Development rebate requires proved ownership and business use of plant or machinery; a successor firm could not claim it here.

Development rebate under section 33(1) is available only where the assessee both owns the plant or machinery and uses it wholly for its business during the relevant previous year. A reconstituted or successor firm is not automatically treated as the same assessable entity as the earlier partnership, and the benefit cannot be claimed unless legal ownership of the asset has passed to the claimant in a recognised form. On the stated facts, the assessee failed to prove ownership of machinery installed by the earlier firm, so the rebate was not allowable.

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Issues: Whether the assessee was entitled to development rebate under section 33(1) of the Income-tax Act, 1961, in respect of plant and machinery installed by an earlier partnership firm, where the assessee claimed to be the continuing or successor firm.

Analysis: Entitlement to development rebate under section 33(1) depends on the twin conditions that the machinery or plant must be owned by the assessee and wholly used for the purposes of the business carried on by it. The provision requires unity of ownership and user during the relevant previous year. A reconstituted firm is not automatically the same assessable entity as the earlier firm, and the benefit cannot be claimed unless ownership of the asset is shown to have passed to the claimant in legally recognised form. On the facts, the assessee failed to establish that it became the owner of the machinery installed by the earlier firm.

Conclusion: The assessee was not entitled to development rebate under section 33(1) of the Income-tax Act, 1961.

Final Conclusion: The appeal failed, and the Revenue's view that the assessee could not claim the rebate was upheld.

Ratio Decidendi: Development rebate is allowable only to the assessee who both owns the machinery or plant and uses it wholly for its business during the relevant period; absence of proved ownership defeats the claim.

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