1963 (2) TMI 69 - HC - Income Tax

Summary

Issues:
1. Claim of initial depreciation on replacement of old bodies on motor vehicles.
2. Interpretation of the term "plant" under section 10(2)(vi) of the Income Tax Act.
3. Comparison with previous judicial opinions regarding initial depreciation on machinery or plant.

Analysis:
1. The assessee claimed initial depreciation under section 10(2)(vi) for replacing old bodies on its buses with new ones to increase passenger capacity. The Income-tax Officer and the Appellate Assistant Commissioner allowed the claim, but the Income-tax Appellate Tribunal reversed the decision, stating that a bus body does not qualify as machinery or plant under the provision.

2. The crux of the issue lies in interpreting whether a vehicle body constitutes "plant" under section 10(2)(vi). The contention was that since sub-section (5) of section 10 includes vehicles in the definition of "plant," each vehicle should be considered a plant, and a new body on a vehicle should also be classified as plant. However, judicial opinions have varied on this matter, with some cases emphasizing that a part of a plant, such as an engine in a vehicle, does not fall under the definition of "plant."

3. Previous cases involving replacement of petrol engines with diesel engines in vehicles have set a precedent regarding the interpretation of "machinery" or "plant" under section 10(2)(vi). The courts have held that a new body on a vehicle cannot be equated to machinery or plant, as it is not a self-contained unit capable of independent use for business purposes. The analogy drawn from other cases involving heavy machinery in manufacturing processes was also deemed irrelevant in the context of vehicle bodies.

In conclusion, the High Court upheld the decision of the Income-tax Appellate Tribunal, denying the initial depreciation claim on the new bodies of the buses. The judgment clarified that a vehicle body does not qualify as plant under section 10(2)(vi) of the Income Tax Act, emphasizing the need for a complete and self-contained unit to be considered machinery or plant for depreciation purposes.