LexCOMMISSIONER OF INCOME TAX MADRAS versus SOUTHERN ROADWAYS (P) LTD.
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... j A B c D E F G H SSL· COMMISSIONER OF INCOME TAX MADRAS v. SOUTHERN ROADWAYS (P) LTD. · November 28, 1974 [H. R. KHANNA AND A. C. <:JUPTA, JJ.J Income.tax Act 1922-Scctiim 10(2)(vi·b) Proviso-Income Tax Act 1961, Section 33(1) (a )-Dei·e/opment rebate-Diesel Enginj;?s after they are fitted !O trucks wherher retai11 their characrer as rnacl1inery, The respondent is er.gaged in transport business and owns a fleet of lorries ;;nd buses. The respondent purchased new diesel .engines and fitted them in the vehicl~s. He claimed development rebate on the price of the die·;el engines pur~hased in respect of the assessment years 1961-62 and 1962-63. For the ac~ounting year relevant to assessment year 1961-62 the Income Tax Act, 1922 was applkable and for the tlccounting year relevant to 1962-63 the Income Tax Act, 1961 was applicable. The Income Tax Officer rejected the claim for development rebate in respect of both the years, The Appellate Asstt. Commis- sioner confirmed the decision of the In:ome Tax Officer. In respect of the assessment year 1961·62, the Tribunal allowed the claim of the assessee for development rebate. The Tribunal, however, rejected the claim inade by the asses·¥e in respect of the asse.ssment year 1962-63. The High Court decided both the references in favour of the assessee on the ground that the case was covered by the judgment of this Court in the case of Mir Mohammad. ·HELD : Section 10(2) as in force in the year 1950 when the cele of Mir Mohammad was decided bas underaone change and at the relevant time the section clearly provided that no allowance will be made in respect of any machinery or plant .which consists of office appliances or road transport vehicles. [883D·B: 884C-D] FURTHER HELD : The contention of the assessee ·that the diesel engines retained their character as maichinery though they were fitted to the transport vehl:les was negatived on the ground that development rebate i» allowed on machinery used for the purpose of business carried on by the assesse-~ and in the preser.t case the diesel engines were not used by the assessee for his business. It is .the vehicles which were used for the purposes of the business. In section 33 of the 1961 Act, road trnnsport vehicles are exprc>sly taken away from the operation of the section. The High Court was therefore, iii errur in answering the question in favour of the assessee.' [8840-F] CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. '.lll and 212 of 1970. · , Appeal by Special Leave from the Judgment & Order dated the 4th September, 1967 of the Madras High Court in Tax Cases Nos. ·155 and 156 of 1965. T. A. Ramachandran and S. P. Nayar, for the appellant. S: Swaminathan and S, Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by GUPTA, J. These two appeals by special leave arise out of two references, one under sec. 66(1) of the Income-Tax Act, 1922, and the other under sec. 256 (1) of the Income-Tax Act, 1961. The two ap. peals relate respectively to assessment years 1961-62 and 1962-63. The assessee in both cases is a private limited company, engaged .in transport business and owns a fleet of lorries and buses. In both appeals the appellant is the Commissioner of Income-Tax (Central), Madr11s. In 882 SUPREME COURT REPORTS [1975] 2 S C.R. respect of the assessment year 1961-62, the T.ribunal allowed the claim of the assessee for developm~nt rebate on the new diesel engines ins- talled by the assessee in its ~hides. 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\Coun, one in each of these two cases; both · questions involve similar query though they_ are framed somewhat differently because of the contrary dr-eisions out of which the refer- ences arise. In Civil Appeal No. 211 of 1970 which relates to the assessment year 1961-62 the question referred under sec. 66(1) is: · "Whether on the facts and in the circumstances of the case, tht: Tribunal was right in l2lw in holding that the asse- ssee was entitled to claim development rebate on new diesel engines fitted to vehicles." The question in Civil Appeal No. 212 of 1970 referred under sec. 256 (1) of the Income-Tax Act, 1961, relates to the assessment year t962- 63 and reads : "Whether on the facts and in the circumStances of the case, th
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