RAJU AND MANNAR vs COMMISSIONER OF Income Tax, MADRAS.

JAGADISAN J. - Messrs. Raju and Mannar, Salem, is a registered firm carrying on the business of transport, by plying lorries for hire. It owned a

fleet of ten lorries. In the accounting year - year ended March 31, 1955, relevant to the assessment year 1955-56 - some of these lorries were

fitted with new engines capable of being run on diesel oil replacing the old petrol driven engines. In the assessment proceedings under the Indian

Income Tax Act for the year of assessment 1955-56, the firm claimed ""development rebate"" u/s 10(2)(vib) of the Act and extra depreciation on

these engines newly fitted to the vehicles. The Income Tax Officer rejected the claim. On appeal by the assessee to the Appellate Assistant

Commissioner the decision of the Income Tax Officer was affirmed. The Appellate authority held that ""development rebate"" was permissible only

in respect of plant or machinery which was ""installed"" and that fitting of new diesel engines to old lorries did not amount to any installation of plant

or machinery. The assessee preferred a further appeal before the Income Tax Appellate Tribunal, Madras. The assessee again failed and the

Tribunal dismissed the appeal in the following words : ""In order to attract the operation of clause (vi) of sub-section (2) of section 10 of the Act,

the machinery itself and not a part thereof should have been installed. The new diesel engine forms only a part of the old lorry into which it is fitted.

The engine cannot rightly be regarded as the machinery cotemplated under clause (vi) of section 10(2) of the Act. Nor can the process of fitting it

into lorry be correctly described as ""the installation"" within the meaning of the said clause. On an application u/s 66(1) of the Act made to the

Tribunal for reference to this court, the following question of law was referred :

Whether, on the facts and in the circumstances of the case, the disallowances of the development rebate and the extra depreciation in respect of

the new diesel engines are correct in law ?

It is this question which we have now to answer. The provisions of sections 10(2)(vi), 10(2)(via) and 10(2)(vib) deal with allowances for

depreciation and ""development rebate"" in respect of machinery or plant. An assessee is entitled to depreciation allowance u/s 10(2)(vic) in the case

of machinery or plant of twenty per cent. on its cost. He is also entitled to extra depreciation allowance deductible in determining the written down

value under rule 8. In respect of plant or machinery not entitled to development rebate under clause (vib), he is entitled to initial depreciation

allowance in the first year in respect of machinery and plant. He is further entitled to extra depreciation allowance for not more than the first five

years even in respect of machinery and plant entitled to development rebate under clause (vib) deductible in determining the written down value.

These benefits by way of depreciation allowance follow from the language of section 10(2)(vi) and section 10(2)(via). Section 10(2)(via) reads as

follows :

In respect of depreciation of buildings newly erected, or of machinery or plant being new which has been installed, after the 31st day of March,

1948, a further sum (which shall be deductible in determining the written down value) equal to the amount admissible under clause (vi) (exclusive of

the extra allowance for double or multiple shift working of the machinery or plant and the initial depreciation allowance admissible under that clause

for the first year of erection of the building or the installation of the machinery or plant) in not more than five successive assessments for the financial

years next following the previous year in which such buildings are erected and such machinery and plant installed and falling within the period

commencing on the 1st day of April, 1949, and ending on the 31st day of March, 1959.

Section 10(2)(vib) is in these words :

In respect of machinery or plant being new, which has been installed after the 31st day of March, 1954, and which is wholly used for the

purposes of the business carried on by the assessee, a sum by way of development rebate in respect of the year of installation equivalent to

twenty-five per cent. of the actual cost of such machinery or plant to the assessee.

Provided that no allowance under this clause shall be made unless the particulars prescribed for the purpose of clause (vi) have been furnished by

the assessee in respect of such machinery or plant.

Section 10(5) defines ""plant"" as including vehicles, books, scientific apparatus and surgical equipment purchased for the purposes of the business,

profession or vocation. The word ""machinery"" has not been defined under the Act. The assessee is entitled to development rebate u/s 10(2)(vib) in

respect of machinery or plant which is new and which has been installed after the 31st day of March, 1954, and which is used wholly for the

purpose of his business. Development rebate is a concession or privilege which the assessee obtains quite apart from the benefit derived by him by

way of depreciation allowance u/s 10(2)(vi) and section 10(2)(via).

The real question for consideration in the present case is whether the fitting of the diesel engines into the motor vehicles constitute installation of

machinery or plant. Construing the words of section 10(2)(via), which also require the installation of machinery or plant before the depreciation

allowance can be claimed, this court held in Mir Mohd. Ali v. Commissioner of Income Tax [1960] 38 ITR 413., that a diesel engine was

machinery within the meaning of section 10(2)(vi) and section 10(2)(via) of the Act and continued to be machinery even after it was made an

integral part of the bus into which it was fitted. At page 422, the learned judges observed :

In our opinion, machinery does not cease to be machinery merely because it has to be used in conjunction with one or more machines. Nor does

it cease to be machinery merely because it is, for instance, installed as part of a manufacturing or industrial plant.....machinery.... means some

machanical contrivances which by themselves or in combination with one or more other mechanical contrivances, by the combined movement and

interdependent operation of their respective parts generate power...

This court differed from the view taken by the Bombay High Court in Maneklal Vallabhdas Parekh Vs. Commissioner of Income Tax, Bombay

North, , that the machinery must be a self-contained unit.

We have no doubt that the interpretation placed by this court on the words ""machinery"" and ""installed"" occurring in section 10(2)(via) of the Act

would equally apply to the interpretation of these words occurring in section 10(2)(vib) of the Act. It is a salutary rule of construction that the same

words occurring in different parts of a statutory enactment should as far as possible receive the same meaning. It may be that in a particular context

a word may have to be construed differently from what it means in another context though in the same enactment. But there is nothing to justify or

warrant the view that installation of machinery contemplated and provided for u/s 10(2)(vib) of the Act is something different from such installation

within the meaning of that expression in section 10(2)(via).

Learned counsel for the department strenuously contended that the conception of depreciation allowance which by a gradual and slow process

erodes into the original cost of the plant or machinery of the assessee is quite different from the concept of development rebate which is granted

only in the first year of the acquisition, and which is not of a recurring nature. We are not able to appreciate this contention. The subject has a right

to claim the development rebate so long as his claim is within the plain words of the statutory enactment. Whether the legislature intended to grant

development rebate in cases where old engines are replaced by new in respect of a motor vehicle need not be conjectured as we are satisfied that

the engine is a machinery and that the fitting of the engine into the vehicle amounts to installation. There is nothing compelling in the context of

section 10(2)(vib) to construe the words ""machinery"" and ""installation"" differently from the interpretation received by those words in the decision of

this court already referred to in dealing with section 10(2)(via) of the Act.

We are, therefore, of the opinion that the question has to be answered in favour of the assessee. The department will pay the costs of the assessee,

Rs. 250.