Natural Corporation, the taxpayer seeks to claim a deduction of the cost of acquiring machinery used by it in its trade. Natural's trade is then provision of purified water for refilling, which sit atop free-standing water coolers (also called office coolers).

Natural Corporation does not produce the bottles itself, but rather refills the bottles returned to it by its clients - typically office cooler maintenance companies. The bottles are deep-cleansed and sterilized. The water is sourced from an underground source, undergoes treatment process, the treated (purified) water then is filled in the bottles before the full bottles are collected by clients.

In the 2024 year of assessment, Natural Corporation purchased new distillation and ozonation equipment. It claims this cost as a deduction in its 2024 income tax return.

The Commissioner of Inland Revenue refuses to allow the deduction.

Question:

Provide an opinion as to whether Natural Corporation, the taxpayer may deduct the cost of acquiring the new equipment.