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Whether the assessee is eligible for development rebate under section 33 of the Income-tax Act, 1961, with reference to lifts and central air-conditioning plant in Nilhat House. Analysis: The case involved the question of whether the assessee, a tea broker, was entitled to claim development rebate under section 33(1) of the Income-tax Act, 1961, for lifts and central air-conditioning system in a building it constructed and partially leased out. The Income-tax Officer initially disallowed the claim, but the Tribunal allowed it based on a judgment of the Kerala High Court. The assessee argued that the machinery or plant must be used in its entirety to qualify for the rebate, citing interpretations of the words "wholly" and "exclusively." However, the court noted that the section is a concession to the assessee and must be strictly complied with. The court referred to past judgments, including the case of Dalmia Cement Ltd., to emphasize that the machinery or plant must be used exclusively for the business to qualify for the rebate. The court highlighted that the term "wholly used" does not mean "exclusively used" and must be interpreted as "used in their entirety." The Supreme Court's decision in New Savan Sugar Gur Refining Co. Ltd. v. Commissioner of Income-tax was cited to support the requirement of the machinery being new and used wholly for the business. The court agreed with the revenue's contention that the case was covered by previous decisions and that the term "wholly" should be understood as "exclusively." It held that unless the machinery or plant is used exclusively for the business, no development rebate can be allowed under section 33(1)(a) of the Income-tax Act, 1961. The court concluded by answering the question in the negative, in favor of the revenue, and directed each party to bear their own costs. Judge Dipak Kumar Sen concurred with the judgment delivered by Judge S. C. Deb.
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