Depreciation on replacement diesel engine treated as newly installed machinery for business use under income-tax law.

A diesel engine purchased and fitted into a motor vehicle was treated as machinery for depreciation purposes under section 10(2)(vi) and section 10(2)(via) of the Indian Income-tax Act, 1922. The majority held that "machinery" must be given its ordinary meaning, and that replacing an existing engine did not prevent the diesel engine from being newly installed for business use. Fixing the engine in the vehicle satisfied the requirement of installation, and the statutory context did not justify narrowing machinery to a self-contained unit. Extra depreciation was therefore admissible in favour of the assessee.

---

---

Issues: Whether extra depreciation was admissible under section 10(2)(vi) and section 10(2)(via) of the Indian Income-tax Act, 1922 in respect of a diesel engine fitted to a motor vehicle in replacement of the existing engine.

Analysis: The majority held that the word "machinery" in the depreciation provisions should bear its ordinary meaning. A diesel engine, when purchased and fitted, is machinery, and the fact that it replaces an existing engine does not prevent it from being machinery newly installed for the purposes of the business. The requirement that the machinery be "installed" was also satisfied, since fixing an engine in a vehicle amounts to installation for use. The statutory context and the definition of "plant" did not justify restricting the scope of "machinery" to a self-contained unit only.

Conclusion: Extra depreciation was admissible, and the question was answered in the affirmative in favour of the assessee.

Ratio Decidendi: For the purposes of section 10(2)(vi) and section 10(2)(via) of the Indian Income-tax Act, 1922, a diesel engine purchased and fitted into a vehicle is machinery newly installed, and replacement of an existing engine does not by itself exclude the allowance.

---