depreciation is allowed according to the percentage set out in the section. The court emphasized that any reference to rules framed under the Act would be inappropriate for determining initial depreciation eligibility. The expression "plant" under section 10(5) includes "vehicles" purchased for business purposes. However, the court held that installing an engine in a vehicle does not automatically qualify for initial depreciation, as the engine becomes part of the vehicle and may not be considered separate machinery eligible for such depreciation. The court also rejected the argument that the diesel engines constituted "machinery being new which has been installed." It was emphasized that for machinery to qualify for initial depreciation, it must be a self-contained unit capable of being used for the benefit of the business. In this case, the diesel engines did not meet this criterion. Therefore, the court concluded that initial depreciation is not allowable on the diesel engines installed by the assessee in the motor-lorries. The court answered the question in the negative and directed the assessee to pay the costs of the Commissioner.
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