24 April 1964
Supreme Court


Case number: Appeal (civil) 145 of 1963






DATE OF JUDGMENT: 24/04/1964


CITATION:  1964 AIR 1693            1964 SCR  (7) 846  CITATOR INFO :  D          1975 SC 481  (3)

ACT: Income  Tax-Depreciation  allowance-Replacement  of   petrol engine  in  a  bus  by  new  Diesel  engine-If  amounts   to installation of machinery ’Installation of machinery", Mean- ing  of-Indian  Income-tax  Act,  1922  (11  of  1922),  ss. 10(2)(vi). 10 (2) (via).

HEADNOTE: The  assessee, who was the owner of a fleet of  buses,  rep- laced  the petrol engines in two of his buses by new  Diesel engines  incurring  an expenditure of Rs. 18,544/-  in  this connection, during the year of account ending with March 31, 1950.  For the relevant assessment year he claimed deprecia- tion  allowance  under the second para of cl. (vi)  and  cl. (via) of s. 10(2) of the Indian Income-tax Act, 1922,  apart from  the  normal depreciation under the first para  of  cl. (vi) but he was allowed only 25 per cent depreciation  under the  first para ,of cl. (vi) on the ground that he  was  not entitled  to  extra depreciation under s. 10(2)(vi).  or  s. 10(2)(via) because the ,engine was only part of an equipment and  could not by itself become machinery and that  when  an engine was fixed in a motor vehicle it could not be said  to be installed within the meaning of those sub-sections. Held:  (per Subba Rao and Sikri, JJ.) (i) The  assessee  was entitled  to  extra depreciation under  ss.  10(2)(vi).  and 10(2)  (via) of the Indian Income-tax Act, 1922, in  respect of  the  diesel oil engine fitted to the motor  vehicles  in replacement of the existing engines. (ii)The  definition  of  "machinery"  given  by  the  Privy Council in the case of Corporation of Calcutta v.  Chairman, Cossipore and Chitpore Municipality (1922) L.R. 48 I.A. 435, is  applicable,  and according to that definition  a  diesel engine is clearly "machinery".  And when an engine is  fixed in  a  vehicle  it is installed within the  meaning  of  the expression in cls. (vi) and (via). Per Shah, J. (dissenting)--Replacement of a petrol engine by a  new  diesel engine in a motor car cannot be  said  to  be installation  of machinery.  To be installed, the  machinery must for the purpose of the business be brought into service



as  a  self-contained  unit, and it would  be  difficult  to regard  the  introduction  of  a mere  part,  which  has  no independent  use in the business conducted by the  assesses, as machinery installed for the purpose of the second para of cl. (vi) of s. 10 (2).

