Section 15C exemption upheld where minor transfer of old machinery did not form the new textile undertaking.

Section 15C relief was not denied merely because some previously used machinery from an old factory was transferred into a new textile unit. The Bombay HC treated the statutory bar in section 15C(2)(i) as applying only where the industrial undertaking is formed by transfer of used building, machinery or plant, and gave the word "formed" its full meaning. Because the transferred items were only a minor and insignificant part of the new undertaking, which was substantially set up with fresh land, buildings, imported machinery and capital, the exemption remained available to the assessee.

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Issues: Whether the textile department at Ghatkopar was disqualified from relief under section 15C because some machinery previously used in the old Sewri factory had been transferred and used in the new unit.

Analysis: The statutory condition in section 15C(2)(i) denies relief only where the industrial undertaking is formed by transfer of previously used building, machinery or plant. The transferred items from the old factory were a minor and insignificant part of the capital and equipment of the new undertaking. The word "formed" was given its due significance, and the exemption provisions were construed liberally so long as no violence was done to the language. On the facts found, the new textile department was formed substantially by fresh land, buildings, imported machinery and capital, not by the old Sewri machinery.

Conclusion: The assessee was entitled to exemption under section 15C for the textile department, and the answer was in favour of the assessee.

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