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Assessment of development rebate for air-conditioning machinery used in a bank building partially leased out to tenants. Detailed Analysis: The judgment concerns the assessment year 1960-61 and revolves around the correctness of the development rebate allowed by the Tribunal for air-conditioning machinery in a bank building partially leased out to tenants. The Pandyan Bank Limited, Madurai, claimed both depreciation and development rebate for the machinery's total cost of Rs. 2,31,279. The Income-tax Officer disallowed the development rebate, citing that the machinery was not wholly used for the bank's business due to portions being let out to tenants. The Tribunal, however, overturned this decision, emphasizing that the plant served the entire premises and was integral to the bank's operations, thereby qualifying for the rebate. The statutory provision governing the matter stipulates that development rebate is allowable for machinery installed after March 31, 1954, and wholly used for the business. The Revenue contended that strict compliance with the legislative conditions is necessary for rebate allowance, emphasizing that the machinery must be wholly used for the business. The court highlighted that the letting of a portion of the premises, even if part of the bank's business activities, does not categorize it as business income under the Income-tax Act. The distinction between income from property and business income is crucial in determining rebate eligibility. The court delved into the definition of "business" under the Income-tax Act, emphasizing that income from property, even when derived from letting out a portion of the premises, falls under the property income category, not business income. The judgment underscored that the machinery's eligibility for development rebate hinges on its complete use for the business conducted by the assessee. The court rejected arguments invoking the de minimis principle or substantial compliance, asserting that "wholly used" should be construed strictly without room for interpretation beyond its literal meaning. The court referenced precedents to reinforce its interpretation, emphasizing that the machinery must be used entirely for business purposes to qualify for the rebate. The judgment concluded in favor of the Revenue, ruling that the air-conditioning plant did not meet the criteria of being wholly used for the bank's business due to the portion of premises being leased out. The court's decision highlighted the importance of adhering strictly to statutory conditions for development rebate eligibility, emphasizing the literal interpretation of "wholly used" in determining allowance.
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