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Judgment
Ramaprasada Rao, J.—As similar questions of law are involved in the above three tax cases they have been heard together, though the
applicants are different. In Tax Case NO. 80 of 1964, the applicant, a private limited company, is a dealer in motor cars, trucks, jeeps motor parts
and accessories, tractors, etc. In Tax Case No. 81 of 1964 the applicant is a private limited company dealing in the purchase and sale of motor
spare parts. In Tax Case No. 129 of 1964, the applicant is an engineering contractor. During the year previous to the assessment year 1957-58
the applicants have purchaser plants of varied description and claimed development rebate u/s 10(2)(vib) of the Income Tax Act, 1922, as
amended but the Finance Act, 1955(XV of 1955). In particular, the claim for rebate was made but the respective applicants as under : Applicant
in Tax Cases No. 80 of 1964 in respect of (1) electric fans, (2) bicycles,(3) motor cycles, (4) office cars,(5) jeeps, (6) tractors, (7) typewriter and
office appliances, and (8) electric installation. applicant in Tax Case No. 81 of 1964 in respect of (1) motor cars, (2) typewriters, (3) office
appliances and (4) bicycles, Applicant in Tax Case No. 129 of 1964 in respect of (1) odometers ,(2) typewriters, (3) electric fans, (4)
refrigerators, (5) jeeps, (6) cars, (7) survey instruments and (8) cycles. The Income Tax Officer rejected the claim of each of applicants for
development rebate, but the Tax Case No. 80 of 1964 for electric fans and electric installations, and in respect of the jeep of the applicant in Tax
Case NO., 129 of 1964, but otherwise sustained the order of the Income Tax Officer. The revenue having thus detail with their respective claims,
the applicants approached the Tribunal for relief but with no success. On their requirement to the Tribunal to state a case to this court u/s 66(1) of
the Indian Income Tax Act, 1922 the following questions have been referred for us to ended our answers thereto :
Tax Cases No. 80 of 1964. - Whether, on the facts and in circumstances of the case, the assessee is entitled to the allowance of Rs. 23,899 u/s
10(2)(vib) of the Indian Income Tax Act, 1922 ?
Tax Case No. 81 of 1964. - 1. Whether, on the facts and in the circumstances of the case, the disallowance, of development rebate on motor
cars, typewriters and officer appliances and bicycles amounting to Rs. 10,605 is lawful ?
2 . Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the applicant company is not entitled to
the development rebate provide u/s 10(2)(vib) of the Act ?
Tax Case No. 129 of 1964. - Whether the claim for development rebate is not admissible for odometers ,electric fans, cars, cycles, typewriters
and survey instruments with the meaning of the section 10(2)(vib) ?
The Tribunal, while disposing of the appeals separately, were of the view that the the word ""instal"" in section 10(2)(vib) of the Act should be
understood in the sense of placing in position for service or use, though the machinery or plant may be mobile and ultimately held that development
rebate should be restricted, ""having regard to the circumstances in the which by the direct use of plant or machinery like a textile manufacture or
road operator"".. In this view, the applicants claims we rejected.
The Tribunal, having correctly posed the problem before them, ultimately, fell into an error in iron-jacketing the scope and application of the
beneficial rule of law enabling assesses to gain the concession contemplated therein. It is indisputable that in these days of advanced commercial
enterprise it is difficult to draw a line as to which of the plant or machinery engaged in the trade by a businessman could with reasonable certainly
be said t be not for carrying on its trade or to for purposes of its business or intended to earned income therefrom. The conservative view
expressed by the Tribunal that such plant or machinery should be such or machine is, to put minds, a proposition which cannot be warranted
having regard to the the historic development of law in the grant of such concessions to industries with a view to afford an inputs and an
encouraged to them to secure more and more of such machinery and plant so that the could be an aid to the developing economy of our country.
