TMI Blog2000 (1) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... pleased to direct that Revision No. 700 of 1997 (Kajaria Ceramics Ltd. v. Trade Tax Tribunal) pending in the High Court of Judicature at Allahabad and Trade Tax Revision No. 53(L) of 1997 (Commissioner of Trade Tax v. Kajaria Ceramics Ltd.) pending before the Lucknow Bench of this Court may be heard and decided together. Honourable the Chief Justice passed the following order on September 29, 1999 on the said application: "Heard learned counsel for the parties. The record pertaining to the Trade Tax Revision No. 53(L) of 1997 pending before Lucknow Bench be summoned to this Court immediately and the same be placed before honourable P.K. Jain, J., for hearing. Dated 29-9-99 Sd/- N.K. Mitra." That is how Trade Tax Revision No. 53(L) of 1997 came up for hearing before this Court. 3.. The dealer, M/s. Kajaria Ceramics Limited, carries on the business of manufacture and sale of ceramics wall and floor tiles having its factory situated in industrial area, Sikandarabad, district Bulandshahar, Uttar Pradesh. It set up a new unit and its date of first sale was August 16, 1988. The investment in the unit up to August 12, 1988 was Rs. 16,21,54,452. On December 26, 1985, the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Committee, the dealer filed appeal before the Trade Tax Tribunal, Lucknow. The Trade Tax Tribunal by its judgment and order dated April 10, 1997 partly allowed the appeal accepting the claim of the dealer in respect of additional fixed capital investment to the tune of Rs. 54,48,34,341.70 paise, it rejected the claim of the dealer with regard to Rs. 16,21,54,852 the original fixed capital investment as on August 12, 1988. By such rejection of claim, the dealer felt aggrieved and filed Trade Tax Revision No. 700 of 1997. 5.. The Divisional Level Committee had rejected the claim of the dealer in respect of additional fixed capital investment during the period April 1, 1990 to March 28, 1994 to the tune of Rs. 30,35,98,525.00. But the Tribunal while partly allowing the appeal, accepted the claim of the assessee in respect of additional fixed capital investment to the tune of Rs. 30,33,29,323.70 paise. The revenue feeling aggrieved by such acceptance of the claim of the dealer, has filed Trade Tax Revision No. 53(L) of 1997. 6.. Sri Bharat Ji Agrawal, learned Senior Counsel for the revisionist in T.T.R. No. 700 of 1997 and Sri B.K. Pandey, learned Standing Counsel for the Revenue w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceedexceeding three lakh rupees. ing three lakh rupees. --------------------------------------------------------------------------------- 1 2 3(a) 3(b) --------------------------------------------------------------------------------- (1) ............ Five years Seven years (2) Bulandshahar Four years Six years (3) ........... Three years Five years --------------------------------------------------------------------------------- Explanation.-For the purposes of this notification: (1)................... (a) and (b)................... (2) 'Date of starting production' and 'new unit' shall have the meaning assigned to them in the explanation to section 4-A of the Uttar Pradesh Sales Tax Act, 1948; and (3) 'Capital investment' means investment in land, building, plant, machinery, equipment and apparatuses." English translation of Vitta (Bikri-kar) Anubhag-2, Notification No. S.T.2-1093/XI-7(42)-68-U.P. Act XV-48-Order-90, dated July 27, 1991. Whereas the State Government is of the opinion that for promoting the development of certain industries in the State it is necessary to grant exemption from or reduction in rate of tax to new units and also to units wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts certified by a chartered accountant. 4.. In determining the fixed capital investment as defined in clause (4) of the Explanation in case of 'new units' or 'additional fixed capital investment' referred to in sub-clause (d) of clause (5) of the Explanation in case of 'units which have undertaken expansion, diversification or modernisation' the investment in only such land, building, plant, machinery, equipment, apparatus and component or, as the case may be, such additional land, building, plant, machinery, equipment, apparatus and component shall be taken into account as were acquired on or before the relevant date of commencement of the period of facility notified under sub-section (1) of section 4-A of the Act. 5.................................... 1(a) and (b) .................... 6(a) and (b)...................... Annexure I --------------------------------------------------------------------------------- No. Position Total peRate of tax applicable Monetary limit of unit riod of ex(denoted as percentage of up to which emption/ the rate of tax normally exemption from reduction applicable under the Act or reduction in in the rate to the goods concerned) the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of units undertaking diversification. 1(C)................ 2................... 