TaxTMI 
TaxTMI 
2000 (1) TMI 947
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..... 68823 of 1999 before the honourable Chief Justice with a prayer that the honourable Chief Justice be pleased to direct that Revision No. 700 of 1997 (Kajaria Ceramics Ltd. v. Trade Tax Tribunal) pending in the High Court of Judicature at Allahabad and Trade Tax Revision No. 53(L) of 1997 (Commissioner of Trade Tax v. Kajaria Ceramics Ltd.) pending before the Lucknow Bench of this Court may be heard and decided together. Honourable the Chief Justice passed the following order on September 29, 1999 on the said application: "Heard learned counsel for the parties. The record pertaining to the Trade Tax Revision No. 53(L) of 1997 pending before Lucknow Bench be summoned to this Court immediately and the same be placed before honourable P.K. Jain, J., for hearing. Dated 29-9-99 Sd/- N.K. Mitra." That is how Trade Tax Revision No. 53(L) of 1997 came up for hearing before this Court. 3.. The dealer, M/s. Kajaria Ceramics Limited, carries on the business of manufacture and sale of ceramics wall and floor tiles having its factory situated in industrial area, Sikandarabad, district Bulandshahar, Uttar Pradesh. It set up a new unit and its date of first sale was August 16, 198....
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....8, 1994 the total amount being Rs. 76,17,87,532. 4.. Aggrieved by the order passed by the Divisional Level Committee, the dealer filed appeal before the Trade Tax Tribunal, Lucknow. The Trade Tax Tribunal by its judgment and order dated April 10, 1997 partly allowed the appeal accepting the claim of the dealer in respect of additional fixed capital investment to the tune of Rs. 54,48,34,341.70 paise, it rejected the claim of the dealer with regard to Rs. 16,21,54,852 the original fixed capital investment as on August 12, 1988. By such rejection of claim, the dealer felt aggrieved and filed Trade Tax Revision No. 700 of 1997. 5.. The Divisional Level Committee had rejected the claim of the dealer in respect of additional fixed capital investment during the period April 1, 1990 to March 28, 1994 to the tune of Rs. 30,35,98,525.00. But the Tribunal while partly allowing the appeal, accepted the claim of the assessee in respect of additional fixed capital investment to the tune of Rs. 30,33,29,323.70 paise. The revenue feeling aggrieved by such acceptance of the claim of the dealer, has filed Trade Tax Revision No. 53(L) of 1997. 6.. Sri Bharat Ji Agrawal, learned Senior Couns....
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.... Sl. Location of No. unit In the case of units with In the case of units with capital investment not capital investment exceedexceeding three lakh rupees. ing three lakh rupees. --------------------------------------------------------------------------------- 1 2 3(a) 3(b) --------------------------------------------------------------------------------- (1) ............ Five years Seven years (2) Bulandshahar Four years Six years (3) ........... Three years Five years --------------------------------------------------------------------------------- Explanation.-For the purposes of this notification: (1)................... (a) and (b)................... (2) 'Date of starting production' and 'new unit' shall have the meaning assigned to them in the explanation to section 4-A of the Uttar Pradesh Sales Tax Act, 1948; and (3) 'Capital investment' means investment in land, building, plant, machinery, equipment and apparatuses." English translation of Vitta (Bikri-kar) Anubhag-2, Notification No. S.T.2-1093/XI-7(42)-68-U.P. Act XV-48-Order-90, dated July 27, 1991. Whereas the State Government is of the opinion that for promoting the development o....
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....ing certified by an evaluator approved by the Income-tax Department for the purpose; (c) the value of plant, machinery, equipment, apparatus and components certified by a chartered accountant. 4.. In determining the fixed capital investment as defined in clause (4) of the Explanation in case of 'new units' or 'additional fixed capital investment' referred to in sub-clause (d) of clause (5) of the Explanation in case of 'units which have undertaken expansion, diversification or modernisation' the investment in only such land, building, plant, machinery, equipment, apparatus and component or, as the case may be, such additional land, building, plant, machinery, equipment, apparatus and component shall be taken into account as were acquired on or before the relevant date of commencement of the period of facility notified under sub-section (1) of section 4-A of the Act. 5.................................... 1(a) and (b) .................... 6(a) and (b)...................... Annexure I --------------------------------------------------------------------------------- No. Position Total peRate of tax applicable Monetary limit of unit riod of ex(denoted as percenta....
