Purposive construction of industrial exemption law upheld where SSI timing mismatch and authorised-partner loan details did not defeat eligibility.

Exemption under section 4A of the U.P. Trade Tax Act could not be denied merely because the SSI registration certificate was issued after production began or because the term loan was sanctioned in the name of an authorised partner. The departmental circular of 10.03.1987 was treated as binding and recognised that such a timing difference is a normal situation that does not by itself defeat relief. The loan was also treated as a firm loan taken through an authorised partner, consistent with the partnership deed. Section 4A was construed purposively to advance support for new industrial units, and technical discrepancies not affecting substantive eligibility were rejected.

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Issues: Whether exemption under section 4A of the U.P. Trade Tax Act, 1948 could be denied on the ground that the SSI registration certificate was issued after the commencement of production and on the ground that the term loan was sanctioned in the name of a partner who was authorised to act for the firm.

Analysis: The refusal was held contrary to paragraph 7 of the Commissioner's circular dated 10.03.1987, which treated a difference between the date of commencement of production and the date of issue of the SSI registration certificate as a normal situation that should not by itself defeat exemption. The circular was treated as binding on the departmental authorities. The record also showed that the bank loan was in substance a loan to the firm through its authorised partner, and the partnership deed authorised that partner to procure loans on behalf of the firm. The provision was further construed purposively, since section 4A was intended to encourage new industrial units and an interpretation defeating that object was rejected.

Conclusion: Denial of the eligibility certificate on those grounds was unsustainable, and the assessee was entitled to the benefit under section 4A.

Ratio Decidendi: A binding departmental circular must be followed by the assessing authority, and exemption provisions meant to promote new /industrial units must be interpreted purposively so that technical discrepancies not affecting the substance of eligibility do not defeat relief.

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