Section 15C exemption and reconditioned imported machinery: prior use must be shown in the relevant form to trigger the statutory bar.

Section 15C exemption was available to a newly established industrial undertaking where the machinery imported from abroad, though second-hand and reconditioned, was not shown to have been used in any business after reconditioning. The statutory bar applies only if the undertaking is formed by transfer of building, machinery or plant previously used in another business. On the facts found, the reconditioned machinery was treated as effectively new for the purpose of the exemption, so the disqualification was not attracted.

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Issues: Whether reconditioned machinery imported from abroad constituted machinery previously used in any other business so as to disentitle the assessee from exemption under section 15C of the Indian Income-tax Act, 1922.

Analysis: The exemption under section 15C applies to newly established industrial undertakings, subject to the condition that the undertaking is not formed by splitting up or reconstruction of an existing business or by transfer to the new business of building, machinery or plant previously used in any other business. The machinery in question was second-hand but had been reconditioned before import and was found to be as new as reconditioned machinery could be. There was no finding that the machinery, in its reconditioned form, had been used in any business before import into India, and the statutory disqualification was therefore not attracted on the facts found.

Conclusion: The assessee was entitled to exemption under section 15C; the question was answered against the Revenue.

Final Conclusion: Reconditioned imported machinery, not shown to have been used in any business after reconditioning, did not fall within the statutory bar against transfer of previously used plant or machinery for the purposes of section 15C exemption.

Ratio Decidendi: For the disqualification under section 15C to apply, the transferred machinery must be previously used in another business; reconditioned second-hand machinery is not excluded merely because it was once used abroad if it was not shown to have been used in its reconditioned form before import.

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