Initial depreciation denied for diesel engines fitted in motor-lorries because they were not separate plant or self-contained machinery.

Initial depreciation under section 10(2)(vi) of the Income-tax Act, 1922 was denied for diesel engines fitted in motor-lorries because the allowance required the asset to independently qualify as plant or as new machinery installed for business use. Although vehicles were treated as plant for normal depreciation, engines forming part of the vehicle could not be treated as plant for initial depreciation in a taxing statute. The alternative claim also failed because the engines were not a self-contained unit capable of being put to use in the business. The reference was answered in the negative, against the assessee.

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Issues: Whether diesel engines installed in motor-lorries were entitled to initial depreciation under section 10(2)(vi) of the Income-tax Act, 1922, either as plant or as new machinery installed for business use.

Analysis: Initial depreciation was treated as a distinct allowance from normal depreciation and was held not to depend on the rules framed under the Act. Although vehicles are included within the definition of plant, the reasoning held that diesel engines fitted into vehicles and forming part of them could not, in the context of a taxing statute, be treated as plant for the purpose of initial depreciation. The alternative claim that the engines were new machinery installed was also rejected because initial depreciation on machinery required a self-contained unit capable of being put to use in the business, and the installed diesel engines did not satisfy that test.

Conclusion: The claim for initial depreciation on the diesel engines was rejected and the answer to the reference was in the negative, against the assessee.

Ratio Decidendi: For initial depreciation, the asset must independently satisfy the statutory description of plant or new machinery as a self-contained unit capable of being put to use, and an item forming part of a vehicle does not qualify merely because the vehicle is treated as plant for normal depreciation.

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