TMI Blog2011 (3) TMI 1541X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and the further investment, as on the date of the claim of exemption. Revision allowed. - Trade Tax Revision No. 888 of 2003 - - - Dated:- 31-3-2011 - RAJES KUMAR J. Bharat Ji Agrawal, Senior Advocate, for the petitioner B.K. Pandey, Standing Counsel, for the respondents JUDGMENT This is a revision filed under section 11 of the U. P. Trade Tax Act, 1948 preferred against the order of the Tribunal August 27, 2003. The applicant is a company, incorporated under the Indian Companies Act, 1956. The applicant is also registered under the U. P. Trade Tax Act (hereinafter referred to as, the Act ). The applicant established a new unit for the manufacturing of writing instruments in the year 1993. The date of production of the applicant-company was March 23, 1993. The first sale was dated May 3, 1993. The initial fixed capital investment was ₹ 99,54,118. The applicant applied for exemption under section 4A of the Act. The application was allowed and an eligibility certificate bearing No. 710, dated July 1, 1995 was issued. The applicant-unit had undergone for diversification. Thereafter, the applicant had undergone for the third diversification in the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... versifications. We have seen cases of units which have undertaken expansion together and also expansion and diversification within one year of earlier expansion or diversification. This fact has in fact created this question for determination as to what is the meaning of 'original fixed capital investment' and its requisite additional fixed capital investment in case of expansion or diversification. If it was first expansion or diversification, there was no problem. In that case the 'original fixed capital investment' of a unit was the basis for working out the requisite 25 per cent of additional fixed capital investment but the problem is when the unit undertakes one after other several schemes of expansion or diversification. The meaningful interpretation to our mind would be and should be the fixed capital investment was prior to second or third expansion or diversification. If the interpretation of the learned counsel for the appellant is accepted then the original fixed capital investment shall be taken as original fixed capital investment in every expansion or diversification, it would lead to frustrate the meaning of the fixed capital investment as used in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the diversification scheme, which has not been complied with by the applicant and, therefore, the exemption has been rightly rejected. Considered the rival submission and perused the impugned orders. The relevant part of section 4A reads as follow:- 4A. Exemption from trade tax in certain cases:- (1) Notwithstanding anything contained in this Act, where the State Government is of the opinion that it is necessary so to do for increasing the production of any goods or for promoting the development of any industry in the State generally or in any districts or parts of districts in particular, it may on application or otherwise, in any particular case or generally, by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding twelve years from such date on or after the date of starting production as may be specified by the State Government in such notification, which may be the date of the notification or a date prior or subsequent to the date of such notification, and where no date is so specified from the date of first sale by such manufacturer, if such sale takes place within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tus, components and machinery, as is necessary for the establishment or running of the factory or workshop; (ii) investment as is necessary under some statutory obligation; and (iii) expenses incurred in erection and installation of such plant and machinery and bringing it to the site. (e) the State Government may, by notified order, specify the procedure for determining fixed capital investment. The condition as laid down in Explanation (5) and (5)(d) regarding additional fixed capital investment is given below:- (5) 'Unit which has undertaken expansion, diversification or modernisation' means an industrial undertaking:- ..... (d) wherein an additional fixed capital investment of at least twenty five per cent of such original fixed capital investment (without providing for depreciation) is made; Let us consider what is the meaning of word original . The word original has been defined in different dictionaries as follows:- Webster's Encyclopedic Unabridged Dictionary of the English Language:- Original:- Belonging or pertaining to the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of encouraging an industrial activity, a liberal construction should put upon the language of the statute. The object of section 4A of the Act has been, considered, by the apex court in the case of Commissioner of Sales Tax v. Industrial Coal Enterprises reported in [1999] 114 STC 365 (SC); [1999] 2 SCC 607, the apex court has held that section 4A of the Act provides exemption from tax for the purposes of encouraging production of goods and promoting development of industry. The construction should be reasonable and purposive and should be liberally construed. In the case of Bajaj Tempo Ltd., Bombay v. Commissioner of Income-tax, Bombay City III reported in [1992] 196 ITR 188 (SC); [1992] 3 SCC 78, the apex court has held that a provision in taxing statute granting incentives for promoting growth and development should be construed liberally. A provision intending for promoting economic growth has to be interpreted liberally and the object for granting the exemption should not be defeated. The object of section 4A of the Act is to encourage entrepreneurs to make further investments for the growth of the industry and the production and providing the benefit to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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