1975 (10) TMI 19

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....ent year when no reserve was created in the year the machineries were first put to use ?" Assessee is a private limited company. The year of assessment is 1968-69. Assessee put up its plant and machinery for the first-time during this year. The Income-tax Officer computed assessee's loss for the year at Rs. 3,03,143 but did not allow any development rebate to be carried forward as provided in section 33(2) of the Act on the ground that the condition imposed under section 34(3) of the Act had not been satisfied. Assessee preferred an appeal to the Appellate Assistant Commissioner for a direction to the Income-tax Officer to determine the development rebate to be carried forward in the manner provided by law to be allowed in such year w....

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....ess 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); ...... (2) In the case of a ship acquired or machinery or plant installed after the 31st day of December, 1957, where the total income of the assessee assessable for the assessment year relevant to the previous year in which the ship was acquired or the machinery or plant installed or the immed....

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.... the case may be." Relief by way of development rebate was introduced for the first time by the Finance Act of 1955, and was intended as a fillip to business by permitting assessees to deduct a certain percentage of the actual cost of specified capital assets as revenue expenditure in lump. This is not over and above the normal recoupment of actual cost of the capital assets through depreciation allowance. The three qualifications for being entitled to development rebate are : (i) the asset should hive been owned by the assessee during the relevant accounting year; (ii) it must be wholly used for the purpose of the business; and (iii) the business should have been carried on by the owner during the entire accounting period. U....