3.................... 4.................... 5.................... 6.................... 7.................... Annexure I S. Location Total Exemption from or Monetary limit No. of unit period of reduction in the rate of up to which the exemption tax (denoted as perbenefit to exempreduction centage of the rate of tion from or in the tax normally applicable reduction in the rate of under the Act to the rate of tax under tax. goods concerned) which, the Act together on any transaction of with the benefit sale, shall not exceed of exemption five per cent of the sale from or reducprice. tion in the rate ----------------------- Year In case of In case of tax under the unit with a of Central Sales fixed other Tax Act, 1956 capital units. is admissible investment exceeding 50 crores. ----------------------------------------------------------------------------------------- 1 2 3 4 5 ----------------------------------------------------------------------------------------- A B C -------------------------- 1 ... Twelve ... ... ... years 250 per cent of the fixed capital inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessary for the establishment or running of the factory or workshop of the unit; (ii) expenses incurred in registration of land and building under the provisions of the Registration Act, 1908 and in development of land as development charges payable to any statutory body; (iii) the value of land or building already owned and given by the proprietor, partner, managing director, promoter, director, or holding company as his or its share in the capital in case the unit is established in such land or building; (iv) the amount or proportionate amount paid or payable as premium for the period for which exemption under section 4-A is granted on account of lease and the expenses incurred on registration of the lease deed under the Registration Act, 1908 in case the unit is established in land or building taken on lease; (v) the investment in land or building which is necessary for establishing or running the unit under some statutory obligation. (b) for the purposes of determining investment in plant, machinery, equipment, apparatus, components, moulds, dyes, jigs and fixtures only the following shall be taken into account: (i) investment whether by means of purchase, hire or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revisionist had undertaken expansion of his unit between April 1, 1990 to March 28, 1994, the unit was entitled to exemption on the total fixed capital investment as it existed prior to the date of the making of the application or the total fixed capital investment which included the fixed capital investment prior to April 1, 1990 and additional fixed capital investment made between the period from April 1, 1990 to March 28, 1994. He further submits that the Tribunal has committed error in not granting the benefit claimed by the revisionist by adverting to the provisions of subsequent notification dated March 31, 1995 extract of which has been reproduced above. His submission is that when the revisionist was granted eligibility certificate in view of the notification of 1985 as reproduced above, the exemption from payment of tax was on the total turnover of sales and was not relatable to the fixed capital investment by the dealer. By notification dated July 27, 1991 the benefit in exempting the dealer from payment of sales tax was curtailed by making it relatable to the fixed capital investment which in the case of new units means the capital investment made after April 1, 1990 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that even before the Tribunal also no claim for relief in respect of original fixed capital investment to the tune of Rs. 16,21,54,852 was made which is evident from the reading of the opening paragraph of the judgment of the Tribunal. It is also submitted that in the grounds of appeal before the Tribunal several issues might have been raised but if the revisionist did not opt to press the grounds in question relating to the fixed capital investment of Rs. 16,21,54,852 at the time of arguments before the Tribunal it cannot be permitted to raise those grounds in this revision before this Court. In case the point was pressed and canvassed before the Tribunal and the Tribunal omitted to notice the same, the revisionist ought to have approached the Tribunal. It is also submitted that the letter dated January 24, 1997 by the convener of the Divisional Level Committee addressed to the applicant also reiterates that the revisionist had disagreed with treating the capital investment of Rs. 24 crores 15 lakhs and odd as fixed capital investment as the revisionist had claimed exemption in respect of Rs. 54.51 crores as fixed capital investment and the revisionist's own case is that he was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Pradesh (Nai Ikai Anubhag), Lucknow, and it is argued that exemption under the scheme of expansion shall be limited to additional fixed capital investment only. 10.. In reply Sri Bharat Ji Agrawal, learned Senior Counsel, has submitted