Section 15C exemption upheld where prior use of some imported machinery outside India did not disqualify the undertaking.

An industrial undertaking remained eligible for exemption under section 15C because the disqualifying test focused on whether the business was formed by transfer of previously used building, machinery or plant from any other business in India. Prior use of some imported machinery outside India did not by itself defeat the exemption. The court also held that the meaning of "new machinery" in section 10(2)(vib) did not control section 15C, as the two provisions serve different statutory purposes. The predominance of new machinery further supported qualification for the exemption, and the assessee was entitled to the benefit of section 15C.

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Issues: Whether the assessee's industrial undertaking was disentitled to exemption under section 15C because some machinery imported for the undertaking had been previously used elsewhere.

Analysis: The relevant test under section 15C(2)(i) is whether the undertaking was formed by transfer to a new business of building, machinery or plant previously used in any other business. The provision was construed as referring to prior use in any other business in India, not use anywhere in the world. The wording of the section, including the association of "building" with machinery and plant, supported this construction, and the interpretation of "new machinery" in section 10(2)(vib) was held not to control section 15C, which serves a different statutory purpose. The substantial predominance of new machinery also supported treating the undertaking as qualifying for the exemption.

Conclusion: The assessee was entitled to the benefit of section 15C.

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