COMMISSIONER OF INCOME TAX MADRAS vs SOUTHERN ROADWAYS (P) LTD.

The Supreme Court held that under Section 10(2) of the Income Tax Act, 1922, as it stood in 1950, no allowance is permissible for machinery that consists of office appliances or road transport vehicles. The Court clarified that diesel engines fitted to transport vehicles do not qualify for development rebate since the rebate is applicable only to machinery used for business purposes, and in this case, the vehicles were the ones used for business, not the engines. The High Court's decision favoring the assessee was overturned, affirming the Income Tax Tribunal's ruling that denied the rebate for the assessment year 1962-63 under the Income Tax Act, 1961.