Fixed capital investment under section 4-A turns on actual payment timing and the correct post-cutoff machinery exemption rule.

Amounts payable for land and building after the date of first sale could not be treated as fixed capital investment for section 4-A eligibility, because only investment actually made on or before the relevant commencement date counted; the exemption was therefore denied for the balance amount. Plant and machinery purchased from a State Government corporation had to be examined under the post-31 March 1990 explanation to section 4-A, which excludes previously used machinery but carves out machinery sold by a Government company or government-controlled corporation; the authority's reliance on the wrong clause was erroneous, so the denial on this issue was set aside and the matter remanded for reconsideration.

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Issues: (i) Whether amounts payable towards land and building after the date of first sale could be included in fixed capital investment for eligibility under section 4-A; (ii) Whether plant and machinery purchased from a State Government corporation could be excluded from the definition of new unit under the relevant explanation to section 4-A.

Issue (i): Whether amounts payable towards land and building after the date of first sale could be included in fixed capital investment for eligibility under section 4-A.

Analysis: The facility under section 4-A and the notification operated from the relevant date of commencement and only the investment actually made on or before that date could be taken into account. The assessee had paid only part of the land and building cost and registration charges by the date of first sale. The balance was payable in instalments later and therefore did not constitute investment made within the relevant period for the purpose of exemption.

Conclusion: The rejection of exemption for the balance land and building investment was upheld and was against the assessee.

Issue (ii): Whether plant and machinery purchased from a State Government corporation could be excluded from the definition of new unit under the relevant explanation to section 4-A.

Analysis: The scheme of section 4-A drew a distinction between units established during the earlier period and units established after March 31, 1990. For units set up after that date, the exclusion relating to previously used machinery was subject to the proviso that machinery or equipment sold by a Government company or a corporation owned or controlled by the Central or State Government would not attract the exclusion. As the unit was treated as a new unit after March 31, 1990 and the machinery was purchased from U.P. Financial Corporation, the authorities were required to consider the claim under the correct explanation. Their approach in applying the wrong clause was erroneous.

Conclusion: The finding denying exemption on plant and machinery was set aside and the issue was remanded for reconsideration in favour of the assessee.

Final Conclusion: The revision succeeded only to the extent of the machinery issue, while the claim relating to later-paid land and building investment remained rejected. The matter was sent back for fresh decision on the eligible treatment of the plant and machinery investment.

Ratio Decidendi: For a unit established after the relevant cut-off date, eligibility under the new-unit definition must be tested under the applicable post-cut-off explanation, and amounts not actually invested by the relevant date cannot be treated as fixed capital investment.

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