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 145 of  1963. Appeal from the judgment and order dated November 16.  1959, of the Madras High Court in Case Reference No. 82 of 1956. S.   K. Kapur and R. N. Sachthey, for the appellant. S.   Swaminathan and R. Gopalakrishnan, for the respondent. 847 S.   T.  Desai, J. B. Dadachanji, O. C. Mathur and  Ravinder Narain, for the intervenor. April 24, 1964.  The judgment Of SUBBA RAo and SIKRI In, JJ. was  delivered  by SIKRI J. SHAH J. delivered  a  dissenting Opinion. SIKRI,  J.-This is an appeal by the Commissioner  of  Income Tax,  Madras, against the judgment of the High Court,  dated November  16,  1959, on a certificate granted  by  the  High Court under s. 66A(2) of the Indian Income Tax Act, 1922. The  respondent, Mir Mohd.  Ali, hereinafter referred to  as the assessee, is a bus owner and transport operator at  Vel- lore,  North Arcot District.  He had a fleet of  buses,  and during  the  year  of account ending  with  March  31,  1950 (relevant to assessment year 1950-51) he replaced the petrol engines  in  two of his buses (MDJ 583 and MDJ 723)  by  new Diesel  engines, incurring an expenditure of  Rs.  18,544/in this connection.  Before the Income Tax Officer, apart  from claiming  normal depreciation under the first  Paragraph  of cl. (vi) of s. 10(2), he also claimed depreciation under the second  paragraph  of cl. (vi) and cl. (via) of  the  Indian Income  Tax Act, 1922.  The Income Tax Officer only  allowed 25  per cent depreciation under the first paragraph  of  cl. (vi).  The assessee appealed unsuccessfully to the Appellate Assistant  Commissioner  on this point.   There  were  other points  involved in the appeal but as we are  not  concerned with  them in this appeal, they are not being mentioned.  On further  appeal,  the  Appellate  Tribunal  held  that  "the assessee  is  not entitled to extra  depreciation  under  s. 10(2)  (vi) or s. 10(2)(via) because however  important  the engine might be for running of a motor, it is after all part of  an equipment and it cannot by itself become  "machinery" for the purpose of claiming extra depreciation, as envisaged in   these   sub-sections.   We  have  to  hold   that   the "installation of the new engines is only a capital addition, for  the above reasons the assessee was rightly refused  the extra  depreciation  he claims".  The Income  Tax  Appellate Tribunal,  on the application of the assessee, referred  the following question to the High Court:               "Whether  extra  depreciation  is   admissible               under the provisions of section 10(2)(via)  of               the Income Tax Act, in respect of a diesel oil               engine   fitted   to  a   motor   vehicle   in               replacement of the existing engine." We may mention that another question regarding  disallowance of interest had also been referred to the High Court but  we are not concerned with that in the present appeal. 848 As  the  High Court felt that there had been  an  accidental slip in framing the question, it amended the question as and the amended question reads:



             "Whether  extra  depreciation  is   admissible               under  the  provisions  of  s.  10(2)(vi)  and               section  10(2)(via) of the Income Tax  Act  in               respect  of the diesel oil engines  fitted  to               the  motor  vehicles  in  replacement  of  the               existing engines". The  High  Court answered this question in  the  affirmative i.e., in favour of the assessee.  The Commissioner of Income Tax,  on  obtaining  a certificate under s.  66A(2)  of  the Income Tax Act, has filed this appeal. Before attempting to answer the question, it is necessary to set out the relevant provisions of the Income Tax Act.   The relevant provisions, as in force at the relevant time, were:               s.    10(2)  Such  profits or gains  shall  be               computed    after   making    the    following               allowances, namely--               (iv)in respect of insurance against risk  of               damage or destruction of buildings, machinery,               plant,  furniture, stocks or stores, used  for               the  purposes of the business,  profession  or               vocation, the amount of any premium paid;               (v)   in  respect of current repairs  to  such               buildings, machinery, plant or furniture,  the               amount paid on account thereof;               (vi)in  respect  of  depreciation  of   such               buildings,  machinery,  plant,  or   furniture               being  the  property of the  assessee,  a  sum               equivalent,  where the assets are ships  other               than ships ordinarily plying on inland waters,               to  such  percentage  on  the  original   cost               thereof to the assessee as may in any case  or               class of cases be prescribed and in any  other               case,  to such percentage on the written  down               value  thereof as may in any case or class  of               cases be prescribed;               and  where  the  buildings  have  been   newly               erected,  or the machinery or plant being  new               has  been  installed, after the  31st  day  of               March,  1945,  a  further  sum  (which   shall               however  not be deductible in determining  the               written  down value for the purposes  of  this               clause) in respect of the year of erection  or               installation equivalent,-               (a)   in the case of buildings the erection of               which  is begun and completed between the  1st               day               849               of  April 1946 and the 31st day of March  1952               (both dates inclusive), to fifteen per cent of               the cost thereof to the assessee;               (b)   in  the case of other buildings, to  ten               per cent of the cost thereof to the assessee;               (c)   in  the case of machinery or  plant,  to               twenty  per  cent of the cost thereof  to  the               assessee:               Provided that-               (via) in respect of depreciation of  buildings               newly erected, or of machinery or plant  being               new  which has been installed, after the  31st               day of March, 1948, a further sum (which shall               be deductible in determining the written  down               value)  equal to the amount  admissible  under               clause (vi) (exclusive of the extra  allowance               for  double or multiple shift working  of  the               machinery    or   plant   and   the    initial



