Installation of machinery includes fitting a new diesel engine into an existing lorry for tax allowance purposes.

Fitting a new diesel engine into an existing lorry was treated as installation of machinery for purposes of development rebate and extra depreciation under the Indian Income-tax Act, 1922. The analysis notes that statutory allowances depended on new machinery or plant being installed, that "plant" includes vehicles, and that a diesel engine remains machinery even when fitted as an integral part of a vehicle. Applying the same meaning to "machinery" and "installation" across the relevant clauses, the text concludes that inserting a new engine into a lorry falls within the statutory language, making disallowance of the allowances incorrect.

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Issues: Whether the fitting of new diesel engines into existing lorries amounted to installation of machinery or plant so as to entitle the assessee to development rebate and extra depreciation.

Analysis: The statutory allowances under section 10(2)(vi), section 10(2)(via) and section 10(2)(vib) of the Indian Income-tax Act, 1922 depend upon machinery or plant being new and having been installed. The term "plant" includes vehicles under section 10(5), and a diesel engine is machinery even when fitted as an integral part of a vehicle. The same words used in different parts of the Act should ordinarily receive the same meaning, and there was no contextual reason to treat "machinery" or "installation" differently in clause (vib) from their meaning in clause (via). Fitting a new engine into a lorry was therefore installation of machinery within the statutory language.

Conclusion: The disallowance of development rebate and extra depreciation was incorrect. The question was answered in favour of the assessee.

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