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TMI Blog1976 (7) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... ibutions received from the Government or public or local authorities can be deducted in arriving at the actual cost of the machinery for purposes of allowance of development rebate under section 10(2)(vib) ? " The few facts giving rise to this question may be stated : The question relates to the assessment year 1961-62, the corresponding previous year being the year ended on March 31, 1961. The assessee, Bombay Suburban Electric Supply Co. Pvt. Ltd., is a company which generates and distributes electricity. During the relevant previous year the assessee-company installed machinery of the total value of Rs. 53,44,232. It claimed development rebate amounting to Rs. 13,36,060 on the said machinery under section 10(2)(vib) of the Act. Admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 10(2)(vib). The Tribunal accepted the contention and held that the Explanation to section 10(5) had been introduced only for the purpose of defining the words " actual cost " occurring in section 10(5) which opens with the words " For the purposes of this sub-section " and that it could not be given a larger operation than what had been conceived for it by the legislature. It, therefore, held that when the Explanation did not have application, the matter was governed by the decision of this court in the case of Commissioner of Income-tax v. Poona Electric Supply Co. Ltd. [1946] 14 ITR 622 (Bom) and it, therefore, allowed development rebate on the entire value of the machinery without deducting therefrom the contrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of machinery or plant installed after the 31st day of March, 1961, twenty per cent. of the actual cost of the machinery or plant to the assessee ........ " It was relying upon the aforesaid material provisions which are to be found in section 10(2)(vib) that the assessee-company had claimed development rebate on the total value of the new machinery that was installed in the relevant previous year, the total value being Rs. 53,44,232, as according to the assessee-company that was the actual cost of the machinery or plant to the assessee. We may then set out the material Explanation to section 10(5) on which reliance has been placed by Mr. Joshi on behalf of the revenue. It may be stated that sub-section (5) of section 10 is nothing but a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Assistant Commissioner after deducting from the value of the total cost the amount of contribution which the assessee-company received from the Government or public or local authority. It is not possible to accept this contention of Mr. Joshi for more than one reason. In the first place, the Explanation opens with the words " For the purposes of this sub-section " and, therefore, the definition of " actual cost " as given in this Explanation will have to be considered only while considering the expression " paid ", " plant " and " written down value " which have been defined in sub-section (5) of section 10 for the purposes of sub-section (2) of section 10. The expression " written down value " in so far as is material for our purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " actual cost " means nothing more than the actual cost actually ascertained, i.e., the amount paid for the assets. Mr. Joshi then contended that the expression "actual cost ...... to the assessee " occurring in section 10(2)(vib) should normally mean the cost which the assessee had spent from his own coffers and it cannot be said that if part of the cost is met by the assessee by receiving contributions from Government or public or local authority, that part of the cost would be any cost to the assessee. It is not possible to accept this contention for the reason that if once the Explanation to section 10(5) is out of the way as has been decided by this court in Commissioner of Income-tax v. Poona Electric Supply Co. Ltd. [1946] 14 ITR 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding to confine the relief to an aggregate equal to the sum of money which the person has defrayed out of his own resources, the cost of the burden which has ultimately fallen upon him. I confess I do not think that this is the natural meaning of the words. What a man pays for construction or for the purchase of the work seems to me to be the cost to him ; and that whether some one has given him the money to construct or purchase for himself, or before the event has promised to give him the money after he has paid for the work, or after the event has promised or given the money which recoups him what he has spent." Similar expression occurring in section 10(2)(vib) will have, therefore, to be construed as being referable to the cost whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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