             depreciation  allowance admissible under  that               clause  for the first year of erection of  the               building or the installation of the  machinery               or  plant) in the assessments for such of  the               five years commencing on the 1st day of April,               1949,  and ending with the 31st day of  March,               1954:               Provided  that  where,  in  respect  of   such               machinery  or plant, the assessee  establishes               that the market value of similar machinery  or               plant on the 31st day of March, 1953, is lower               than  the original cost, then, subject to  the               provisions of clause (vi), there shall be made               in the assessment for the year commencing next               after  that  date a further  allowance  (which               shall be deductible in determining the written               down value) of an amount by which the  written               down  value  of the machinery or plant  as  on               that  date (without deduction of  the  initial               depreciation  admissible  in the  first  year)               would have exceeded the corresponding  written               down value thereof as on the same date if  the               market  price  of the machinery or  plant  had               been taken as the actual cost of the assessee;               (vii)in   respect  of  any   such   building,               machinery  or  plant which has  been  sold  or               discarded  or  demolished  or  destroyed,  the               amount by which the written down value thereof               exceeds the amount               850               for which the building, machinery or plant, as               the case may be, is actually sold or its scrap               value:               Provided that               (5)   In  sub-section  (2)   ..........‘plant’               includes vehicles, books, scientific apparatus               and  surgical  equipment  purchased  for   the               purpose   of  the  business,   profession   or               vocation......." The  point at issue before us has been considered  by  three High Courts.  The Bombay and Andhra Pradesh High Courts have held  against  the  assessee while  in  the  judgment  under appeal,  the  Madras High Court has held in  favour  of  the assessee.  The High Court of Andhra Pradesh, in the case  of B.   Srikantiah   v.  Commissioner  of   Income-Tax   Andhra Pradesh(1), followed the Bombay case and expressly dissented from the Madras case. In  the judgment under appeal (reported as Mr. Mohd. Ali  v. Commissioner  of  Income-Tax,  Madras(2),  the  High   Court arrived at the conclusion by the following steps:               (a)Machinery must be given the same meaning               with  reference  to  each  of  the   statutory               provisions, in s.    10(2)(vi)     and      s.               10(2)(via);               (b)  A diesel engine is machinery by the  test               laid  down  in  the  case  of  Corporation  of               Calcutta  v. Chairman, Cossipore and  Chitpore               Municipality(3);               (c)  Machinery does not cease to be  machinery               merely   because   it  has  to  be   used   in               conjunction  with one or more  machines.   Nor               does  it cease to be machinery merely  because               it  is, for instance, installed as part  of  a               manufacturing or industrial plant;               (d)   The statutory provision for depreciation