that the application for exemption under section 4-A of the Act copy whereof is appended to the revision application as annexure 1 is in statutory pro forma. Para 6 of the said application relates to giving of particulars of the fixed capital investment, production capacity, production in the last five consecutive assessment years and dues, if any, payable by the unit under the U.P. Trade Tax Act and the Central Sales Tax Act, etc. It is submitted that under heading "a" fixed capital investment four columns are provided, one relates to particulars, the other relates to original investment without giving margin for depreciation on August 12, 1988, third relates to additional investment in expansion, etc., on the date of commencement of the period of facility and the fourth column relates to certificate of valuation of additional fixed capital investment. It is submitted that there is no column in the statutory pro forma for making an application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular issued by the department is contrary to the notification dated July 27, 1991. In view of the decision of the Division Bench of this Court in the case of Hindustan Reprographics Limited v. State of Uttar Pradesh [1989] 72 STC 424; 1988 UPTC 1232 the statutory notification cannot be overridden by clause (2) of circular dated June 13, 1993. 11.. As already pointed out above, the preliminary objection taken on behalf of the Revenue is that the revisionist had applied for exemption in respect of the original investment of Rs. 16,21,54,852. In support of this submission reference has been made to the application as contained in annexure 1 to the revision application, letter by Joint Director of Industries, Western Region, Meerut, as contained in annexure 3 to the revision application and to the order of the Tribunal. It is submitted that in the application it is nowhere stated that the exemption was being claimed in respect of total fixed capital investment of Rs. 76,17,87,532. It is not disputed that application as contained in annexure 1 to the revision application is in statutory form provided under the Rules. Column No. (6) of the application relates to furnishing of details o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal was that the order passed by the Divisional Level Committee be modified and the fixed capital investment of the unit be mentioned as Rs. 7617.87 lakhs in place of Rs. 24,15.05 lakhs in the eligibility certificate issued under section 4-A of the Act. Perusal of grounds Nos. 3 and 4 also shows that the revisionist had claimed before the Tribunal that he was entitled to benefit of additional fixed capital investment as defined under section 4-A of the Act and the Divisional Level Committee ought to have mentioned the fixed capital investment of Rs. 76,17.87 lakhs which includes the original fixed capital investment. It appears that the Tribunal has misread the prayer of the revisionist in the memo of appeal and has wrongly stated in para first of the order that the appellant claimed exemption in respect of Rs. 54,51,03,544 only. It may further be seen that the Tribunal was under the wrong impression that the revisionist was entitled to apply for exemption only in respect of fixed capital investment/additional fixed capital investment and in concluding para of the judgment the Tribunal having made a reference to notification dated March 31, 1995 wrongly observed that under the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and additional fixed capital investment. In the case of new units the exemption was to the extent of 250 per cent or 200 per cent of the fixed capital investment whereas in the case of units undertaking expansion, diversification or modernisation the benefit was only to the extent of additional fixed capital investment. Therefore, observation of the Tribunal that similar benefit was granted under the two schemes of 1991 and 1995 is apparently erroneous and based upon wrong assumption of facts. It is clear from the comparison of the two schemes that benefit of exemption under section 4-A under the scheme of 1991 was in respect of fixed capital investment whereas under the scheme of 1995 the exemption to the units undertaking expansion, modernisation or diversification, the limit of exemption was only to the extent of additional fixed capital investment. 