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....e of units undertaking expansion or modernisation; and (b) of goods manufactured by the unit which are of a nature different from those manufactured earlier by such unit in the case of units undertaking diversification. 1(C)................ 2................... 3.................... 4.................... 5.................... 6.................... 7.................... Annexure I S. Location Total Exemption from or Monetary limit No. of unit period of reduction in the rate of up to which the exemption tax (denoted as perbenefit to exempreduction centage of the rate of tion from or in the tax normally applicable reduction in the rate of under the Act to the rate of tax under tax. goods concerned) which, the Act together on any transaction of with the benefit sale, shall not exceed of exemption five per cent of the sale from or reducprice. tion in the rate ----------------------- Year In case of In case of tax under the unit with a of Central Sales fixed other Tax Act, 1956 capital units. is admissible investment exceeding 50 crores. ----------------------------------------------------------------------------------------- 1 2....
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....y or workshop in India; Provided that- (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 or 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)....
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.... learned Senior Counsel appearing for the revisionist, is that the revisionist had applied for exemption from payment of sales tax in view of the notification dated July 27, 1991 extract of which has been reproduced above. His submission is that since the revisionist had undertaken expansion of his unit between April 1, 1990 to March 28, 1994, the unit was entitled to exemption on the total fixed capital investment as it existed prior to the date of the making of the application or the total fixed capital investment which included the fixed capital investment prior to April 1, 1990 and additional fixed capital investment made between the period from April 1, 1990 to March 28, 1994. He further submits that the Tribunal has committed error in not granting the benefit claimed by the revisionist by adverting to the provisions of subsequent notification dated March 31, 1995 extract of which has been reproduced above. His submission is that when the revisionist was granted eligibility certificate in view of the notification of 1985 as reproduced above, the exemption from payment of tax was on the total turnover of sales and was not relatable to the fixed capital investment by the deal....
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....do in the case of the revisionist. 9.. Shri B.K. Pandey, learned Standing Counsel, appearing for the respondents has submitted that the revisionist had never applied for exemption in respect of original investment of Rs. 16,21,54,852. He has also submitted that even before the Tribunal also no claim for relief in respect of original fixed capital investment to the tune of Rs. 16,21,54,852 was made which is evident from the reading of the opening paragraph of the judgment of the Tribunal. It is also submitted that in the grounds of appeal before the Tribunal several issues might have been raised but if the revisionist did not opt to press the grounds in question relating to the fixed capital investment of Rs. 16,21,54,852 at the time of arguments before the Tribunal it cannot be permitted to raise those grounds in this revision before this Court. In case the point was pressed and canvassed before the Tribunal and the Tribunal omitted to notice the same, the revisionist ought to have approached the Tribunal. It is also submitted that the letter dated January 24, 1997 by the convener of the Divisional Level Committee addressed to the applicant also reiterates that the revisionist h....
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....anted only in respect of the goods manufactured by the expanded units and not by the existing units. A reference has also been made to a circular dated June 30, 1993 being circular No. New Delhi, Sa.Ka.Mu.-18(93-94)/467/Bikrikar Karyalaya Ayukta Bikrikar Uttar Pradesh (Nai Ikai Anubhag), Lucknow, and it is argued that exemption under the scheme of expansion shall be limited to additional fixed capital investment only. 10.. In reply Sri Bharat Ji Agrawal, learned Senior Counsel, has submitted that the application for exemption under section 4-A of the Act copy whereof is appended to the revision application as annexure 1 is in statutory pro forma. Para 6 of the said application relates to giving of particulars of the fixed capital investment, production capacity, production in the last five consecutive assessment years and dues, if any, payable by the unit under the U.P. Trade Tax Act and the Central Sales Tax Act, etc. It is submitted that under heading "a" fixed capital investment four columns are provided, one relates to particulars, the other relates to original investment without giving margin for depreciation on August 12, 1988, third relates to additional investment in exp....
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....xplanation to section 4-A of the Act and not for the purposes of determining the fixed capital investment to the extent of which the benefit is to be granted to a new unit. As to the reference of the circular Shri Bharat Ji Agrawal has submitted that the circular issued by the department is contrary to the notification dated July 27, 1991. In view of the decision of the Division Bench of this Court in the case of Hindustan Reprographics Limited v. State of Uttar Pradesh [1989] 72 STC 424; 1988 UPTC 1232 the statutory notification cannot be overridden by clause (2) of circular dated June 13, 1993. 11.. As already pointed out above, the preliminary objection taken on behalf of the Revenue is that the revisionist had applied for exemption in respect of the original investment of Rs. 16,21,54,852. In support of this submission reference has been made to the application as contained in annexure 1 to the revision application, letter by Joint Director of Industries, Western Region, Meerut, as contained in annexure 3 to the revision application and to the order of the Tribunal. It is submitted that in the application it is nowhere stated that the exemption was being claimed in respect o....