             is in the alternative.  Whether it is plant or               whether  it  is machinery  without  its  being               itself  a plant, the assessee is  entitled  to               claim    the    statutory    allowance     for               depreciation. The question then is: Which is the correct view?  First, the history of para two of cl. (vi) may be noticed.  The  object of  the  Income Tax (Amendment) Act, 1946  (VIII  of  1946), which   first  inserted  the  provisions   regarding   extra depreciation,  was  to encourage the modernisation  and  re- habilitation of industry and trade.  The Second World War (1961) 41 I.T.R. 518.         (2) (1960) 38 I.T.R. 413. (3) (1922) I.L.R. 49Cal. 190. 851 had  ended  recently and during the long war  machinery  and plant  had not only not been replaced or modernised but  had been  subjected  to  excessive  wear  and  tear  and  needed rehabilitation.   During  the  War,  there  had  also   been great,,, -advance in technology. It is then pertinent to point out that the word  ’machinery’ occurs in cls. (iv), (v), (vi) and (via) of s. 10(2).  Prima facie the same meaning must be given to the word ,machinery’ in  all  these  clauses.   If a  machine  is  machinery  for purposes  of giving an allowance in respect of insurance  or for repairs or in respect of normal depreciation or for  the purpose  of para one of cl. (vi), it must also be  machinery for the purpose of second para of cl. (vi) and cl. (via). But  it is said that the scheme of para two of cl. (vi)  and cl.  (via)  is different from that of para one of  cl.  (vi) inasmuch  as before it can qualify for  extra  depreciation, the  machinery  must be new and must be installed,  and  the rate of depreciation is provided in the Act itself.  Keeping in  view this scheme, it is urged that the word  ’machinery’ must  be given a restricted meaning in para two of cl.  (vi) and cl. (via), and the meaning suggested is that it must  be a  "self contained unit capable of being put to use  in  the business, profession or vocation for the benefit of which it was  installed".   That  this is the  true  meaning,  it  is further  said,  is evidenced by the definition of  the  word ’plant’  in  s. 10(5).  It is argued  that  this  definition indicates that for purposes of para two of cl. (vi) and  cl. (via),  ’plant’, including a vehicle should be viewed  as  a unit  and  component  parts thereof are  excluded  from  its purview,  and ’machinery’ should also be considered  in  the same light. Let  us  now examine these contentions.  First,  we  do  not think  that  there is anything in the scheme of  the  second para ,of cl. (vi) and cl. (via) that throws any light on the construction  of the word ’machinery’ in these clauses.   It is  true  that  the machinery must be new  and  it  must  be installed and the rate of allowance is prescribed in the Act itself.  But the requirement that the machinery must be  new does  not  tell us what is ’machinery’.   Assuming  for  the present  that a diesel engine is machinery, if  an  assessee buys and instals a secondhand diesel engine, he will not  be given the extra allowance under the second para of cl. (vi), and  the ground would be that the engine is not new and  not that  because  it  is  second-hand,  it  is  not  machinery. Similarly, if it is purchased but not installed, the  ground of  refusal would be that it has not been installed and  not that  because it has not been installed it has ceased to  be machinery.   Suppose  a new machinery is purchased  but  not installed,  it would not qualify for extra  depreciation  on the ground that it has not been 852



installed and not because it has ceased to be machinery  due to  its  non-installation.   The  fact  that  the  rate   of depreciation is provided for in the Act has also no  bearing on the question of the construction of the word ’machinery’. This  fact only indicates that the legislature had  made  up its  mind as to the extent of encouragement to be  given  to industry and, therefore, it did not consider it necessary to delegate this to the rule-making authority. The definition of the word ’plant’ in s. 10(5) equally  does not throw any light on the meaning of the word  ’machinery’. The  word ’plant’ is of wide import, but even so it  may  be argued  that  vehicles,  books,  scientific  apparatus   and surgical  equipment are not ’plant’ in all businesses,  pro- fessions  and  vocations.   The  legislature  settled   this possible controversy, but without throwing any light on  the true meaning of the word ’machinery’. What  then is the test for determining whether a  mechanical contrivance is machinery for the purposes of second para  of cl.  (vi) and cl. (via)?  The Privy Council in the  case  of Corporation of Calcutta v. Chairman, Cossipore and  Chitpore Municipality(1)   hazarded  the  following   definition   of ‘machinery’:               "The  word ’machinery’, when used in  ordinary               language  prima facie, means  some  mechanical               contrivances   which,  by  themselves  or   in               combination with one or more other  mechanical               contrivances,.  by the combined  movement  and               inter-dependent operation of their  respective               parts generate power, or evoke, modify,  apply               or  direct natural forces with the  object  in               each   case  of  effecting  so  definite   and               specific a result." They  had  already observed that the word  ’machinery’  must mean  more than a collection of ordinary tools.   The  Privy Council case was not a tax case but prima facie the ordinary meaning  of the word ’machinery’-and the word machinery’  is an  ordinary and not a technical word-must, unless there  is something  in the context, prevail in the Indian Income  Tax Act also. According  to  the  above definition,  a  diesel  engine  is clearly  ’machinery’.  Indeed, r. 8 of the Income Tax  Rules treats  aero-engines separately from aircraft.  It  is  true that  this rule cannot be used to interpret the  clauses  in the  Act  but it does show that components of  an  aircraft, which are machinery, can be treated separately.    (1) (1922) I.L.R 49 Cal. 190 853 Further,  when  the assessee purchased the  diesel  engines, they  were not ’plant’ or part of a plant, because they  had not been installed in any vehicle.  They were, according  to the definition given by the Privy Council, machinery.  They, were not yet part of a plant, and, according to the Act, 20’ per cent of the cost thereof was allowable to the  assessee. All the conditions required by the Act are satisfied.  If we look at the point of time of purchase and installation, what was purchased and installed was machinery. The learned counsel next contended that the assessee is  not entitled  to  extra  depreciation because  a  diesel  engine cannot  be  said to be installed.  He urges  that  the  word ’installed’ is wholly inappropriate to cover the fixing of a diesel  engine  in a motor vehicle.  We are of  the  opinion that  there is no force in this contention.  As observed  by the Bombay High Court in the case of Commissioner of Income- Tax v. Saraspur Mills Ltd.(1) the expression ’installed’ did not  necessarily mean ’fixed in position’ but was also  used



