Judgement

SHAH, J. :- The respondent - hereinafter called "the assessee" - carries on the business of manufacture and sale of cotton yarn. In the previous year relevant to the assessment year 1956-57, the assessee spent Rs. 93,215 for introduction of "Casablanca conversion system" in its spinning plant. Substantially this involved replacement of certain roller stands and fluted rollers fitted with rubber aprons to the spinning machinery, removal of ring-frames from certain existing parts, introduction, inter alia, of ball-bearing jockey-pulleys for converting the original band-drivers to tape-drivers and other additions and alterations in the drafting mechanism.

2. The Income-tax Officer disallowed the claim of the assessee for Rs. 93, 215 because it was not admissible as "development rebate" since the introduction of Casablanca conversion system did not involve installation of "new machinery". The Appellate Assistant Commissioner agreed with the Income-tax Officer. In appeal to the Appellate Tribunal besides submitting the claim that expenditure was allowable as development rebate, the assessee urged that the amount laid out for introducing the Casablanca conversion system was in a