TMI Blog1996 (2) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-tax, Lucknow (the Revenue) having obtained special leave of this court in Special Leave Petition (Civil) No. 3204 of 1977 by order dated February 21, 1978, has filed the civil appeal against the order of the Allahabad High Court dated August 1, 1977, rendered in I. T. A. No. 194 of 1977, rejecting the application filed by the Revenue under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The Revenue required the Income-tax Appellate Tribunal, Allahabad Bench, to refer the following question of law under section 256(1) of the Act for the decision of the High Court : "Whether the Tribunal was in law justified in holding that the amendment order made by the Income-tax Officer was not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate Assistant Commissioner. In further appeal before the Income-tax Appellate Tribunal, it was contended that there was no "sale" or "transfer" within the meaning of section 34(3)(b) of the Act, permitting withdrawal of the development rebate of Rs. 1,00,093, granted earlier and in this view the amendment order passed by the Income-tax Officer was improper and unjustified. The Appellate Tribunal followed its earlier decision rendered for the assessment year 1970-71 and held that no transfer was involved by the lease agreement and so section 34(3)(b) of the Act was not attracted. The appeal filed by the assessee was allowed. Thereafter, the Revenue required the Appellate Tribunal in R. A. No. 131 of 1976-77, to refer the question of law fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is attracted enabling the Income-tax Officer to pass the amendment order as he did, dated March 30, 1970, withdrawing the development rebate of Rs. 1,00,093 ? Dr. Gauri Shankar, senior counsel appearing for the appellant, submitted that by entering into the lease transaction the assessee has "otherwise transferred" the machinery or plant before the expiry of eight years from the end of the previous year in which it was acquired and installed and so the allowance made under section 33 of the Act, in respect of the machinery or plant, should be deemed to have been wrongly made for the purpose of the Act. Counsel for the assessee, Smt. S. Janani, submitted that section 34(3)(b) of the Act should be read along with the definition contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a new ship or new machinery or plant (other than office appliances or road transport vehicles) which is owned by the assessee and is wholly used for the purposes o f the business carried on by him, there shall, in accordance with and subject to the provisions of this section and of section 34, be allowed a deduction in respect of the previous year in which the ship was acquired or the machinery or plant was installed or, if the ship, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, a sum by way of development rebate as specified in clause (b)." " 34. (3)(b) If any ship, machinery or plant is sold or otherwise transferred by the assessee to any person at any tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development rebate is allowed in respect of the new machinery and plant which is owned by the assessee and is wholly used for the purpose of business carried on by him. When the machinery was let out by the assessee to Hindustan Lever Limited, it cannot admit of any doubt, that the said machinery or plant could not and was not used by the assessee for the purpose of business carried on by him. It is not only the ownership of the plant or machinery, but also its exclusive user by the assessee for the purpose of his business, that is essential to enable the assessee to get development rebate under section 33(1)(a). In cases where an assessee disables himself from such continued exclusive user of the plant or machinery for the purpose of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 34(3)(b) is closely linked to section 33(1)(a) of the Act. Keeping in view the purpose for which the relief by way of development rebate is afforded under section 33(1)(a) of the Act, in cases where the machinery or plant is not wholly used by the assessee for the purpose of business carried on by him, for the specified period, and such user is given over to another, it can be safely stated that the machinery or plant is "otherwise transferred" by the assessee to another person. In the above view of the matter, we are of the view that the withdrawal of the development rebate by the Income-tax Officer in the amendment order dated March 30, 1970, by relying on section 34(3)(b) of the Act is justified. We are broadly in agreement with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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