in  the  sense of ’inducted or introduced’-, or to  use  the language   of  the  Madras  High  Court  in  the   case   of Commissioner of Income Tax, Madras v. Sri Ram Vilas Services (Pvt)  Ltd.(2), installed would certainly mean ’to place  an apparatus  in position for service or use’.  We are  of  the opinion  that  when an engine is fixed in a  vehicle  it  is installed within the meaning of the expression in cls.  (vi) and (via). Accordingly,  we  hold that the High Court  was  correct  in answering  the question referred to it in  the  affirmative. The appeal, therefore fails and is dismissed with costs. SHAH,  J.-  I  am  unable to hold  that  the  respondent  is entitled to the allowance under s. 10(2)(vi) paragraph 2, in respect of the diesel engines claimed by him. Section  10 of the Indian Income-tax Act provides  that  tax shall  be  payable on the profits and gains of  an  assessee under the head ’profits and gain of business, profession  or vocation".  By sub-s. (2) in the computation of taxable pro- fits certain allowances prescribed therein are  permissible. We  are primarily concerned in this appeal with the  initial allowance permissible under the second paragraph of cl. (vi) of sub-s. (2).  But cls. (iv), (v), (vi), (vi)(a) and  (vii) are  inter-related and it may be necessary briefly to  refer to  those provisions By cl. (iv) allowance for premium  paid in   respect  of  insurance  against  risk  of   damage   or destruction  of  buildings,  machinery,  plant,   furniture, stocks  or  stores, used for the purposes of  the  business, profession  or  vocation is admissible.  Under  cl.  (v)  an amount  paid  on  account of any  current  repairs  to  such buildings, machinery, plant or furniture is (1),(1959) 36 I.T.R. 580. ( 2 )  (1960) 38 I.T.R. 25. 854 an  admissible  allowance.  Clause (vi)  recognises  by  the first  paragraph  a  right  to  normal  depreciation  of   a percentage  on the prescribed valuation of  such  buildings. machinery, plant or furniture, which are the property of the assessees.  The second paragraph at the material time  stood as follows:               "and  where  the  buildings  have  been  newly               erected,  or the machinery or plant being  new               has  been  installed, after the  31st  day  of               March,  1945,  a  further  sum  (which   shall               however  not be deductible in determining  the               written  down value for the purposes  of  this               clause) in respect of the year of erection  or               installation equivalent, etc. etc." Clause (vi)(a) which was inserted by Act 67 of 1949  permit- ted a further depreciation allowance In respect of buildings newly  erected or of machinery or plant being new which  had been erected or installed after March 31, 1948, in not  more than  five successive assessments, for the  financial  years next  following  the previous year in which  such  buildings were erected, or machinery or plant installed.  Clause (vii) permitted as an allowance the difference between the written down  value  and  the  sale price or  scrap  value  of  such buildings,   machinery  or  plant  which  had   been   sold, discarded, demolished or destroyed. All these clauses dealt with allowances in respect of assets of  the  specified description and used for the  purpose  of business,  profession or vocation.  The depreciation  allow- ance  permitted under the first paragraph of cl. (vi)  which may  be  called the normal allowance is in  respect  of  all buildings,  machinery, plant and furniture of  the  assessee used  for  the  purpose  of his  business.   By  the  second



