COMMISSIONER OF INCOME TAX, MADRAS versus M/S. RAMBAL PRIVATE LTD. ETC.

Citation: [1997] SUPP. 3 S.C.R. 366 · Decided: 06-08-1997 · Supreme Court of India · Bench: B.N. KIRPAL · Disposal: Dismissed

Judgment (excerpt)

A 
COMMISSIONER OF INCOME TAX, MADRAS 
v. 
M/S. RAMBAL PRIVATE LTD. ETC. 
AUGUST 6, 1997 
B 
[B.N. KIRPAL AND K.T. THOMAS, JJ.] 
Income Tax Act, 1961 : 
Section 33(J)(a), Fifth Schedule, Item No. 20--Machinery installed 
C before 1-4-1970 for manufacturing 'automobile ancillaries'-Development 
Rebate-Assessee claiming rebate at the rate of 35o/o-Revenue allowing the 
rebate only 20% on the ground that the machinery which was installed was 
being used not only for the manufacture of items falling in the Fifth Schedule 
but also for the manufacture.of some other items-Held, High Court was right 
in holding that the machinery which was being used for the manufacture of 
D some of the items mentioned in the Fifth Schedule, would be entitled to 
development in the Fifth Schedule, would be entitled to development rebate 
lit the rate of 35% and it need not necessarily have been used exclusively for 
the manufacture of those items alone. 
E 
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4003-
4004 of 1984 Etc. 
From the Judgment and Order dated 18.10.83 of the Madras High 
Court in T.C. Nos. 1555-56 of 1977. 
F 
Ranbir Chandra, B. Krishna Prasad and Ms. Lakshmi Iyengar for the 
Appellant. 
Ms. Janki Ramachandran for the Respondents. 
The following Order of the Court was delivered : 
G Civil Appeal No. 1286 of 1982 
The assessee-respondent manufactures nuts, bolts and screws for 
automobiles which fall under item No. 20 in the Fifth Schedule being 
'automobile ancillaries'. According to the appellant the machinery which 
H was installed was being used not only for the manufacture of items falling 
366 
C.I.T. MADRAS v. RAMBAL PVT.LTD. 
367 
in the Fifth Schedule but also for the manufacture of some other items. A 
Whereas _the respondent had claimed allowance on development rebate in 
respect 0L9ssessment year 1969-70 at the rate of 35%, the Income-tax 
Officer held that inasmuch as the machinery was also being used for the 
manufacture of some other items not falling under the Fifth Schedule, 
therefore, the rate of development rebate should be restricted to 20% only. B 
Being aggrieved the respondent succeeded in the appeal filed before 
the Appellate Assistant Commissioner. The department filed an appeal to 
the Income Tax Appellate Tribunal which, however, upheld the assessee's 
contention. At the instance of the department the Tribunal referred the 
following question of law to the High Court. 
C 
"Whether, in the assessment for the assessment year 1969-70, the 
assessee could be allowed development rebate at 35% on Rs. 
2,30,840 being the cost of the machinery installed during the 
relevant previous year, despite the fact that they were used not 
merely for the manufacture of nuts, bolts and screws for D 
automobiles, but also for the manufacture of such articles for other 
machinery?" 
The High Court answered the question of law in favour of the 
respondent by observing that the machinery which was installed was used E 
wholly for the purpose of business of the assessee. This is a fact which had 
been found by the Tribunal. The High Court, further observed that the 
machinery installed for the purpose of manufacture of one of the items 
mentioned in the Fifth Schecjule need not necessarily be used exclusively 
for the manufacture of those items or any of the items in the Fifth Schedule. 
It accordingly answered the question of law in favour of the Respondent. 
F 
It is contended by the learned Counsel for the appellant, in this 
appeal by special leave, that the respondent used the machinery for the 
manufacture of items other than 'automobile ancillaries' in addition to nuts, 
bolts and screws and, therefore, the respondent was not entitled to claim G 
development rebate at the rate of35%. Section 33(l)(a) and (b) with which 
we are concerned read as follows : 
"33(1)(a) : In respect of a new ship or new machinery or plant 
(other than office appliances or road transport vehicles) which is 
owned by the assessee and is wholly used for the purpose of the H 
.., 
368 
A 
B 
c 
SUPREME COURT REPORTS (1997] SUPP. 3 S.C.R. 
business carried on by him, there shall, in accordance with and 
subject to the provision of this section and of section 34, be allowed 
a deduction, in respect of the previous year in which ; the ship was 
acquired or the machinery or plant was installed or, if the ship, 
machinery or plant is first put up to use in the immediately 
succeeding previous year, then, in respect of that previous year, 

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