It is in this perspective that the background and the circumstances in which clause (vib) of section 10(2) was pout on the anvil has a bearing and
a consideration. Historical setting can sometimes be invoked in the construction of statues and their provisions. It is necessary in such
circumstances for the well-instructed judge to put himself in the position of those responsible for the introduction of such words so as to ultimately
interpret them in the real real popular sense. As point out by by Jessel M. R. in Holme v. Guy :
The Court is not to be oblivious... of the history of law and. Although the court is not at liberty to construe an Act of Parliament by the motives
which influenced the legislature, yet when the history of law and legislation tells the courts, and prior judgments tell this present court, what the
object of the legislature was, the court is to see whether the terms of the section are such as fairly, to carry out that object and no other,..
As pointed out by Venkatarama Ayyar J., speaking for to Supreme Court in R.M.D. Chamarbaugwalla v. Union of India :
To decide the true scope of the present Act, therefore we must have regard to all such factors an can legitimately be taken into account in
ascertaining the intention of the legislature, such as the history of the legislation and the purposes thereof,...
With this background and in order to ascertain the historical setting and the circumstances, in which cause (vib) of section 10(2) came to be put
on the statue book, it is necessary to refer to the the primary cause which prompted the Taxation Enquiry Commission appointed by the
Government of India, in 1953, inter alia, to recommend a development rebate to the entrepreneurs in industry. The enquiry was instituted to study
the practice of industry in providing for depreciation and the character and magnitude of the problem of replacement of old assets in the industrial
sector. Their recommendation, however, centered on new enterprises or, in the alternative, to selective industries. The Finance Minister in his
budget speech for the year 1955-56 reviewing the recommendations of the commission as above, observed :
The Commissioner have examined this matter in considerable detail and have come to the conclusion that the principle of revalorization or
continuous revaluation of an asset for purposes of depreciation is not merely defective in theory but certainly unworkable in practice. Instead, they
have suggested that while the existing system of initial and double depreciation allowance may be retained with certain modifications for all
industries, certain other new industries might be given a development rebate equivalent to 25% of the cost of new fixed assets in the year of
installation. For certain special industries of national importance, they have suggested a tax holiday for six year. These proposals requires further
detailed consideration. Meanwhile I propose to allow a development rebate of 25% of the cost of all new plant and machinery installed for the
business purposes instead in the present initial depreciation allowance of 20%. (The underlining is ours).
Thus, therefore, it is seen that when clause (vib) of section 10(2) was sought to be introduced in the Act by the Finance Act, 1955 [XV of
1955], it was though that the Commissions proposals require further consideration. The fair inference, therefore, is that the allowance
recommended by the Commission to selective industries were not fully implemented. On the other hand, clause (vib) was put in so as to give full
and true effect to the proposal of the Government to allow a development rebate of 25 per cent. of the cost of all new plant and machinery
installed for business purposes.
We may at once consider the argument of the learned counsel for the revenue that, if any additional concession was intended or adumbrated in
clause (vib) of section 10(2), it should be to selective industries a and in the grant of such a rebate to particular set of industries cannot be deduced
while glancing at the historical development of this clause introduced for the first time by the Finance Act. of 1955. In fact, this was adverted to by
Finance Minister and he was of the view that such a dichotomy deserve further consideration. He expressly opinion that the machinery inducted by
them for their business purpose. We are, therefore, unable to agree with the contention of Sri Balasubrahmanyan, learned counsel for the revenue,
that the applicants in question being ordinary traders and dealers and not being persons engaged in selective indsutries of importance cannot claim
the benefit of clause (vib) of section 10(2) of the Indian Income Tax Act.
