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Option in case of replacement.
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273.—(1) Where machinery or plant in the case of which any of the events mentioned in section 272 (1) has occurred is replaced by the owner thereof and a balancing charge falls to be made on him by reason of that event, or, but for the provisions of this subsection, would have fallen to be made on him by reason thereof, then, if by notice in writing to the inspector he so elects, the following provisions shall have effect:
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(a) if the amount on which the charge would have been made is greater than the capital expenditure on providing the new machinery or plant—
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(i) the charge shall be made only on an amount equal to the difference,
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(ii) no initial allowance, no balancing allowance and no wear and tear allowance shall be made in respect of the new machinery or plant or the expenditure on the provision thereof, and
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(iii) in considering whether any, and if so what, balancing charge falls to be made in respect of the expenditure on the new machinery or plant, there shall be deemed to have been made in respect of that expenditure an initial allowance equal to the full amount of that expenditure;
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(b) if the capital expenditure on providing the new machinery or plant is equal to or greater than the amount on which the charge would have been made—
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(i) the charge shall not be made,
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(ii) the amount of any initial allowance in respect of the said expenditure and the amount of any wear and tear allowance shall be calculated as if the expenditure had been reduced by the amount on which the charge would have been made, and
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(iii) in considering whether any, and if so what, balancing allowance or balancing charge falls to be made in respect of the new machinery or plant, there shall be deemed to have been granted in respect thereof an initial allowance equal to the amount on which the charge would have been made, in addition to any initial allowance actually granted in respect thereof.
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(2) Where any such election is made as is mentioned in section 243, no balancing allowance shall be made in respect of the machinery or plant which is replaced.
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