1971 PLP 245 (PTD)

K. L. ROY, J.‑This is a reference under section 66(1) of the Indian Income‑tax Act, 1922 (hereinafter referred to as the Act). The assessee is the Calcutta Tramways Company Limited and the assessment year concerned in this reference is 1958‑59, the corresponding accounting year being the calendar year ending 31st December 1957. During the accounting year the assessee‑company installed new bodies on the old chassis of its tram cars which it plies in the City of Calcutta. Over and above the normal depreciation, additional, depreciation and development rebate under sections 10(2)(via) and 10(2)(vib) of the Act were claimed in respect of the cost thereof. The Income tax Officer allowed only normal depreciation taking the entire tram car plus the chassis as one unit and disallowed the claims for additional depreciation and development rebate. On appeal against the order of assessment by the assessee, the Appellate Assistant Commissioner allowed the claim for additional depreciation but disallowed the claim for development rebate. Both the assessee and the Department appealed to the Tribunal against the aforesaid order of the Appellate Assistant Commis sioner, the Department claiming that the allowance of additional depreciation was wrong whereas the assessee claimed that the disallowance of the claim for development rebate was erroneous. The Tribunal disposed of both the appeals by a consolidated order and, relying on the decision of the Madras High Court in the case of Mir Muhammad Ali v. Commissioner of Income‑tax ((1960) 38 I T R 413), held that, since the tram car bodies were plant and machinery by themselves, the requirements of sections 10(2)(via) and 10(2)(vib) of the Act were satisfied and both additional depreciation and development rebate were allowable on the new tram‑car bodies. Consequently, it dismissed the departmental appeal and allowed the assessee's appeal. At the instance of the Commissioner the following question has been referred to this Court: "Whether, on the facts and in the circumstances of the case, the new tram‑car bodies installed on old chassis were machinery or plant by themselves and accordingly additional depreciation and development rebate were allowable in respect thereof under sections 10(2)(via) and 10(2)(vib) of the Income tax Act, 1922?" Mr. S. Mukherji, learned counsel appearing for the Commis sioner, submitted that the Supreme Court had in Commissioner of Income‑tax v. Mir Muhammad Ali ((1964) 53 I T R 165 (SC)) sustained the decision of the Madras High Court referred to above and had held that the same meaning ought to be given to the word "machinery" in all the clauses, namely, clauses (iv), (v), (vi), (via) and (vib) of section 10(2) of the Income‑tax Act, and that if a machine was machinery for the purpose of giving an allowance in respect of normal depreciation, it must also be machinery for the purpose of clause (vi) and clause (via). Mr. Mukherji further stated that in view of the definition of plant in section 10(5) of the Act as including vehicles, books, etc., he could not submit that new bodies installed on old chassis in the assessee's tram cars could not be regarded as plant. Dr. D. Pal appearing for the assessee drew our attention to rule 8(3) of the Income‑tax Rules which provides for special rates of depreciation to be applied to machinery and plant. Item F of this rule deals with electric tramways and depreciation is provided in sub‑clause (ii) thereof at the rate of 10 % on cars, car trucks, car bodies, etc., and submitted that, as the assessee was entitled to normal depreciation on these bodies installed on old chassis under section 10(2)(vi), it was also entitled to additional depreciation and development rebate under sections 10(2)(via) and 10(2)(vib). Dr. Pal's contention must be upheld and the question referred to this Court must be answered in the affirmative in favour of the assessee. There will be no order for costs. BANERJEE, J.‑I agree. Question answered in affirmative.