Functional test for plant: computer used in factory operations qualified for investment allowance.

A computer installed in a special cabin within factory premises and used for processing raw materials, production data, wage and salary calculations, and monitoring operations was treated as part of the manufacturing apparatus. Applying the functional test, the court held that the equipment was in direct connection with the manufacturing process of the cable division, and rejected the narrower view that computers qualify only when used for accounting purposes. The earlier accounting-only precedent was distinguished. On that basis, the computer was regarded as plant for the Act's purposes, and the assessee was entitled to investment allowance.

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Issues: Whether a computer installed within the factory premises and used for processing raw materials, data, wage and salary calculations, and monitoring production details formed part of the manufacturing unit so as to qualify for investment allowance.

Analysis: The computer was found to have been installed in a special cabin within the factory and to be used in direct connection with the manufacturing operations of the cable division. Applying the functional test, the equipment was treated as being in the line of the manufacturing process. The contrary view that a computer could qualify only for accounting purposes was rejected on the facts, and the earlier decision on accounting-only use was distinguished. Reliance was also placed on the principle that a computer may constitute plant for the purposes of the Act.

Conclusion: The computer was held to be part of the manufacturing apparatus and the assessee was entitled to investment allowance. The question was answered in the affirmative and in favour of the assessee.

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