Wholly used requirement for development rebate is construed strictly, defeating relief where plant serves partly let-out premises.

Development rebate on machinery or plant is available only when the asset is new, installed after the relevant date, and wholly used for the assessee's business. In this commentary, an air-conditioning plant in a building partly let out to tenants was treated as failing that test because income from the let-out portion was characterised as property income, not business income, under the Income-tax Act. The strict wording of the taxing provision was applied, so the fact that the plant served the whole premises or that the non-business use was small did not satisfy the condition. De minimis and substantial compliance were held inapplicable to relax the statutory requirement.

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Issues: Whether the assessee was entitled to development rebate on air-conditioning plant used in a building partly let out to tenants, and whether the plant was "wholly used" for the purposes of the assessee's business within the meaning of the taxing provision.

Analysis: The allowance of development rebate under the relevant provision depended upon the machinery or plant being new, installed after the specified date, and wholly used for the purposes of the business carried on by the assessee. Income from the let-out portion of the premises was treated as income from property under the scheme of the Income-tax Act, not as business income, even if letting might be regarded as part of the banking company's objects under the Banking Companies Act. The requirement of "wholly used" was construed strictly in a taxing statute, and the fact that the plant served the whole premises or that the let-out area was small did not satisfy the statutory condition. The doctrines of de minimis non curat lex and substantial compliance were held inapplicable to dilute the clear language of the provision.

Conclusion: The assessee was not entitled to development rebate, and the answer to the reference was against the assessee and in favour of the Revenue.

Ratio Decidendi: In a taxing provision granting development rebate, the condition that the machinery or plant must be "wholly used" for the purposes of the business requires complete compliance and cannot be relaxed by treating partial or incidental non-business use as immaterial.

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