COMMISSIONER OF INCOME TAX Vs. MODI INDUSTRIES LIMITED

JUDGEMENT

(1.) These two references, which relate to the assessment years 1969-70 and 1971 - 72 involve a common question referred under Section 256(1) of the Income-tax Act, 1961 (in short 'Act') by the Income-tax Appellate Tribunal Delhi Bench-A New Delhi (in short 'Tribunal'):- "Whether on the facts and circumstances of the case, the Tribunal was justified in law in holding that development rebate was allowable even on the items of plant and machinery costing less than Rs. 750.00?"

(2.) Factual position in a nutshell is as follows:- Assessee a public limited company claimed deduction under the 1 st proviso to Section 32(1)(ii), in respect of items of plant and machinery costing less than Rs. 750.00 each, while computing its total income. Assessee also claimed development rebate in respect of such new items of plant and machinery. The income-tax Officer (in short "I.T.O.") held that development rebate could not be allowed in respect of plant nd machinery whose total value has been allowed to be written off under the proviso to Section 32(1 )(ii). Matter was carried in appeal before the Appellate Assistant Commissioner (in short "AAC"). Said officer held that the ITO was not correct in refusing to allow development rebate on such items of plant and machinery. Appeals were preferred by the Revenue before the Tribunal. Revenue's stand was that once having got a deduction by operation of one provision, there could not be allowance of a further deduction. To put it differently, it was Revenue's stand that the provision applies to actual cost and 100% deduction is to be allowed and not 100% depreciation. Additionally two benefits are relateable to grant of a particular type of benefit and therefore double deduction is not permissible. Tribunal held that assessee is entitled to the allowance of development rebate under Section 33(1)(b), if the requisite development rebate reserve has been created and this allowance was different in context from the depreciation allowed on the cost of plant and machinery which does not exceed Rs. 750.00 each. On being moved for reference, question as set out above, has been referred for opinion of this Court.

(3.) The stand taken before the Tribunal was reiterated by learned counsel for the Revenue. Learned counsel for the assessee, on the other hand, submitted that the scope of the allowances under the two provisions are entirely different and the provisions operate in different fields.