1971 (5) TMI 11 - HC - Income Tax

Use of some imported reconditioned machinery - Whether the assessee s industrial undertaking was not formed by the transfer to its business of machinery or plant previously used in any other business within the meaning of section 15C(2)(i) of the Indian Income-tax Act, 1922, for the purposes of tax exemption in accordance with section 15C(1)

Summary

Issues:
1. Whether the assessee's industrial undertaking qualifies for tax exemption under section 15C(2)(i) of the Indian Income-tax Act, 1922.
2. Whether the machinery worth Rs. 2,68,515 qualifies as new machinery under section 10(2)(vib) of the Indian Income-tax Act, 1922.

Analysis:
1. The first issue revolves around the interpretation of section 15C(2) concerning the formation of an industrial undertaking without the transfer of machinery previously used in any other business. The court rejected the contention that the machinery must be entirely new, emphasizing that the machinery must have been used in a business in India, not necessarily brand new. The court highlighted that the provisions of section 10(2)(vib) do not control the interpretation of section 15C(2) as they serve different purposes. The Tribunal's decision to treat the machinery as new based on the substantial portion being new was upheld, citing precedent and rejecting the argument based on percentages.

2. The second issue pertains to whether reconditioned machinery worth Rs. 2,68,515 qualifies as new machinery for development rebate under section 10(2)(vib). The court referred to a Supreme Court decision indicating that reconditioned machinery can be considered new in certain circumstances. However, due to insufficient facts provided in the case, the court remitted this aspect back to the Tribunal for a proper determination based on the Supreme Court precedent. The court deferred the decision on costs pending the receipt of additional facts for a just determination of the second question.