14.. The submission of Sri Bharat Ji Agrawal, learned counsel for the revisionist is that since the notification dated July 27, 1991 grants exemption in respect of fixed capital investment and does not make only distinction between the fixed capital investment and the additional fixed capital investment, the revisionist was enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation) is made. On the strength of the above provision it is argued that sub-clause (d) of explanation (5) clearly provides that additional fixed capital investment in case of a unit undertaking modernisation should be at least 25 per cent of such original fixed capital investment. Shri Bharat Ji Agrawal, learned counsel for the revisionist, has rightly pointed out that the explanation as aforesaid provides only with regard to the field of eligibility. By explaining as to what would be meant by a unit which has undertaken expansion, etc., the explanation provides as to which unit shall be eligible for facility of exemption under section 4-A of the Act. In my view also sub-clause (d) of explanation (5) has nothing to do with the extent of benefit of exemption which can be granted to a unit undertaking modernisation, expansion or diversification. Then learned Standing Counsel and the learned Chief Standing Counsel have made a reference to explanation (4) of section 4-A of the Act and have pointed out that the expression "fixed capital investment" is relatable to a new unit as also to the new unit which has undertaken expansion. Therefore, fixed capital investment should be suitably ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diversification was relatable to additional fixed capital investment. Column 5 of annexure 1 to the notification dated March 31, 1995 provided the monetary limit up to which exemption from or reduction in the rate of tax is admissible. It provides the monetary limit of 200 per cent of the fixed capital investment in case of new units and the limit of additional fixed capital investment in the case of units undertaking modernisation, diversification and expansion. This is with respect to industries or units situated in district Bulandshahar or other areas of the like category. It is argued on behalf of the opposite parties that subsequent notification cannot be taken into consideration for construing the provisions of the notification under which the benefit of exemption is being claimed. In reply Shri Bharat Ji Agrawal has made a reference to a decision of the honourable Supreme Court in Pappu Sweets and Biscuits v. Commissioner of Trade Tax, U.P., reported in [1998] 111 STC 425; 1998 UPTC 1086 and has submitted that in case of doubt subsequent notification can be looked into to interpret the notification dated July 27, 1991. He has also submitted that the object of the notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue Commissioners [1921] 2 KB 403: 'I think it is clearly established in Attorney-General v. Clarkson (1900) 1 QB 156 at pages 163, 164 that subsequent legislation may be looked at in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. I quite agree that subsequent legislation if it proceeded on an erroneous construction of previous legislation cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation, then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier Act'." Thus the honourable Supreme Court took the view that subsequent legislation may be looked into in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. Therefore, subsequent notification can be looked into for interpreting the true meaning of expression "fixed capital investment" as employed in column 5 of annexure I to the notification dated July 27, 1991. It has already been found above that earlier under the notification of 1985 the exemption was unlimited and was not related to fixed capital investment except that the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf has referred to the purpose for which the Government could grant such exemption........... 11.. In Commissioner of Income-tax, Amritsar v. Strawboard Manufacturing Co. Ltd. [1989] 177 ITR 431; (1989) Supp 2 SCC 523; 1989 UPTC 1300 (SC) this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd., Bombay v. Commissioner of Income-tax, Bombay City-III, Bombay [1992] 196 ITR 188 (SC); (1992) 3 SCC 78; 1992 UPTC 857 (SC), it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. 12.. We find that the object of granting exemption from payment of sales tax has always been for encouraging capital investment and establishment of industrial units for the purpose of increasing production of goods and promoting the development of industry in the State. If the test laid down in Bajaj Tempo Ltd. case [1992] 196 ITR 188 (SC); (1992) 3 SCC 78; 1992 UPTC 857, is applied, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larified that the facility of exemption to the units undertaking expansion, modernisation or diversification shall be to the extent of 100 per cent to 150 per cent of the additional fixed capital investment. It is submitted that in view of the above clarification also the fixed capital investment used in column 5 of annexure 1 to the notification dated July 27, 1991 fixed capital investment in respect of units undertaking modernisation, etc., shall be only relatable to additional fixed capital investment. Shri Bharat Ji Agrawal has, however, pointed out that if the contention of the revisionist that fixed capital investment as used in column 5 of annexure 1 to notification dated July 27, 1991 is construed as additional fixed capital investment then the circular letter shall be in contravention to the notification which is statutory notification. There is substance in the submission of Shri Agrawal. Notification dated July 27, 1991 was issued in exercise