Functional nexus test for plant and machinery allowed investment allowance on tea estate leaf-carrying trailers.

Leaf-carrying basket trailers used exclusively within a tea estate to transport green leaves to the factory were treated as plant and machinery because they had a direct functional nexus with the tea manufacturing process and were not used as general road vehicles. On those undisputed facts, the trailers formed part of the integrated business of tea manufacture and sale, so investment allowance was admissible.

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Issues: Whether leaf-carrying basket trailers used only within a tea estate for transporting green leaves to the factory formed part of the plant and machinery entitled to investment allowance.

Analysis: The trailers were used exclusively within the tea garden for carrying green leaves to the factory situated inside the estate and were never used as vehicles on public roads or for any other transportation purpose. On these undisputed facts, they were functionally connected with the manufacture of tea and formed part of the plant and machinery used in the integrated business of tea manufacture and sale. The decision relied on the actual use and functional nexus of the trailers with the manufacturing process, distinguishing vehicles used generally as road conveyances.

Conclusion: The trailers qualified as plant and machinery and investment allowance was admissible on them.

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