COMMISSIONER OF INCOME-TAX, MADRAS versus MIR MOHD. ALI, BUS OWNER, VELLORE

Citation: [1964] 7 S.C.R. 846 · Decided: 24-04-1964 · Supreme Court of India · Bench: K. SUBBA RAO, J.C. SHAH, S.M. SIKRI · Disposal: Dismissed
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Judgment (excerpt)

1964 
April 24 
846 
SUPRE:ME COURT REPORTS 
[1964] 
COMMISSIONER OF INCOME-TAX, MADRAS 
v. 
MIR MOHD. ALI, BUS OWNER, VELLORE 
IK. SUBBA RAO, J. C. SHA!-1 AND s. M. StKRI, JJ.] 
Income 
Tax-Depreciation 
allowance-Replacement 
of 
petrol engine in a bus by new Diesel engine-If amounts to 
installation of machin.ery-"Installation of mJchinery" Mean-
ing of-Indian Income-tax Act, 1922 (11 of 1922), ss. 10(2)(vi). 
10(2)(vial. 
The assessee, who was the owner of a fleet of buses, rep-
laced the petrol engines in two of his buses by new Diesel 
engines incurring an expenditure of Rs. 18,544/- in this con-
nection, during the year of account ending with March 31, 
1950. For the relevant assessment year he claimed deprecia-
tion allowance under the second para of cl. (vi) and cl. (via) 
of s. 10(2) of the Indian Income-tax Act, 1922, apart from the 
normal depreciation under the first para of cl. (vi), but he 
was allowed only 25 per cent depreciation under the first para 
of cl. (vi) on the ground that he was not entitled to extra 
depredation under s. 10(2) (vi) or s. 10(2)(via) because the 
engine was only part of an equipment and could not by itself 
become machinery and that when an engine was fixed in a 
motor vehicle it could not be said to be installed within the 
meaning of those sub-sections. 
Held: (per Subba Rao and Sikri, JJ.) (i) The assessee 
was entitled to extra depreciatiLon under ss. 10(2)(vi) and 10(2) 
(via) of the Indian Income-tax Act, 1922, in respect of the 
diesel oil engine fitted to the motor vehicles in replacement 
of the e~sting engines. 
(ii) The definition of "machinery" given by the Privy 
Council in the case of Corporation of Calcutta v. Chairman, 
Cossipore and Chitpore Municipality \1922) L.R. 48 I.A. 435, is 
applicable, and according to that definition a diesel engine 
is clearly "machinery". And when an engine is fixed in a 
vehicle it is installed within the meaning of the expression 
in els. (vi) and (via). 
Per Shah, J. (dissenting)-Replacement of a petrol engine 
by a new diesel engine in a 1notor car cannot be said to be 
installation of machinery. To be installed, the machinery 
must for the purpose of the business be. brought into service 
as a self-contained unit, and it would be difficult to regard 
the introduction of a mere part, which has no independent 
use in the business conducted by the assessee, as machinery 
installed for the purpose of the second para of cl. (vi) of 
s. 10(2). 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 145 
of 1963. Appeal from the judgment and order dated Novem-
ber 16. '1959, of the Madras High Court in Case Reference 
No. 82 of'1956. 
· 
S. K. Kapur and R. N. Sachthey, for the appellant. 
S. Swaminathan and R. Gopa/akrishnan, for the res-
pondent. 
I 
7 S.C.R. 
SUPREME COURT REPORTS 
847 
S. T. Desai, J. B. Dadachanji, 0. C. Mathur and Ravin-
1961 
der Narain, for the intervenor. 
Cammi.,ioner 
of 
lncome-t<n. JJ!adra• 
April 24, 1964. The judgment of SUBBA RAO and SJKRI 
v. 
. 
JJ was delivered by S1KRI J. SHAH J. delivered a dissentingMir Molid.Afi, n •• 
· . . 
0u'11er, 
1 rllort 
Op1mon. 
· 
Sikri, 
J, 
SJKRI, J .-This is an appeal by the Commissioner of 
Income Tax, Madras, against the judgment of the High 
Court, dated November 16, 1959, on a certificate granted 
by the High 0'ourt under s. 66A(2) of the Indian Income Tax 
Act, 1922. 
The respondent. Mir Mohd. Ali, hereinafter referred to 
as the assessee, is a bus owner and transport operator at Vel-
lore, North Arcot District. He had a fleet of buses, and 
during the year of account ending with March 31, 1950 
(relevant to assessment year 1950-51) he replaced the petrol 
engines in two of his buses (MDJ 583 and MDJ 723) by 
new Diesel engines. incurring an expenditure of Rs. 18,544/-
in this connection. Before the Income Tax Officer, apart 
from claiming normal depreciation under the first para-
graph of cl. (vi) of s. 10(2), he also claimed depreciation under 
the second paragraph of cl. (vi) and cl. (via) of the Indian 
Income Tax Act, 1922. The Income Tax Officer only 
allowed 25 per cent depreciation under the first paragraph 
of cl. (vi). The assessee appealed unsuccessfully to the 
Appellate Assistant Commissioner on this point. There were 
other points involved in the appeal but as we are not con-
cerned with them in this appeal, they are not being mention-
ed. On further appeal, the Appellate Tribunal held that "the 
assessee is not entitled to extra depreciation under s. 1
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