1975 (6) TMI 12 - HC - Income Tax

Summary

Issues involved:
1. Determination of whether the air-conditioning equipment installed in the safe deposit vault qualifies as machinery or plant under section 10(2)(vib) of the Indian Income-tax Act, 1922.
2. Assessment of the availability of relief under sections 56A and 49B of the Indian Income-tax Act, 1922, in relation to dividends without reducing them by interest and administrative expenses.

Issue 1 - Air-conditioning equipment classification:
The High Court considered the question of whether the air-conditioning equipment installed by the assessee in its safe deposit vault could be classified as machinery or plant. The court referred to a decision of the Supreme Court in Commissioner of Income-tax v. Taj Mahal Hotel, where the definition of "plant" was discussed. The Supreme Court had previously ruled that certain fittings in a hotel constituted "plant" for the purposes of the Income Tax Act. The court cited a case where partitions in an office space were considered "plant" as they facilitated the business's operations. The court concluded that the air-conditioning equipment in the safe deposit vault would also be classified as "plant" based on the precedent set by the Supreme Court. Therefore, the court answered question No. 1 in the affirmative in favor of the assessee.

Issue 2 - Relief under sections 56A and 49B:
Regarding the availability of relief under sections 56A and 49B of the Indian Income-tax Act, the revenue conceded that it was covered by a previous decision of a Division Bench. The court noted that question No. 2 had to be answered in the affirmative in favor of the assessee based on this concession. Therefore, the court ruled in favor of the assessee on this issue as well.

Conclusion:
The High Court of Bombay ruled in favor of the assessee on both issues presented before the court. The court determined that the air-conditioning equipment in the safe deposit vault qualified as "plant" under the Income Tax Act and that relief under relevant sections was available to the assessee. The revenue was directed to pay the costs associated with the case.