Reconditioned machinery and depreciation: incomplete facts prevented final determination whether rebuilt equipment qualified as "new" machinery.

Reconditioned machinery was examined for eligibility as "new" machinery for initial and additional depreciation under section 10(2)(via) of the Income-tax Act, 1922. The term "new" was read in its ordinary sense as something not previously existing or used, while the real enquiry was whether the reconditioning amounted to reconstruction or substitution of substantially the whole machinery. Because the record did not contain essential facts on the extent of prior use, improvements, dates of manufacture, and the nature and cost of modifications, the question could not be finally determined on the existing material and a supplementary statement of the case was required.

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Issues: Whether reconditioned machinery could be treated as "new" machinery for the purpose of initial and additional depreciation under section 10(2)(via) of the Income-tax Act, 1922, and whether the matter should be remanded for further factual material.

Analysis: The expression "new" was construed in its ordinary sense as meaning not existing before and as opposed to "used". On the materials before the Court, the machines had admittedly been used earlier, then stripped, rebuilt, and fitted with worn parts renewed and latest modifications incorporated. The Court held that the real question was whether the reconditioning amounted to reconstruction or substitution of substantially the whole machinery, but the record did not disclose essential facts such as the precise improvements, dates of manufacture, prior use, and the nature and cost of the modifications. In the absence of that material, the question whether the machines were "new" could not be finally determined.

Conclusion: The issue could not be decided on the existing record, and the matter was remanded to the High Court to obtain a supplementary statement of the case and then determine the reference afresh.

Ratio Decidendi: Where the record lacks the factual foundation necessary to determine whether reconditioned machinery is "new" within the depreciation provision, the proper course is to call for a supplementary statement of the case rather than decide the question on an incomplete record.

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