Income Tax Act, 1967.


Initial Allowances for Certain Capital Expenditure on Machinery and Plant and on Industrial Buildings and Structures

Chapter I

Machinery and Plant: Initial Allowances

Initial allowances.

251.—(1) Subject to the provisions of this Act, where a person carrying on a trade the profits or gains of which are (otherwise than consequent upon an election under section 34) chargeable under Case I of Schedule D, incurs capital expenditure on the provision, for the purposes of the trade, of new machinery or new plant, other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles, there shall be made to him, for the year of assessment in the basis period for which the expenditure is incurred, an allowance (in this Chapter referred to as an initial allowance) equal to one-fifth of the expenditure, and such allowance shall be made as a deduction in charging the profits or gains of the trade.

(2) Any expenditure incurred for the purposes of a trade by a person about to carry it on shall be treated for the purposes of subsection (1) as if it had been incurred by that person on the first day on which he does carry it on.

(3) Subsections (1) and (2) shall not apply to any expenditure incurred before the 6th day of April, 1956.

(4) Notwithstanding anything in the preceding provisions of this section, this Chapter shall have effect in relation to capital expenditure incurred on or after the 14th day of December, 1961, and before the 1st day of April, 1968, as if “two-fifths” were substituted for “one-fifth” in subsection (1).

(5) Any claim by a person for an allowance under this section in charging the profits or gains of his trade shall be included in the annual statement required to be delivered under this Act of the profits or gains thereof and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on new machinery or new plant and giving such particulars as show that the allowance falls to be made.

(6) In this section, “new” means unused and not secondhand, provided that a ship shall be deemed to be new even if it has been used or is secondhand.