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TMI Blog1974 (11) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... s the appellant is the Commissioner of Income-tax (Central), Madras. In respect of the assessment year 1961-62, the Tribunal allowed the claim of the assessee for development rebate on the new diesel engines installed by the assessee in its vehicles. The Tribunal, however, dismissed a similar claim made by the assessee in the assessment year 1962-63 when the Income-tax Act, 1961, had come into force. Two questions were referred to the High Court, one in each of these two cases; both questions involve similar query though they are framed somewhat differently because of the contrary decisions out of which the references arise. In Civil Appeal No. 211 of 1970 which relates to the assessment year 1961-62, the question referred under section 66( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed this claim and his order was affirmed by the Appellate Assistant Commissioner on appeal. The Tribunal in this case held that a diesel engine by itself might be machinery but, when fitted to a road transport vehicle, it became part of the vehicle and the question of development rebate had to be considered in such a case in regard to the larger unit, namely, the road transport vehicle on which no development rebate was admissible under section 33 of the Income-tax Act, 1961. On this view the Tribunal affirmed the order disallowing the claim. The High Court answered the question referred to it in each case in favour of the assessee and disposed of the two references in identical language. The judgment of the High Court in both cases rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch governs the case of the assessee as regards the assessment year 1961-62, was inserted in section 10(2) with effect from April 1, 1955, and that clause as originally introduced was again substituted by a new one in 1958. The provisions of section 10 of the Indian Income-tax Act, 1922, applicable to the assessee's claim in the assessment year 1961-62, are as follows: "10. Business.--(1) The tax shall be payable by an assessee under the head 'Profits and gains of business, profession or vocation' in respect of the profits or gains of any business, profession or vocation carried on by him. (2) Such profits or gains shall be computed after making the following allowances, namely:--...... (vib) in respect of a new ship acquired or new ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause with effect from April 1, 1960, no development rebate could be claimed in respect of road transport vehicles in the assessment year 1961-62. Counsel for the assessee contended that the diesel engines in regard to which development rebate had been claimed retained their character as machinery though they were fitted to the transport vehicles and accordingly, the argument proceeded, the proviso taking away the right to development rebate in respect of road transport vehicles had no application. We do not consider the argument sound. Clause (vib) allows development rebate in respect of new machinery or plant which was used for the purpose of the business carried on by the assessee. In this case it is not claimed that the diesel engines as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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