1997 (8) TMI 2

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.... in respect of the assessment year 1969-70 at the rate of 35 per cent. the Income-tax Officer held that inasmuch as the machinery was also being used for the manufacture of some other items not falling under the Fifth Schedule, therefore, the rate of development rebate should be restricted to 20 per cent. only. Being aggrieved, the respondent succeeded in the appeal filed before the Appellate Assistant Commissioner. The Department filed an appeal to the Income-tax Appellate Tribunal which, however, upheld the assessee's contention. At the instance of the Department, the Tribunal referred the following question of law to the High Court (see [1980] 123 ITR 130) : " Whether, in the assessment for the assessment year 1969-70 the assessee ....

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....s of the business carried on by him, there shall, in accordance with and subject to the provisions of this section and of section 34, be allowed a deduction, in respect of the previous year in which the ship was acquired or the machinery or plant was installed or, if the ship, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, a sum by way of development rebate as specified in clause (b). (b) The sum referred to in clause (a) shall be-- (A) in the case of a ship, forty per cent. of the actual cost thereof to the assessee ; (B) in the case of machinery or plant,-- (i) where the machinery or plant is installed for the purposes of business of construction, man....

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....ule being "automobile ancillaries". These items were in fact manufactured. Section 33(1)(b) does not state that the machinery which has been installed for the manufacture or production of one or more of the articles specified in the Fifth Schedule should be used solely or exclusively for the manufacture of that/those article/articles. As long as the machinery, which is installed, manufactures any of the articles specified in the Fifth Schedule, the assessee would be entitled to claim development rebate at the rate of 35 per cent. if the machinery is installed before April 1, 1970, notwithstanding the fact that in addition to the manufacture of the listed items, the assessee also manufactures some other goods with the help of that machinery.....