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TMI Blog1981 (10) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... t order dated27-8-1979: "Development rebate - In its revised return the company has claimed development rebate, amounting to Rs. 12,94,254. The details in respect of the above claim have been furnished as under:--- Rs. Plant and Machinery 43,90,186 Cost of cylinders 40,82,383 Elect. Installations 1,55,790 ----------------- 86,28,359 ----------------- As the accounting period of the assessee-company is1-7-1974to30-6-1975and the development rebate was not allowable in respect of the plant and machinery installed after31-5-1975, subject to further condition in which development rebate was allowable in respect of the machinery and plant installed by the assessee between1-6-1974to30-5-1975. The assessee-company was required to furnish details with regard to the conditions laid down in this respect to the effect that machinery and plant had been purchased before 1-12-1973 or the company had entered into contract for the purchase of such machinery or plant with the manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s allowed on an amount of Rs. 36,16,676. The ITO, therefore, held that excessive development rebate was allowed on the cost of cylinders, amounting to Rs. 16,18,206, which were installed after30-5-1975and that such excessive development rebate allowed at 15 per cent on the abovementioned amount of Rs. 16,18,206, amounted to Rs. 2,42,730. Therefore, he called upon the assessee to show cause against the rectification of this mistake. 4. The assessee filed its objections in its letter dated12-9-1979. It stated that it had placed its order for all cylinders in August 1973 ; that while 2,000 cylinders were received in the factory before 31-5-1975, the remaining cylinders had also been paid for on 3-4-1975 and had, thus, become the property of the company before 31-5-1975. The assessee-company, therefore, contended that there was no mistake apparent from the record which could be rectified under section 154. The ITO rejected the assessee's submission and held that the assessee could not be entitled to development rebate only by placing an order or by making payments for such assets but that it would be entitled to such development rebate only when the machines or plants were actually i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under section 154 dated21-11-1979of the Income-tax Officer, Coy. Cir. VIII,New Delhi, withdrawing development rebate amounting to Rs. 2,49,730, @15 per cent on Rs. 16,18,206, representing plant and machinery installed after31-5-1975." 7. Shri S.D. Kapila, the learned departmental representative, contended that the order of the Commissioner (Appeals) annulling the rectification order passed by the ITO was unsustainable both in law and on facts. He contended that on the facts as found by the Commissioner (Appeals) there could hardly be any dispute, debate or discussion about the admissibility or otherwise of development rebate to the assessee. He pointed out that out of 3,785 gas cylinders imported by the assessee 1,785 gas cylinders had reached the assessee's factory premises only on10-6-1975and12-6-1975which was beyond the time limit of31-5-1975specified in section 16(c) of the Finance Act, 1971. Shri Kapila submitted that though the other conditions specified in this provision might have been fulfilled by the assessee, the most important condition, namely, the installation of the machinery or plant by the assessee after31-5-1974but before1-6-1975was not fulfilled. Shri Kapila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner (Appeals) in his order. He, therefore, submitted that the order of the Commissioner was right and that the same should be upheld. 9. We have carefully considered the submissions urged on both sides and looked into the materials placed before us. There is no dispute that the assessee's claim for allowance of development rebate is based on section 16(c) of the Finance Act, 1974, which is quoted below : "16. Continuance of development rebate in certain cases.---The notification of the Government of India in the Ministry of Finance (Department of Revenue and Insurance) No. SO 2167, dated the 28th day of May, 1971, issued under sub-section (5) of section 33 of the Income-tax Act shall not apply in respect of--- (a) (b) (c) any machinery or plant [not being machinery or plant referred to in clause (b)] installed by any assessee after the 31st day of May, 1974, but before the 1st day of June, 1975, if the assessee furnishes evidence to the satisfaction of the Income-tax Officer that before the 1st day of December, 1973, he had purchased such machinery or plant or had entered into a contract for the purchase of such machinery or plant with the manufacturer or own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of this authoritative pronouncement of the Supreme Court on the meaning of the word "installed", we find ourselves unable to agree with the learned counsel for the assessee that 1,785 cylinders in question, which were lying atBombaydocks, should be considered as having been installed within the meaning of section 16(c) of the Finance Act, 1974. Till these cylinders reached the factory premises of the assessee at Nagpur they could not be regarded as having been inducted or introduced or to have been placed in a position for service or use in the business of the assessee before 31-5-1975 in order to be eligible for the benefit of development rebate under section 16(c) of the Finance Act, 1974, read with section 33 of the Act. By no stretch of imagination it is possible to hold that these cylinders which were nearly 600 miles away from the assessee's factory premises were installed in the assessee's business the moment the assessee took delivery of these cylinders at theBombaydocks on2-5-1975. Unless and until these cylinders were actually received in the assessee's factory premises atNagpur, they could not be held to have been available for service or use or inducted or intro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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