Mr. Swaminathan, appearing for the applicants, would maintain that the plant in question admittedly purchased and used by the applicants in
their respective trade and business cannot be treated as something which are unconnected with their business and therefore, disentitled to the
benefit of the rebate provided for in clause (vib) of section 10(2). The Appellate Assistant Commissioner as well as the Tribunal accepted the view
that electric fans and electric installations as regards the applicant in Tax Case NO. 80 of 1964, and jeeps in respect of the applicant in Tax Case
No. 129 of 1964 are entitled to such a rebate. We are unable to appreciate that when electric fans and electric installation can be deemed to be
plants for a dealer in motor, cars, trucks, jeeps etc., and if a jeep could be so construed in respect of an engineering contractor, why should
appliances and apparatus like bicycles, motorcycles, office cars, office appliances etc., should not equally be dealt with on the same par. Even the
reasoning of the Tribunal ought to have prompted them to allow to the rebate as claimed by the applicants in these cases. We are unable to see
how by the use of bicycles, motor cycles, office cars, office appliance, odometers ,survey instruments, it cannot be said that no income is derived
by the respective applicants by the induction of such plant. It is not seriously deputed by the department that the apparatus or appliances are
reused by the respective applicant in their trade and commerce. It cannot also be seriously disputed that they are sufficient means to the accredited
end of the applicants to carry on their business and earn profits. Stroud in his Judicial Dictionary refers to the meaning of ""plant"" as attributed by
Lindley L. J. in Yarmouth v. France 1 as follows : the word ""plant"" which has not been defined in the Act has to be understood in its ordinary sense
and ""it includes whatever apparatus is used by a business man for carrying on his business, - not his stock-in-trade which he buys, or makes for
sale; but all goods and chattels, fixed or movable live or dead, which he keep for permanent employment in his business"". Bearing in mind,
therefore, the genesis for the introduction of this concession for the firs time by the Finance Act of 1955, the scope of the concession as expressly
spoken to by the Finance Minister, as also the ordinary and popular concept of the word ""plant"", we are of the view that each of the applicants in
the tax cases under review is entitled to the development rebate claimed by each of them before the revenue.
The Tribunal was apparently guided by the word ""instal"" appearing ii clause (vib) of section 10(2). The Supreme Court had occasion to
interpret the word ""machinery"" and ""instal"" appearing in a similar clause in Commissioner of Income Tax v. Mir Mohammad Ali. While considering
the meaning of the word ""machinery"", their Lordships would say :
.... the definition of machinery adopted by the Privy Council in Corporation of calcutta v. Chairman, Cossipore and chitpore Municipality namely,
machinery means some mechanical contrivances which by themselves or in combination with the one or more contrivances which by them selves or
in combination with the one more contrivances by the joint movement and interdependent operation of their respective parts generate power, or
evoke modify apply, or direct natural forces with the object in each case of effecting so definite and specific a result, although not given in a tax
case, should prevail under the Income Tax Act also, as the word machinery was an ordinary and not a technical word. According to this definition
a diesel engine was clearly machinery.
While dealing with the expression ""instal"" in clause (via) of section 10(2), the Supreme Court observed as follows :
.... the expression installed in the second paragraph of clause (vi) and clause (via) did not necessarily mean fixed in position but also used in the
sense of induct or induce or placing an apparatus in position for service or use.
Thus understood, the word ""plant"" also should be given the same popular meaning as ""machinery"". If the plant in combination with other
appliances in the business effectuate and perpetuate the trade or commerce in question, then such induction or introduction of such plant should be
deemed to be such that they are placed in a position for service or use in the business. The principle in the above Supreme Court case was applied
with equal force in Commissioner of Income Tax v. Raju and Manner to development rebate appearing in clause (vib) of section 10(2). We have,
therefore, no hesitation in coming to the conclusion that the applicants by the introduction of the apparatus or appliance or the plant as enumerated
above, are entitled to claim development rebate thereto as put forward by them before the revenue. We are unable to agree that such allowance
has to be restricted to textile manufacturers or road operators. There cannot be any straining of the language if it is said that the appliances like type
writers, office accessories, bicycles, motor cars and odometers etc., used for the purpose of expansion of their rebate or marketing their products
are not entitled to the development rebate contemplated in clause (vib) of section 10(2). We, therefore, answer the question referred to us in T. C.
No. 80 of 1964 in the affirmative and in favour of the assessee. We answer the first question in T. C. No. 81 of 1964 in the negative and in favour
of the assessee, the second] question also is answered in the negative and in favour of the assessee. We answer the question in T. C. No. 129 of
1964 in the negative and the favour of the assessee.
As these tax cases were heard together, we allow only one set of costs. Advocates fee Rs. 250.