of the powers given under section 4-A of the Act. Therefore, the notification has statutory effect. A circular issued by the department is only clarificatory or in the nature of administrative instructions. It cannot override the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers under sub-section (5) of section 8 of the Central Sales Tax Act, 1956 read with section 21 of the General Clauses Act................. Thus the period of exemption of seven years having been specified by the State Government by notification, and the said notification being a statutory instrument, could not be modified or reduced to a lesser period by administrative instructions or clarifications issued by the Government under letters, dated 17th March, 1988 and 23rd March, 1988." Therefore, in my view, the circular cannot override the statutory notification. 20.. For the foregoing discussions T.T.R. No. 700 of 1997 deserves to be allowed. Trade Tax Revision No. 53(L) of 1997 21.. In this revision dispute relates to the benefit to which the dealer was entitled as additional fixed capital investment made during the period from April 1, 1990 to March 28, 1994. The dealer had claimed benefit of Rs. 54,51,03,544. The Divisional Level Committee allowed it to the tune of Rs. 24,15,05,019 and rejected the claim of the dealer with respect to the remaining amount. The dealer filed appeal before the Trade Tax Tribunal, Lucknow. The Tribunal by the impugned order by partly allowi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such facility. It is also submitted by Shri Mehta that the company had undertaken expansions on August 15, 1990 and December 28, 1991 and had increased production capacity from 12,000 M.T. to 26,000 M.T. and 26,000 M.T. to 40,000 M.T. respectively. It is submitted that on September 16, 1994 three separate applications for these expansions were filed though subsequently the same were withdrawn on November 21, 1994 and revised combined application was filed. It is further pointed out that from time to time separate industrial licences to raise production capacity were obtained. This clearly indicates that there were three separate distinct expansions, the last being dated March 28, 1994. His submission is that since no separate applications for availing of the facility of exemption as required by section 4-A(5)(a) and (b) are moved the Divisional Level Committee has rightly rejected the claim of the dealer for grant of benefit in respect of additional fixed capital investment in first expansion and second expansion. 24.. The last submission of Sri Mehta is that under notification dated December 26, 1985 the dealer obtained eligibility certificate dated May 15, 1990 for a new unit f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one integrated plan though in phases. It is submitted that this is evident from annexure 4, letter dated January 28, 1997 written by the convener of the Divisional Level Committee wherein the expansion in first phase and second phase is stated. It is further submitted that the argument is substantiated by the report of the Trade Tax Department, i.e., the report of the assessing authority as contained in annexure 5 to the counter-affidavit in which it was specifically mentioned that the total investment under the scheme of expansion was Rs. 54,46,59,544 and the unit was entitled for exemption for a period of 9 years on the turnover in the excess of the base production. It is also submitted that the department has admitted before the Tribunal that the expansion was made in three phases. Besides this he has relied upon a circular dated September 26, 1996 copy whereof is enclosed with the written arguments which provided that in the proposed scheme introduced in 1990 prior to the issuance of the notification dated July 27, 1991 and even after the issuance of the notification dated July 27, 1991 the unit shall not be entitled to apply for exemption under expansion scheme unless five yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Committee. It had rather observed that the expansion was made in phases but denied the claim on two grounds, viz., (i) application phasewise expansion was not given and (ii) for obtaining production of 40,038 M.T. investment was made earlier in two phases which cannot be included in the instant expansion scheme. No other ground was taken by the Divisional Level Committee for rejecting the claim of the unit under the expansion scheme with regard to additional fixed capital investment of 40,038 M.T. in earlier first phase and second phase. It appears from the order passed by the Tribunal that the argument was placed before the Tribunal that the provisions of section 4-A(5) being not clear, separate applications were moved for grant of eligibility certificate in respect of expansion undertaken in three phases. However, subsequently the definition of fixed capital investment was modified and therefore, an amendment application dated July 17, 1995 was moved. On the said application the assessing authority had submitted an enquiry report wherein the entire