TMI Blog1990 (12) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case, the order of the Tribunal allowing the unabsorbed development rebate in respect of the plant and machinery not installed by the assessee under section 33 (1) of the Income-tax Act, 1961, was legal and proper ?" The Tribunal referred the question at the instance of the Revenue to the High Court under section 256(1) of the Income-tax Act, 1961 (for short "the Act"), which reads thus (at p. 688 of 100 ITR) : "Whether, in the facts and circumstances of the case, the order of the Tribunal holding that the conditions under section 33(1) of the Income-tax Act are satisfied, is legal and proper?" The appellant-assessee is a registered partnership firm under a deed executed and registered on November 10 . 1958, between Prayagchand Periwal and Hanumanmal Periwal and Messrs. Periwal and Co. P. Ltd. having its business at Purnea in Bihar State. It derives income from the business of cold storage. Messrs. Prayagchand Hanumanmal, a partnership firm, consists of Prayagchand and Hanumanmal Periwal with 50 per cent. share each and started its business with its head office at Calcutta and a branch office at Purnea. It started functioning with effect from May 3, 1956. The bran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he request of the Revenue, the Tribunal referred the question as indicated above and the High Court reframed the question extracted hereinbefore and answered with the finding in favour of the Revenue and against the assessee with the reasoning that the old firm retained its identity carrying on its business separately at Calcutta. It was a separate entity for the purpose of taxation. The whole firm was not reconstituted. The business at Purnea was carried on by a new reconstituted partnership firm which itself claimed to be a separate identity under the Income-tax Act and claimed separate registration and was separately assessed to income-tax. An assessee who installed the new plant or machinery must carry on the business with them in order to get development rebate and he must not transfer them before the expiry of eight years. If the identity of the two firms was different, as assessable identity was clearly so ; then it was plain that, in respect of the plant or machinery installed by the old partnership firm at Calcutta, the new firm at Purnea, a distinct and different assessable identity, could not claim development rebate either under the repealed Act or the Act. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by section 6 of the Finance Act, 1961, with effect from April 1, 1961, which is relevant for the purpose of this case, and read thus : " 10. (2) Such profits or gains shall be computed after making the following allowances, namely: (vib) in respect of a new ship acquired or new machinery or plant installed after the 31st day of March, 1954, which is wholly used for the purposes of the business carried on by the assessee, a sum by way of development rebate in respect of the year of acquisition of the ship or of the installation of the machinery or plant, equivalent to, Section 33(1) of the new Act reads : "33.(1) In respect of a new ship acquired or new machinery or plant (other than office appliances or road transport vehicles) installed after the 31st day of March, 1954, which is owned by the assessee and is wholly used for the purposes of the business carried on by him, a sum by way of development rebate, equivalent to". The other sub-sections are not relevant. Hence, omitted. Under both the repealed Act as well as the Act, two conditions precedent are required to be fulfilled for entitlement to development rebate, namely, a new ship acquired or new machinery or plant inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and use of the asset in the business are disrupted or a branch Of an earlier business is taken over by a new firm which exists simultaneously with the other branches of the old business, the benefit of development rebate under section 33(1) does not extend to either firm. Take, for instance, a case where an assessee leases the asset to another person during the previous accounting year, the use of the plant and machinery is not for the business of the assessee for which the development allowances were accorded under section 33(1) since the machinery was not Wholly used by the assessee for his/its business during the previous accounting year. Suppose the plant or machinery was used for a purpose other than the business of the assessee, then also the assessee is not eligible for development rebate, obviously for the reason that the plant or machinery Was not used for the purpose of the business of the assessee in the previous, accounting year or a portion thereof. The crucial question, therefore, is whether the appellant is the owner of the machinery and plant in the relevant assessment year 1962-63. Acquisition of ownership is a condition precedent for availing of the development r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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