TMI Blog1987 (12) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... lled it. The Electricity Board had given high tension electricity connection to the respondent-unit on September 1, 1977. It is stated by the learned counsel for the respondent that a pilot plant was installed by the respondent for the purpose of test production on experimental basis, to test the quality of the product as well as the raw materials. The pilot plant was operated with the help of a generator. In that pilot plant 28,604.93 square metres of plywood during the period from September 1, 1976 to December 17, 1976 and 1,15,698.52 square metres of plywood during the period December 8, 1976 to December 17, 1976 was produced. The respondent effected sales of plywood worth Rs. 32,502.43 during the period from December 8, 1976 to December 17, 1976 and Rs. 59,197.61 during the period from December 18, 1976 to December 1, 1977. The imported machinery worth Rs. 70,43,113.60 and indigenous machinery worth Rs. 17,42,379.34 purchased by the respondent was installed during the year 1977-78 and the unit went into regular production with effect from December 1, 1977. The respondent has produced a certificate dated June 23, 1981, issued by the Director of Industries that the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the industrial unit of the respondent went into regular production from December 1, 1977, to establish that the industrial unit was set up by the respondent after December 17, 1976. In that connection it was urged that the respondent was granted licence to instal an industrial unit for the manufacture of commercial and decorative plywood of standard sizes of 8'x 4', 7' x 4' and 6'x 4' and the regular production of such plywood by the industrial unit set up by the respondent commenced only from December 1, 1977. According to the learned counsel the plywood sold during the period September 1, 1976 to December 1, 1977 which was of the size of 4' x 2 ' was produced in the pilot plant erected by the respondent for test production on experimental basis and such production in the pilot plant cannot be treated as the production by the industrial unit intended to be set up by the respondent for regular production of plywood on a commercial basis. The only question that arises for consideration in these cases is whether the industrial unit for the regular production of plywood, was set up by the respondent on or after December 17, 1976, in which case it would be entitled to claim the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve plywood with a licensed capacity of 15 lakhs square metres of standard sizes of 8' x 4', 7' x 4' and 6' x 4'. For setting up the unit, the respondent imported machinery worth Rs. 70,43,113.60 and purchased indigenous machinery worth Rs. 17,42,379.34 during the year 1977-78 and erected it during that year. It is no doubt true that the respondent set up a pilot plant during the year 1976 with indigenous machinery worth Rs. 5,25,891.30, produced in that pilot plant some plywood and that plywood was sold during the period from September 1, 1976 to December 1, 1977. The thrust of the argument of the learned Government Pleader is that once the unit established by the respondent commenced production prior to December 17, 1976, whether that unit was called a pilot plant or a regular unit, the respondent was not entitled to claim the benefit provided under the Government Order. We cannot accept the contention of the learned Government Pleader for more than one reason. The first and foremost reason is that a pilot plant established for test production on an experimental basis cannot be treated as a regular unit. The industrial unit mentioned in the Government Order is the one establishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blish". In the Chambers Dictionary meaning of "set up" is given as "to erect", "to put up" which is in contradistinction to "commence". The meaning of the expression "set up" was considered by the Supreme Court in a case arising under the Wealth Tax Act, 1957, in Commissioner of Wealth-tax v. Ramaraju Surgical Cotton Mills Ltd. [1967] 63 ITR 478. The relevant provision which was construed by the Supreme Court reads as follows: "5(1)(xxi). that portion of the net wealth of a company established with the object of carrying on an industrial undertaking in India within the meaning of the explanation to clause (d) of section 45, as is employed by it in a new and separate unit set up after the commencement of this Act by way of substantial expansion of its undertaking: Provided further that this exemption shall apply to any such company only for a period of five successive assessment years commencing with the assessment year next following the date on which the company commences operations for the establishment of such unit." The meaning of the expression "set up" was explained in the following terms (at page 481): "A unit cannot be said to have been set up unless it is ready to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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