Plant and machinery valuation for exemption excludes incidental expenses like installation and technical know-how costs.

For exemption under the relevant notifications, the value of capital investment in plant and machinery had to be computed by excluding ancillary expenses such as installation, erection, transportation, technical know-how and other incidental costs where supported by evidence. The Tribunal accepted the assessee's chartered accountant certificate and related material, and noted that the departmental computation showed only a marginal excess over the prescribed limit. On that basis, the investment was not treated as exceeding the Rs. 10 lakh threshold, and exemption was available. Trade circulars and departmental instructions were treated as relevant guidance for the computation.

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Issues: Whether the value of capital investment on plant and machinery in the factory exceeded the prescribed limit of Rs. 10 lakhs so as to deny the exemption under the relevant notifications.

Analysis: The controversy turned on what components were to be included while computing the value of plant and machinery for the exemption limit. The Tribunal noted that the assessee had produced a chartered accountant's certificate and supporting material showing that part of the amount in the balance-sheet represented installation, erection, transportation, technical know-how and other incidental expenses, and not merely the cost of plant and machinery. It further noted that the departmental computation itself showed only a marginal excess over the limit, and that exclusion of such ancillary items would bring the value below Rs. 10 lakhs. The Tribunal also found the trade circulars and departmental instructions to be relevant guidance for such computation.

Conclusion: The value of capital investment on plant and machinery was not liable to be treated as exceeding Rs. 10 lakhs, and the assessee was entitled to the exemption.

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