TMI Blog1972 (7) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was entitled to development rebate on the four new buses put on road after December 31, 1957 ? " The assessee is a registered firm engaged in various businesses including the running of bus service. During the accounting year ended March 31, 1958, it had purchased seven new buses, of which four were put on the road after December 31, 1957. In respect of the bus service business it filed a return on February 26, 1959, in which depreciation totalling Rs. 2,00,252 was claimed by the assessee. This included development rebate on seven new buses. The total development rebate in respect of the seven new buses claimed was Rs. 62,216, out of which a sum of Rs. 35,727 related to the development rebate on the four new buses put on the roa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces on the ground that the entries had been made after the completion of the assessment. The department filed an appeal before the Tribunal. The Tribunal held that, by implication, the proviso to section 10(2)(vib) requires the creation of a reserve at least before the completion of the assessment and that therefore it is the state of affairs existing at the time of assessment that one has to look into to determine whether the assessment has been made in accordance with law. Hence, the Tribunal was of the view that unless the assessee had created the reserve before the assessment was completed he could not be said to have complied with the requirements of the proviso enabling the Income-tax Officer to allow the development rebate. In suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance called "development rebate" in respect of a new machinery or plant "installed" after March 31, 1954, which is solely used for the purpose of the business carried on by the assessee. But clause (b) of the proviso to section 10(2)(vib) requires two conditions to be complied with before a development rebate could be allowed. They are: (1) in the case of machinery or plant installed after December 31, 1957, an amount equal to 75% of the development rebate to be actually allowed is debited to the profit and loss account of the relevant previous year and credited to a reserve account; and (2) this reserve has to be utilised by the assessee during a period of ten years next following for the purposes of the business of the undertaking but sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also. The Income-tax Officer refused to allow the development rebate on the ground that neither the bus nor the lorry could be regarded as "plant and machinery" which could be "installed" within the meaning of section 10(2)(vib). The Appellate Assistant Commissioner on appeal by the assessee accepted the contention that even in respect of buses and lorries development rebate is allowable but on the ground that the proviso to section 10(2)(vib) had not been complied with inasmuch as the assessee had not set apart 75% of the development rebate to the reserve account, he sustained the order rejecting the allowance towards development rebate reserve. On appeal, the Tribunal held that, in their opinion, it will be enough if the assessee carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of a highly theoretical nature, which need not be complied with to the letter of the statute, this view is opposed to all principles of statutory construction. As we pointed out, section 10(2)(vib) provides for exemption from taxation. The proviso to that section states that no allowance under that clause shall be made unless the conditions contained in sub-clauses (a) and (b) thereto have been complied with. That means that the assessee will not be entitled to allowance unless he had complied with the conditions referred to therein." This decision really concludes the point now in issue. We may also mention that this decision was followed in another decision of this court in Indian Overseas Bank Ltd. v. Commissioner of Income-tax and l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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