COMMISSIONER OF INCOME TAX Vs. JYOTI LIMITED

JUDGEMENT

(1.) THE Tribunal (hereinafter referred to as "the Tribunal") has referred to us the following two questions for our opinion under S. 256(1) of the IT Act, 1961 ("the Act" for short) :

(2.) SO far as the second question referred to us is concerned, the facts are as follows : The assessee, a public limited company, is engaged in the business of manufacture of electrical equipments such as switch gears, circuit breakers etc., and giving of technical know how. In the previous year relevant to the asst. year 1970 71, the assessee company installed a lift in the building exclusively used for research and development. The assessee company claimed development rebate on the lift. The ITO rejected the claim of the assessee company on the ground that the lift was a part of the building and it could not be treated as plant or machinery. In the alternative, he held that the lift could be treated as machinery for transporting men and materials from one place to another According to the ITO, whether transport was horizontal or vertical, rebate on machinery for transport would not be admissible. In the appeal, the AAC observed that the ITO while emphasising the description of the lift as machinery meant for transport, overlooked the provisions of S. 33(1)(a) of the Act which specifically excluded only road transport vehicles from its purview for admissibility of development rebate. The AAC observed that the ITO was technically correct when he said that the lift is used for transporting men and materials, but by no stretch of imagination could it be described as road transport vehicle. According to the AAC, only road transport vehicles were excluded from the purview of S. 33(1)(a) and not any other type of machinery used for transport. He, therefore, held that the assessee company was entitled to development rebate on the lift. The Revenue carried the matter in appeal before the Tribunal. The Tribunal agreed with the AAC that the lift could not be described as a road transport vehicle. The Tribunal further held that the AAC was right in treating lift as plant or machinery. The Tribunal further observed that applying the test laid down by this Court, in CIT vs. Elecon Engineering Co. Ltd. (1974) 96 ITR 672 (Guj), the assessee company was entitled to development rebate on the lift as heeld by the AAC. The Revenue feeling aggrieved by the view taken by the Tribunal, the question referred to above has been referred to us at its instance.