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Issues:
1. Entitlement to higher development rebate under section 33(1)(B)(i)(b) of the Income Tax Act. 2. Determining if plant and machinery installed by the assessee was for the purpose of business of construction of ships. Analysis: The assessee, a firm engaged in construction of building docks and repairing docks, claimed higher development rebate under section 33(1)(B)(i)(b) of the Income Tax Act for the assessment year 1975-76. The claim was based on the installation and use of machinery for the construction, manufacture, and production of ships, listed in the Fifth Schedule. However, the Income Tax Officer (ITO) rejected the claim, stating that the machinery was not used for ship manufacture, as the production was done by others. The Commissioner of Income-tax (Appeals) upheld the ITO's decision. On further appeal, the Tribunal ruled that the assessee was not entitled to the higher development rebate as it was engaged in dockyard construction, not ship manufacture. The Tribunal's decision was based on the requirement that the plant and machinery must be used for the manufacture or production of items in the Fifth Schedule to claim the rebate. The High Court affirmed the Tribunal's decision, stating that the repair or construction of a shipyard does not constitute ship manufacture. Even if the plant and machinery were used in shipyard construction, the crucial factor was whether they were used for manufacturing or producing items in the Fifth Schedule. The court rejected the argument that using items from the Fifth Schedule in dockyard construction would qualify for the rebate, emphasizing that the rebate is only applicable if the machinery is used for manufacturing or producing items from the Fifth Schedule. Therefore, the Tribunal's decision aligned with the provisions of section 33(1)(B)(i)(b) of the Income Tax Act, and the court dismissed the petition without costs.
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