expansion was treated to be under one integrated scheme of expansion for increasing production from 12,000 M.T. to 60,000 M.T. an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansion in the year 1991 the capacity was got increased from 26,000 M.T. to 40,000 M.T. He has submitted that this facility was availed of by the dealer as a "new unit". Once the unit had availed of the facility of exemption by increasing the base production capacity as a new unit, the unit of the assessee cannot avail of the same benefit as a unit undertaking expansion in respect of additional fixed capital investment in the first and second expansions. Shri Bharat Ji Agrawal, learned Senior Counsel appearing for the dealer has challenged the submission of Shri Mehta on the ground that there was only one integrated scheme of expansion which was carried out in phases. He has next submitted that the present benefit of exemption was on being availed of beyond 40,038 M.T. base production. 30.. Explanation (2) to section 4-A of the Act defines and clarifies as to which unit can be termed as a new unit after March 31, 1990. It specifically provides that the new unit after March 31, 1990 will not include any addition to, or extension of an existing factory or workshop not being an expansion, diversification or modernisation within the meaning of clause (5) of this explanation. Admittedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard his first submission is that the three expansions dated August 15, 1990, December 28, 1991 and March 28, 1994 were distinct and separate expansions and if the unit wanted to avail of the facility of exemption from tax on the ground of exemption, distinct and separate applications ought to have been moved in accordance with the provisions of section 4-A(5)(a) of the Act which provides that the application for availing of the facility can be moved within six months from the relevant date of the commencement of the period of facility. In the alternative his argument is that if this is not done then the total period of facility to be availed of has to be curtailed. In reply Shri Bharat Ji Agrawal, learned Senior Counsel has submitted that the expansion was undertaken under one integrated plan though in phases. Shri Agrawal refers to annexure 4 to the revision application which is letter dated January 28, 1997 written by the convener of the Divisional Level Committee wherein the expansion is said to have been carried out in phases. He further submits that the report of the assessing authority, annexure 5 to the counter-affidavit also supports the contention of the assessee. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal are not correct. At the outset it may be stated that these are the findings of fact and cannot be reversed unless found to be perverse or based on no material. It may further be seen that even the Divisional Level Committee in its order as contained in annexure 4 to the revision application had categorically observed that the dealer had made expansion in several phases. The observations of the Divisional Level Committee have already been reproduced above. It was pleaded before the Divisional Level Committee that the scheme for expansion was prepared earlier and under one and the same scheme the entire expansion was completed in the year 1993-94. It was also pleaded before the Divisional Level Committee that the total fixed capital investment was up to March 28, 1994 and the first date of production in excess of the base production of 40,038 M.T. was March 28, 1994. The Divisional Level Committee did not dispute these facts but rejected the claim in respect of benefit regarding fixed capital investment relating to first and second phase of expansions on the ground that the application was not moved earlier. 33.. There is no dispute between the parties and it is rather ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hases of one integrated expansion scheme under which the dealer had undertaken expansion of his unit. It is true that sub-section (5) [section 4-A clauses (a) and (b)] provides that the facility of exemption from or reduction in rate of tax can be availed of if the manufacturer applies for such facility within six months from the relevant date of commencement of the period of facility or by September 13, 1992 whichever expires later in which case facility can be availed of for the entire period notified under sub-section (1) or in case he applies for such facility later than the date specified in the clause (a) only for part of the period notified under sub-section (1) which shall be computed from the date of application and not from the relevant date of commencement for the period of facility referred to in sub-section (1) till the end of the period of facility. So far as the revisionist is concerned the facility available to the revisionist is for a period of 9 years from the date of commencement of the facility, i.e., the first date of sale by the manufacturer on the increased base production over and above the existing base production as a result of the unit