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Claim of development rebate and extra depreciation on new diesel engines fitted to old lorries. Analysis: The case involved a registered firm engaged in the transport business, fitting new diesel engines to old lorries and claiming development rebate and extra depreciation under the Income-tax Act for the assessment year 1955-56. The Income-tax Officer, Appellate Assistant Commissioner, and Income-tax Appellate Tribunal rejected the claim, stating that the new diesel engines did not qualify as machinery under the relevant sections of the Act. The Tribunal specifically noted that the machinery itself, not just a part of it, should have been installed to qualify for the rebate. The Tribunal's decision was challenged through a reference to the High Court. The High Court analyzed the provisions of sections 10(2)(vi), 10(2)(via), and 10(2)(vib) concerning allowances for depreciation and development rebate in respect of machinery or plant. The court emphasized that the assessee is entitled to depreciation allowance and extra depreciation under specific conditions outlined in the Act. Section 10(2)(via) deals with depreciation on newly erected buildings or newly installed machinery or plant, while section 10(2)(vib) pertains to development rebate on new machinery or plant installed after a specified date. The court highlighted the definition of "plant" under section 10(5) and the absence of a specific definition for "machinery" in the Act. Referring to previous judgments, the High Court determined that the fitting of diesel engines into motor vehicles constituted the installation of machinery or plant. The court relied on a previous decision that clarified machinery does not cease to be machinery even when made an integral part of another machine or unit. The court rejected the contention that development rebate and depreciation allowances have different concepts, emphasizing the right of the assessee to claim the rebate within the statutory framework. Ultimately, the court ruled in favor of the assessee, holding that the new diesel engines qualified as machinery, and their fitting into the vehicles constituted installation, entitling the assessee to the claimed benefits. The department was directed to pay the costs of the assessee. In conclusion, the High Court's judgment clarified the interpretation of machinery and installation under the relevant sections of the Income-tax Act, emphasizing consistency in interpreting statutory provisions across different contexts. The decision favored the assessee's claim for development rebate and extra depreciation on the new diesel engines fitted to the old lorries, highlighting the importance of statutory compliance and the definition of key terms within the legal framework.
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