paragraph  of cl. (vi) an initial allowance in the  year  in which buildings have been newly erected or the machinery  or plant being new has been installed after March 31, 1945,  is allowable.  Use of the definite article "the" in the  second paragraph  indicates that the buildings, machinery or  plant referred  to  in that paragraph must also be  used  for  the purpose  of  the  business, profession or  vocation  of  the assessee.   However  to qualify for  the  initial  allowance under paragraph two, the buildings must be newly erected  or the  machinery or plant being new must have been  installed, after March 31, 1945. Two  rival  views  are pressed upon us  in  support  of  the respective cases of the Commissioner and the assessee as  to the  meaning  of  the second  paragraph.   The  Commissioner contends  that the buildings, machinery or plant  for  which the initial allowance is admissible must be a self-contained unit capable of being put to use in the business, profession or  vocation  for  the benefit of which  it  is  erected  or installed.  It is submitted that the second paragraph of cl. (vi) was en- 855 acted  with the object of giving a fillip to industry  which had  been starved during the war years of new machinery  and building  activity.  But the buildings, machinery, or  plant to  qualify for the initial allowances were not intended  to be  in  the nature of replacement, addition,  or  repair  to existing  units: they had to be buildings newly  erected  or machinery  or plant being new installed.  On behalf  of  the assessee  it was contended that the Legislature has not  put any  restriction  of the nature suggested on behalf  of  the Commissioner and, therefore, any building or a part  thereof newly  erected  or  any new machinery or  plant  or  a  part thereof installed,. qualified for the benefit of the initial allowance. The question to be decided is one about the intention of the Legislature.   Can  it  be said that  when  to  an  existing building  a room even a floor is added, that the  additional construction is a building newly erected?  In my view,  that does not appear to be the intention.  Such an addition to an existing  structure,  becomes a part of the  structure,  and cannot  be  said to be a building newly erected.   If  every alteration or addition in an existing building is covered by the second paragraph of cl. (vi) mere repairs falling within the  words  of  cl.  (vi)  may  also  qualify  for   initial allowance.   If  a  mere addition to a  building  cannot  be regarded  as  such  an erection as is  contemplated  by  the second paragraph of cf. (vi), it would be difficult to  hold that the machinery or plant would include part of  machinery or plant. Counsel  for  the assessee concedes that  replacement  of  a petrol engine by a diesel engine in a motor transport  vehi- cle  is not installation of plant.  The question is  whether it is installation of machine.  In my view replacement of  a petrol  engine by a new diesel engine in a motor-car  cannot be  said to be installation of machinery within the  meaning of the relevant clause.  To be installed the machinery being new  must  for the purpose of the business be  brought  into service  as a self-contained unit.  If the argument  of  the assessee  is sound, every bolt, nut, rod or  flywheel  which constitute a part of machinery would qualify for the initial allowance  and  the  difference between  the  allowance  for repairs  and initial allowance may be obliterated.   Counsel for the assessee also did not, as I understood him,  contend that   replacement   of  a  mere  part  of   machinery   was installation  of machinery within the meaning of the  second