undertaking the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on were moved within six months from March 28, 1994, i.e., September 16, 1994. These applications were subsequently withdrawn and revised combined application was moved on July 17, 1995. It cannot, therefore, be said that the applications for availing of the benefit of the scheme on the ground of expansion was not moved within the period provided under sub-section (5)(a) of section 4-A of the Act. Therefore, the argument advanced by Sri Mehta cannot be accepted. At best the unit could avail of the facility of exemption from payment of tax on the ground of expansion from the date of revised application, i.e., July 17, 1995. In the written argument also it was categorically mentioned that no exemption was claimed prior to July 17, 1995. Besides this the exemption has been claimed on the turnover in excess of base production of 40,038 M.T. after July 17, 1995 and no exemption has been claimed prior to that. Following may be quoted from the written argument: "No exemption was claimed prior to July 17, 1995, i.e., the date of filing of application for exemption (annexure No. 2 to the counter-affidavit) given on page 23 the exemption has been claimed but the turnover in excess of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and Standards Accounting on page B.87 and quoted below B.25 which reads as follows: "Interest on moneys which are specifically borrowed for the purchase of fixed asset may be capitalized prior to the asset coming under the production, i.e., during the erection stage. However once production starts under interest of borrowings for the purchase of machinery (whether for the replacement or renovation of existing plant), should be capitalised. For a extending business the interest paid for financing the completely new unit or a substantial expansion undertaken by the company may be capitalised. Only the interest on moneys specifically borrowed for the new expansion may be capitalised and that only for the period before production starts. Interest payable on the fixed assets purchased by the deferred credit basis, should not be capitalised after commencement of the production." 40.. When the Tribunal referred to the decision of honourable Supreme Court in Challapalli Sugars Ltd. v. Commissioner of Income-tax, A.P. [1975] 98 ITR 167 in which the honourable Supreme Court held as follows: "The question often arises as to whether interest on borrowings can be capitalised and added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch plant, equipment, apparatus, components and machinery as is necessary for the establishment or running of the factory or workshop; (ii) Investment as is necessary for some statutory obligation; and (iii) expenses incurred in erection and installation of such plant and machinery and bringing it to the site. 43.. It may be noted that term investment has not been defined in the Act or in section 4-A of the Act. It is well-settled that if a term is not defined in the Act its meaning in other similar enactments can be looked into. Explanation (4)(b)(i) further provides that the investment necessary for the establishment or running of the factory or workshop whether by means of purchase or hire or lease in the plant, equipment, etc., shall be taken into account. Thus, when an equipment or plant is taken on hire the lease amount and the hire amount has to be included in the term investment. Similarly, when the money is taken on loan the interest paid thereon has to be included in the term investment. It is not the case of the department that the claim made by the dealer in respect of pre-operative expenses and interest paid to the financial institutions, etc., were not necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it may be certified by a chartered accountant. Similarly, in the case of value of a building, it may be certified by a valuer approved by the Income-tax Department for the purpose. In the instant case, as is evident from the report of the assessing authority as contained in annexure 5 to the counter-affidavit, the dealer had produced necessary certificates from the chartered accountant as well as from the approved valuer. It was also stated in the report that Rs. 2,318.40 lakhs were obtained by the unit as loan from financial institutions or from the scheduled banks. In the circumstances, there was no reason for depriving the dealer of his claim in respect of fully operational expenses and interest paid to the financial institutions. 45.. In view of the foregoing discussions, the Revision No. 53(L) of 1997 deserves to be dismissed. 46.. The net result is that Revision No. 700 of 1997 filed by M/s. Kajaria Ceramics Ltd., is allowed and it is held that the unit was entitled to include the fixed capital investment of Rs. 16,21,54,452 as on August 12, 1988 in the fixed capital investment provided under notification dated July 27, 1991. The Department's Revision No. 53(L) of 1997 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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