Capital employed includes machinery in transit when acquired for business, even before installation or use.

Machinery acquired for business remained part of capital employed under section 80J read with rule 19A(2) even though it was still in transit and had not yet been installed or put to use. The controlling principle is that capital used to acquire an asset for business purposes is treated as employed in the business once acquisition is complete, and temporary non-installation does not alter that character. The text states that this interpretation was already supported by earlier binding authority, and on that basis the machinery in transit was includible in capital employed for relief under section 80J.

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Issues: Whether machinery acquired by the assessee but remaining in transit and not yet installed or put to use could be included in the capital employed for the purpose of relief under section 80J read with rule 19A(2).

Analysis: The assessee had acquired the machinery, and its temporary state in transit did not change its character as an asset forming part of the business capital employed. The governing principle was that once capital is utilised to acquire an asset for the business, it is treated as employed in the business even if the asset has not yet been installed or used. The issue was covered by earlier binding authority applying the same interpretation to section 80J and rule 19A(2).

Conclusion: The machinery in transit was includible in the capital employed, and the assessee was entitled to relief under section 80J.

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