Development rebate belongs only to the same assessable entity that installed the machinery, not a distinct successor partnership.

Development rebate under section 33(1) is available only to the assessee that owns the new plant or machinery and uses it for its own business. A newly constituted partnership firm could not claim unabsorbed development rebate on machinery originally installed by another firm, because the two partnerships were treated as distinct assessable units and the later firm was not the same assessee that had installed the assets. The prior authorities cited were distinguished on the basis that they involved continuity of the same assessable entity or different factual settings. The claim was therefore not legally sustainable.

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Issues: Whether the assessee, being a newly constituted partnership firm, was entitled under section 33(1) of the Income-tax Act, 1961 to claim unabsorbed development rebate in respect of plant and machinery originally installed by another firm.

Analysis: The claim for development rebate under section 33(1) is available only to the assessee who owns the new machinery or plant and uses it wholly for the business carried on by it. The earlier firm and the later firm were treated on the facts as distinct assessable units, because the business at Purnea was taken over by a new partnership, while the original firm continued its separate identity and business at Calcutta. The Court held that the concept of mere reconstitution could not be extended to a situation where a separate unit came into existence and the assessee before the Court was not the very assessee that had installed the machinery. The authorities relied on by the assessee were distinguished because they involved continuity of the same assessable unit or questions relating to loss allowance or withdrawal of rebate on different facts.

Conclusion: The assessee was not entitled to claim the unabsorbed development rebate in respect of machinery installed by the other firm, and the Tribunal's view allowing such rebate was not legal or proper.

Ratio Decidendi: Development rebate under section 33(1) can be claimed only by the same assessable entity that installed and owned the machinery, and a newly constituted distinct partnership firm cannot claim such rebate merely because it carries on a business formerly conducted by another firm.

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