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1963 (2) TMI 69

..... UDGMENT Mehar Singh, J. The assessee plies a number of passenger buses for hire. In the assessment year 1954-55, in regard to the accounting year 1953-54, the assessee claimed an allowance of ₹ 32,947 under section 10(2)(vi), paragraph 2, on the ground of having acquired new plant inasmuch as it had had new bodies set on its motor vehicles, with the object of increasing sitting capacity for passengers so that it may augment its gains. The Income-tax Officer as also on appeal the Appellate Assistant Commissioner found the amount expended by the assessee on replacement of old bodies on its vehicles by new bodies as representing capital expenditure and this has not been a matter of controversy between the parties. The claim was disallowe .....

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..... on the vehicle has itself to be considered as a plant for the purposes of paragraph 2 of clause (vi) in sub-section (2) of section 10. There is no direct case which deals with this aspect of the matter and from which the learned counsel can obtain assistance in support of his argument. There are four reported cases in which somewhat conflicting judicial opinions have prevailed but the cases concerned not with replacement of an old body by a new body of a vehicle but replacement of a petrol engine by a diesel engine. The first case is Maneklal Vallabhdas Parekh v. Commissioner of Income-tax [1959] 37 ITR 142. In that case on behalf of the assessee initial depreciation was claimed under clause (vi) both on the ground that the new diesel engin .....

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..... luding part thereof. This case has been followed in B. Srikantiah v. Commissioner of Income-tax [1961] 41 ITR 518 . That was also a case of replacement of a petrol engine by a new diesel engine in the vehicle. In Mir Mohd. Ali v. Commissioner of Income-tax [1960] 38 ITR 413 , the learned judges of the Madras High Court have not agreed with the view of the Bombay High Court in the first mentioned case holding that machinery does not cease to be machinery merely because it has to be used in conjunction with one or more machines, nor merely because it is installed as part of a manufacturing or industrial plant. They were of the opinion that a diesel engine, replacing a petrol engine in a vehicle, was by itself "machinery" within the .....

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..... the scope of the provisions as referred to. The analogy is not complete, for one thing an engine, which may be a complete machinery unit by itself, is not the same thing as a body on a vehicle which cannot be considered to be complete in any sense as a useful unit unless it is fixed on a vehicle and the vehicle thus becomes complete for use. So that there is no substance in this argument. Paragraph 2 of clause (vi) in sub-section (2) of section 10, for the present purpose, refers to "plant being new", and it is clear that a plant that is partly new and partly not new is not within the scope of these words. Again sub-section (5) of section 10 defines "plant" to include vehicles, and here again the intention does not appe .....

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..... f the court prima facie to accept the conclusion which then became a question of fact whether in truth, and in the light of all the special circumstances of the manufacturing process the knives and lasts can be properly described as "plant" or "machinery or plant". It is obvious that in view of this observation this case is not helpful to the assessee and even in Mir Mohd. Ali's case (supra), in which reference to Hinton's case (supra) has been made, the learned judges have pointed out that that case is not an authority for the decision of a case like the one that was before them. So Hinton's case (supra) does not advance the argument on behalf of the assessee. In the circumstances the approach to the matter .....

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