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Issues: Interpretation of section 33(6) of the Income-tax Act, 1961 regarding the allowance of development rebate in respect of meters installed in office and residential premises of consumers.
Analysis: The judgment pertains to a reference made by the Revenue under section 256(1) of the Income-tax Act, 1961, concerning the assessment years 1972-73 and 1973-74. The central question posed was whether development rebate is permissible for meters installed in residential and office premises of consumers under section 33(6) of the Act. The assessee, an electric supply undertaking, claimed development rebate for meters installed at consumers' premises, which was initially allowed by the Income-tax Officer but later challenged by the Commissioner of Income-tax. The Tribunal ruled in favor of the assessee, allowing the development rebate on meters not installed in the assessee's office or residential premises, leading to the current reference before the High Court. The crux of the issue revolved around the interpretation of section 33(6) of the Income-tax Act, 1961, which restricts the allowance of development rebate for machinery or plant installed after March 31, 1965, in office or residential premises. The court deliberated on whether the term "any office premises or any residential accommodation" encompasses premises of the assessee or extends to premises of other individuals as well. The court emphasized that the intention behind section 33(6) is to prevent claiming development rebate for certain machinery in the assessee's own office or residential premises, rather than premises of third parties utilized for business purposes. The court highlighted the statutory duty of the electric supply undertaking to provide energy to consumers, necessitating the installation of meters at consumer premises. It differentiated between essential machinery like meters, crucial for business operations, and luxury items such as air-conditioners or room heaters. The judgment clarified that the disallowance under section 33(6) applies to machinery in the office or residential premises of the assessee, whether owned or occupied, and not to premises of unrelated individuals used for business purposes. In conclusion, the court ruled in favor of the assessee, affirming that development rebate is allowable for meters installed at consumer premises, not constituting the assessee's office or residential premises. The judgment emphasized the specific application of section 33(6) to the assessee's premises, excluding premises of third parties utilized for business activities. The decision provides clarity on the interpretation of the provision and its scope concerning the allowance of development rebate for essential machinery installed outside the assessee's own premises.
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