9911796707
TMI Blog2006 (6) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... partners namely Ratanlal Jain, Uttam Sultania and Bimala Sultania with effect from April 1, 2003. The said partnership firm was also duly registered with the Registrar of Firms, West Bengal under the provisions of the Indian Partnership Act, 1932. The petitioner is a registered dealer and has been carrying on business of manufacturing gunny bags and laminated jute bags. Petitioner, being a small-scale industrial unit for manufacture of goods was granted eligibility certificate under section 39 of the West Bengal Sales Tax Act, 1994 for a period of five years from May 30, 2000 to May 29, 2005 and was enjoying tax exemption as available in law. Sub-section (4) of section 39 of the Act as inserted by West Bengal Finance Act introduced a limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of calculating its "gross value of fixed assets". By an order dated March 12, 2004 the Commercial Tax Officer, Lalbazar Charge, disallowed such claim on the ground that the title of the property did not then pass to the petitioner-firm and determined gross value at Rs. 1,56,000 excluding such consideration money. By memo dated March 26, 2004 the said Commercial Tax Officer informed the petitioner that its eligibility to enjoy tax exemption ceased on and from April 1, 2003 and asked the petitioner to pay tax from April 2, 2003. Being aggrieved the petitioner has moved the Tribunal against the said determination of gross value of fixed assets and demand of tax from April 2, 2003. It appears that this Tribunal by its order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in relation to the small-scale industrial unit. (vi) The investment was neither on land nor on plant and machinery nor on consideration of sale. The purchase of property being the ground floor flat of a multi-storeyed building cannot be treated as purchase of land. (vii) There is no exclusive ownership of the land as owners of other flats have right on every inch of the land. The firm cannot demarcate any part of the land for factory purpose. (viii) The character of the land does not change even if the petitioner's factory is run in the said purchased flat inasmuch as all the flats of the building are not being used for factory purpose. (ix) The petitioner has not claimed that the investment was made by the partners. There is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on lease an existing structure or building instead of purchasing vacant land and then construct shed the price paid for purchasing such ready-made structure or building cannot be excluded from the gross value provided such structure or building is really used for the purpose of the newly set up small-scale industrial unit. According to us the C.T.O committed error in taking the view that only price or premium for land will form part of the gross value. Partnership firm is not a legal entity but the persons who have entered into partnership are collectively called "firm". Firm name is a compendious mode of describing partners composing the firm. When anything is done in the firm name it is to be treated as the collective action o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercial taxes authorities were well aware that Vinoy Industries had been converted into a partnership firm. If the C.T.O. felt it necessary he could have made an enquiry and physically verified whether Vinoy Industries had been carrying its manufacturing activities in the premises purchased by it. If the purchased premises was being really used by Vinoy Industries for its manufacturing activities, we do not find any valid reason for not accepting the payments towards price of the premises as investment within the meaning of Explanation (a) to section 39(4). The concerned C.T.O. has raised objection on the ground that the petitioner-firm has not become exclusive owner of the land as the purchased premises is the ground floor of a multi-store ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s value of fixed assets and extended the benefit of exemption of tax on the basis of such gross value of fixed assets. The C.T.O. is correct in his view that permissible investment would have to be made before exemption limit is crossed. If subsequent investment as admissible under Explanation (a) for purchase of the premises and for procurement of plant and machinery were made during subsistence of tax-exemption such investment will have to be taken into account for calculating the petitioner's gross value of fixed assets. The respondents are however at liberty to physically inspect and verify whether the purchased premises were/are being actually used for the purpose of the petitioner's small-scale industrial unit. If it is found ..... X X X X Extracts X X X X X X X X Extracts X X X X
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