paragraph  of cl. (vi).  The Legislature has not  given  any definition   for   that  expression,  and   the   expression "machinery" is otherwise somewhat difficult to define.   The Judicial  Committee in Corporation of Calcutta v.  Cossipore and  Chitpore  Municipality(1) when it was  called  upon  to consider whether a tank supported on (1)  L. R. 48 I.A. 435. 856 columns,  and  which could be filled by pumping from  a  re- servoir  belonging to the Corporation could be  regarded  as machinery  within the meaning of the Bengal  Municipal  Act, 1884, observed at p. 445:               "If  their Lordships were obliged to  run  the               hazard  of the attempt (to  define  machinery)               they  would be inclined to say that  the  word               ’machinery’  when used in  ordinary  language,               prima facie means some mechanical contrivances               which,  by themselves or in  combination  with               one  or more other mechanical contrivance,  by               the  combined  movement  and   inter-dependent               operation  of their respective parts  generate               power,  or  evoke,  modify,  apply  or  direct               natural forces with the object in each case of               effecting so definite and specific a result." But we are not called upon in this case to decide whether  a diesel engine is in the abstract machinery: the question  is whether a diesel engine, which is used for replacing a  pet- rol  engine, in a vehicle used by a transport  operator  for the  purpose of his business is machinery  installed  within the meaning of s. 10(2)(vi) paragraph 2. Whether "machinery" is  some contrivance for supplying motive power  to  another contrivance  which  directly  produces an article  or  is  a mechanical  contrivance  which produces or  assists  in  the production  of an article, it would be difficult  to  regard introduction of a mere part, which has no independent use in the  business  conducted  by  the  assessee,  as   machinery installed  for  the purpose of the second paragraph  of  cl. (vi).    The  Legislature  has  provided  for   the   normal depreciation  by paragraph 1 of cl. (vi) and in  respect  of newly  installed machinery it has provided for  the  initial allowance,  the  object being to  induce  industrialists  to start new industries or to extend their existing  industries by  erecting new buildings, or installing new  machinery  or plant. A  diesel  engine  by itself may undoubtedly be  used  in  a business  other  than  that of  a  transport  operator,  for instance,  for working a pump to draw underground water  and may  for that purpose be regarded as a self-contained  unit. But  that  is not decisive of the question  whether  in  the business  of  a transport operator a diesel engine  used  to replace  a  petrol  engine  may  be  regarded  as  machinery installed.   Machinery  installed  within  the  meaning   of paragraph  2 of s. 10(2)(vi) is qualified by the  expression "used  for  the  purposes of the  business",  and  therefore unless  as a self-contained unit the machinery is  used  for the purposes of the business, initial depreciation would not be admissible in respect thereof.  That it may be capable of being used in another 857 business by the same or another assessee as a self-contained unit  is  irrelevant in considering  its  admissibility  for initial  allowance in the business in which it  is  actually used. It would be fruitless to refer to the schedule under rule  8 of the Income-tax Rules for computing the allowance in  res-



pect  of the depreciation under s. 10(2)(vi).  The  schedule catalogues different items in respect of which  depreciation is  admissible  at  the rates  prescribed.   But  whether  a particular  item is admissible for initial allowance in  the second paragraph must depend upon two factors-(i) that it is in respect of the year of erection or installation that  the initial  allowance is permissible; and (ii) the building  or the machinery is used for the purposes of the business.   If it is a predicate of admissibility to initial allowance that the  machinery must be new and a self-contained unit in  the particular business in the carrying on of which the  initial allowance  is claimed, the fact that in  certain  conditions that  machinery  may be regarded as self-contained  for  the purpose  of  another  business in which it  is  used,  would furnish  no guide in ascertaining whether initial  allowance is  permissible as a deduction in the assessment of  taxable income of the business in which it is actually used. In  my  view the appeal should be allowed and  the  question referred for opinion should be answered in the negative.                            ORDER In accordance with the opinion of the majority the appeal is dismissed with costs. Appeal dismissed. 858