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M/S Vardhman Industries Ltd. Through Director v. Commissioner Of Trade Tax - SALES/TRADE TAX REVISION DEFECTIVE No. 918 of 1998  RD-AH 12284 (26 July 2006)
Court no. 43
Trade Tax Revision no. (918) Of 1998.
M/S Vardhman Industries Ltd., Saharanpur. ... Revisionist.
The Commissioner, Trade Tax, U. P. Lucknow..... Opp. Party.
Hon'ble Rajes Kumar, J.
Present revision under section 11 of U.P. Trade Tax Act (hereinafter referred to as the "Act") is directed against the order of Full Bench of Tribunal, Lucknow dated 30th March, 1998 relating to the assessment year 1989-1990 under the U. P. Trade Tax Act.
The applicant is a Public Limited Company incorporated under the provisions of Indian Companies Act having its registered office at AF-1 & 2, First Floor, 2 Jaisons Place, 5006 Hamdard Marg, Hauz Qauzi, Delhi. Applicant established a new Unit for the manufacturing of Vanaspati Ghee and Oil at 132 KVA Sub Station, Dehradun Road, Village Chhutmalpur, district Saharanpur. The applicant claimed exemption under Section 4-A of the Act being a new Unit. The applicant Unit has been treated as a new Unit by the Divisional Level Committee and an Eligibility Certificate has been issued. In the present case, the only dispute relates to the claim of certain expenses incurred by the applicant towards electric line charges to the extent of Rs.16,28,141/-. Claim of the applicant is that the aforesaid expenses falls under Clause-(b) (i) of Explanation 4 to Section 4-A of the Act, therefore, the aforesaid expenses should be treated as "Fixed Capital Investment" and the benefit of exemption on the said amount should be allowed.
Heard Sri Bharat Ji Agarwal, learned Senior Advocate appearing on behalf of the applicant assisted by Sri P. Agarwal, Advocate and Sri U. K. Pandey, learned Standing Counsel.
Explanation-4 to Section 4-A reads as follows:-
"(4) ''Fixed Capital Investment' means investment in land and building and such plant, machinery, equipment, apparatus and components as have not been used or acquired for use in any other factory or workshop in India:
(a) For the purposes of determining investment in land and building only the following shall be taken into account;
(i) investment in only such portion of land and building as is necessary 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 of 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 and components only the following shall be taken into account:-
(i) investment in such plant, equipment, apparatus, 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:
(c) the State Government may by, notified order specify the procedure for determining the fixed capital investment."
Clause-(b) (i) qualifies the investment only on the plant, equipment, apparatus, components and machinery as is necessary for the establishment or running of the Factory or Workshop, therefore, it has to be established that amount has been incurred on the aforesaid five items. In the present case, Tribunal held that a sum of Rs.16,28,141/- is the expenses relating to the electric line charges and the amount paid to U. P. S. E. B. C. towards the electric charges. Applicant is not able to show that the aforesaid expenses relates to the investment on plant, equipment, apparatus, components and machinery, therefore, in my opinion, Tribunal has rightly not allowed the benefit on the amount of Rs.16,28,141/- incurred for the electric line charges.
In the result, revision fails, and is, accordingly, dismissed.
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