TMI Blog1998 (11) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... er be regarded as a small scale industrial unit. As the company had applied as an SSI unit, the District Level Committee had to verify the status of the company as an SSI unit and, therefore, it was bound to take into account the abovereferred two notifications of the years 1991 and 1993. If under these circumstances, the District Level Committee came to the conclusion that the company is not entitled to the benefit of deferment in respect of its investment in bottles and crates, it cannot be said that it has acted contrary to law. Appeal allowed, set aside the judgment of the High Court and dismiss the writ petition filed by the company.. - Civil Appeal No. 12556 of 1996, - - - Dated:- 18-11-1998 - Judge(s) : S. P. BHARUCHA., G. T. NANAVATI., B. N. KIRPAL M.L. Varma, Senior Advocate (Gopal Prasad, Rohil Tandon and Ejaz Msqbool, Advocates, with him), for the respondents. B.B. singh, Advocate, for the appellants. [The judgment of the High Court ran as follows] : S. K. CHATTOPADHYAYA J.-- -The petitioner No. 1, a limited company, being represented by its director, petitioner No. 2, Killol D. Kamani have moved this court for a direction to the respondents to grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the District Level Committee has already allowed 90 per cent. of the deferred payment on the investment in fixed assets, we need not deliberate on the averments made in the counter-affidavit in respect of the prayer made in the main writ application. The only point which remains to be considered is as to whether the District Level Committee has erred in law in refusing relief to the petitioners in respect of bottles, crates, electrification and tools. Mr. Gadodia, learned senior counsel appearing on behalf of the petitioners, has urged that the only question for consideration by this court is as to whether bottles and crates, etc., shall be treated as "plant" for the purpose of giving benefit under the deferment scheme. Advancing his argument, it is urged that the word "plant" should be construed in popular sense by giving a wide meaning. In support of his contention, he has relied upon the decisions in the case of CIT v. Sri Krishna Bottlers Pvt. Ltd. [1989] 175 ITR 154 (AP); CIT v. Jai Drinks (P.) Ltd. [1988] 173 ITR 100 (Raj) and CIT v. Taj Mahal Hotel [1971] 82 ITR 44 (SC). Mr. M. Y. Eqbal, learned Government advocate, on the other hand, has contended that the terms "fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be construed in its popular sense if it is a word of every day use. Popular sense means 'that sense which people conversant with the subject-matter with which the statute is dealing, would attribute to it'". In the case of CIT v. Sri Krishna Bottlers Pvt. Ltd. [1989] 175 ITR 154, a Division Bench of the Andhra Pradesh High Court dealt with the question as to whether, on the facts and circumstances of the case, the bottles and shells constitute "plant" and depreciation is admissible thereon under section 32(1)(ii) of the Income-tax Act, 1961. After noticing various foreign as well as Indian decisions the Division Bench has, inter alia, held that bottles are essential tools of the trade for it is through them that the soft drinks are passed on from the assessee to the customers. Without these bottles the soft drinks cannot be effectively transported. According to their Lordships, the bottles and shells also satisfy the durability test for it is nobody's case that their life is too transitory or negligible to warrant an inference that they have no function to play in the assessee's trade. The Division Bench has agreed with the decision of the Rajasthan High Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the pleadings under the Civil Procedure Code and a writ petition or a counter-affidavit, their Lordships, inter alia, have held : "While in a pleading, that is, a plaint or a written statement, the facts and not evidence are required to be pleaded, in a writ petition or in the counter-affidavit not only the facts but also the evidence in proof of such facts have to be pleaded and annexed to it. So, the point that has been raised before us by the appellants is not entertainable." On the same premises, in the facts and circumstances of this case also, I am of the opinion that the plea of the respondents taken in the written notes cannot be entertained as neither it was pleaded by filing a counter-affidavit in reply to the amendment petition nor any such documents were annexed prior to that. Consequently, this writ application is allowed and the order as contained in annexure 8 to the amendment petition refusing to grant exemption by the District Level Committee is set aside. The concerned respondent is directed to grant exemption for deferment of sales tax in respect of investment made by the petitioners towards bottles and crates. In the facts and circumstances, the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enged that part of the decision of the District Level Committee which was against it. The High Court after considering that under the Deferment Rules "fixed capital investment" means investment in land, building, plant and machinery and that they do not define the word "plant", observed that it was required to be construed according to its dictionary meaning or as understood in common parlance and not in its technical sense. It then held that the word "plant" would include whatever apparatus is used by a businessman for carrying on his business not his stock-in-trade which he buys or makes for sale, but all goods and chattels fixed or movable which he keeps for employment in his business and which have some degree of durability. Considering the nature of business of the company, namely, manufacturing soft drinks and beverages, the High Court, held that bottles and crates employed by it for its business are also "plant" and, therefore, the company is entitled to get the benefit of deferment on the investment made in them. The High Court quashed the decision of the District Level Committee which was under challenge and directed the State and its officers to grant the benefit of def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be a plant". Learned counsel for the respondents, heavily relying upon this decision, submitted that the High Court was right in interpreting the word "plant" in the Deferment Rules as including bottles and crates also, as they are used by the company for carrying on its business. We cannot agree with this contention as we are of the view that the High Court was wrong in interpreting the word "plant" in rule 2(v) so widely. It failed to consider whether the object and scheme of the Deferment Rules permit such a wide interpretation. The High Court also failed to appreciate that the decisions of this court in Taj Mahal Hotel [1971] 82 ITR 44 and Scientific Engineering House [1986] 157 ITR 86, were under the Income-tax Act and the observations made and the test indicated therein were in the context of the wide definition of the word "plant" given in that Act and, therefore, not of universal application. Obviously, if plant is defined differently under a different provision or if the context so requires, it may have to be given a different and a narrower meaning. The Deferment Rules do not define plant and, therefore, what should have been considered by the High Court was what mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of investment contemplated by the Deferment Rules is investment in fixed assets which are ordinarily considered essential for production or manufacture of goods and have some degree of permanency. The second proviso to rule 3 makes this position further clear. It states that "deferment shall be limited to 90 per cent. of the fixed capital investment in fixed capital assets". To explain how in business accounting "fixed capital" and "fixed assets" are understood, Mr. Singh, learned counsel for the State, drew our attention to the book titled Advanced Accounting by Jamshed R. Batliboi. Therein, it is stated that "fixed capital of a business consists of its fixed assets" and "fixed assets" are those which are acquired and intended to be retained permanently for the purpose of carrying on a business, such as land, buildings, plant and machinery etc. Therefore, the context in which the word "plant" is used in rule 2(v) indicates that it is not used in its wider sense and does not include within its meaning land, building and machinery. It also appears that the rule-making authority did not intend "plant" to mean what is not a fixed asset. For all these reasons, we are of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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