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TMI Blog1960 (9) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary to state the facts which lie in a very short compass. The assessee runs a bus service. In the account year, he spent ₹ 21,855 in replacing the petrol engines of three, of the buses by diesel engines, as the former were worn out beyond repair. The cost of the two new diesel engines was ₹ 17,415. In computing the income from the bus service, the assessee claimed a deduction of ₹ 21,855 under sections 10(2)(v), 10(2)(xv), 10(2)(vi ) and 10(2)(vi-a), the last claim bearing on the initial and additional depreciation aggregating ₹ 17,415. The claim as made by the assessee was wholly rejected but here we are concerned only with the third head of the claim as the question referred to us by the Tribunal concerns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inery, plant or furniture being the property of the assessee, a sum equivalent, where the assets are ships other than ships ordinarily plying on inland waters, to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed and in any other case, to such percentage on the written down value thereof as may in any case or class of cases be prescribed. This clause deals with normal depreciation allowance, which has to be computed in terms of rule 8 which has been framed by the Government of India in exercise of the powers conferred on them by section 59 of the Act. Paragraph 2 of clause (vi) reads: And where the buildings have been newly erected, or the machinery or plant being ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction of a building or installation of the plant or machinery between the dates indicated therein in the shape of initial and additional depreciation allowances. We are here called upon to decide as to whether the language of these two clauses warrant the grant of depreciation allowances in regard to diesel engines fitted into motor vehicles or in regard to parts of a plant or machinery, however substantial they may be. On this question, as we have already stated, there is conflict of judicial opinion between two of the High Courts in India, the Madras High Court taking the view that the word machinery includes a diesel engine replacing a petrol engine found to be worn out, while the Bombay High Court expressed a contrary opinion. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , depreciation allowance is admissible even under the first paragraph of that clause. The depreciation has to be judged with reference to the plant or machinery taken as a unit and not with reference to its component parts. It is the written down value of the whole vehicle, plant or machinery that would be the basis for computation of the depreciation allowance. There could be no written down value in respect of each of the parts of a plant including vehicle or a machinery. We are inclined to the view that the expression machinery denotes machinery as a unit . We, therefore, feel that a diesel engine fitted into a motor vehicle is not comprehended within the scope of machinery in clause (vi) and, as such, the normal depreciation allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There can be no dispute that the ordinary meaning of machinery includes the working parts of a machinery which are utilised or the component parts of a machinery or plant. But that is not decisive of the matter, since we have to construe the word with reference to the language of the clauses and the scheme of the section. Nor do the remarks of the Court of Appeal in Madan and Ireland Ltd. v. Hinton [1958] 38 ATC 317 assist us very much in this enquiry. The question that posed itself in that case was whether the expenditure incurred for purchasing knives and lasts, which were inserted into a machinery, would constitute capital expenditure. The considerations pointed out in the context of the first paragraph of clause (vi) are pertinent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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