Fixed capital investment includes actual purchase price of capital goods and statutory car parking required for setting up a unit.

Modvat credit or excise duty adjustment does not reduce the actual purchase price of plant, machinery, apparatus or equipment for computing fixed capital investment under the U.P. Trade Tax Act, because the incentive does not change the price paid for the capital goods. Expenditure incurred to provide car parking where required by applicable development regulations is also part of fixed capital investment, as it is a necessary cost incurred to comply with a statutory obligation connected with setting up the unit. On both issues, the assessee's claim was accepted and the disputed capital expenditure was included in fixed capital investment.

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Issues: (i) Whether Modvat benefit or excise duty adjustment could reduce the purchase price of plant, machinery, apparatus and equipment so as to exclude it from fixed capital investment under the U.P. Trade Tax Act. (ii) Whether expenditure on car parking required under the applicable development regulations could be included in fixed capital investment.

Issue (i): Whether Modvat benefit or excise duty adjustment could reduce the purchase price of plant, machinery, apparatus and equipment so as to exclude it from fixed capital investment under the U.P. Trade Tax Act.

Analysis: The price paid for the capital goods remained the actual investment made by the assessee. The grant of Modvat was only an incentive under the excise law and did not alter the purchase price of the goods acquired. The exclusion adopted by the tribunal was based only on the fact that Modvat had been allowed, without any further reasoning. The amount paid for plant and machinery therefore answered the description of purchase price and qualified as fixed capital investment.

Conclusion: The issue was decided in favour of the assessee.

Issue (ii): Whether expenditure on car parking required under the applicable development regulations could be included in fixed capital investment.

Analysis: Where the unit was required to provide car parking under the governing building and development regulations, the expenditure was incurred to satisfy a statutory obligation connected with setting up the unit. Such necessary investment could not be ignored while computing fixed capital investment.

Conclusion: The issue was decided in favour of the assessee.

Final Conclusion: The revision succeeded, the tribunal's order was modified, and the assessee obtained the benefit of inclusion of the disputed capital expenditure in fixed capital investment.

Ratio Decidendi: Incentives such as Modvat do not reduce the actual purchase price of capital goods, and expenditure necessarily incurred to meet statutory obligations for setting up the unit forms part of fixed capital investment.

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