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....Shri Bharat Ji Agrawal that this was not correctly stated by the Tribunal. He has drawn attention of the court to the memo of appeal, copy of which has been filed with supplementary affidavit dated September 23, 1999. The first prayer made in the said memo of appeal was that the order passed by the Divisional Level Committee be modified and the fixed capital investment of the unit be mentioned as Rs. 7617.87 lakhs in place of Rs. 24,15.05 lakhs in the eligibility certificate issued under section 4-A of the Act. Perusal of grounds Nos. 3 and 4 also shows that the revisionist had claimed before the Tribunal that he was entitled to benefit of additional fixed capital investment as defined under section 4-A of the Act and the Divisional Level Committee ought to have mentioned the fixed capital investment of Rs. 76,17.87 lakhs which includes the original fixed capital investment. It appears that the Tribunal has misread the prayer of the revisionist in the memo of appeal and has wrongly stated in para first of the order that the appellant claimed exemption in respect of Rs. 54,51,03,544 only. It may further be seen that the Tribunal was under the wrong impression that the revisionist wa....
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....d the units which have undertaken expansion, diversification and modernisation on or after April 1, 1995 but not later than March 31, 2000. From perusal of annexure 1 to the said scheme it would be evident that a distinction was made between the fixed capital investment and additional fixed capital investment. In the case of new units the exemption was to the extent of 250 per cent or 200 per cent of the fixed capital investment whereas in the case of units undertaking expansion, diversification or modernisation the benefit was only to the extent of additional fixed capital investment. Therefore, observation of the Tribunal that similar benefit was granted under the two schemes of 1991 and 1995 is apparently erroneous and based upon wrong assumption of facts. It is clear from the comparison of the two schemes that benefit of exemption under section 4-A under the scheme of 1991 was in respect of fixed capital investment whereas under the scheme of 1995 the exemption to the units undertaking expansion, modernisation or diversification, the limit of exemption was only to the extent of additional fixed capital investment. 14.. The submission of Sri Bharat Ji Agrawal, learned counsel....
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.... drawn the attention of the court to sub-clause (d) of the aforesaid explanation which provides that such a unit means wherein an additional fixed capital investment of at least twenty five per cent of such original fixed capital investment (without providing for depreciation) is made. On the strength of the above provision it is argued that sub-clause (d) of explanation (5) clearly provides that additional fixed capital investment in case of a unit undertaking modernisation should be at least 25 per cent of such original fixed capital investment. Shri Bharat Ji Agrawal, learned counsel for the revisionist, has rightly pointed out that the explanation as aforesaid provides only with regard to the field of eligibility. By explaining as to what would be meant by a unit which has undertaken expansion, etc., the explanation provides as to which unit shall be eligible for facility of exemption under section 4-A of the Act. In my view also sub-clause (d) of explanation (5) has nothing to do with the extent of benefit of exemption which can be granted to a unit undertaking modernisation, expansion or diversification. Then learned Standing Counsel and the learned Chief Standing Counsel hav....
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....undertaking modernisation, diversification or expansion. It may be seen here that such a distinction was made in the subsequent notification dated March 31, 1995 where the benefit of exemption in payment of tax in the case of unit undertaking modernisation, expansion or diversification was relatable to additional fixed capital investment. Column 5 of annexure 1 to the notification dated March 31, 1995 provided the monetary limit up to which exemption from or reduction in the rate of tax is admissible. It provides the monetary limit of 200 per cent of the fixed capital investment in case of new units and the limit of additional fixed capital investment in the case of units undertaking modernisation, diversification and expansion. This is with respect to industries or units situated in district Bulandshahar or other areas of the like category. It is argued on behalf of the opposite parties that subsequent notification cannot be taken into consideration for construing the provisions of the notification under which the benefit of exemption is being claimed. In reply Shri Bharat Ji Agrawal has made a reference to a decision of the honourable Supreme Court in Pappu Sweets and Biscuits v.....
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....urt in State of Bihar v. S.K. Roy [1996] Supp. SCR 259 and Jogendra Nath Naskar v. Commissioner of Income-tax, Calcutta [1969] 3 SCR 742. In Naskar's case [1969] 3 SCR 742, this Court quoted with approval the following observations made in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 2 KB 403: 'I think it is clearly established in Attorney-General v. Clarkson (1900) 1 QB 156 at pages 163, 164 that subsequent legislation may be looked at in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. I quite agree that subsequent legislation if it proceeded on an erroneous construction of previous legislation cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation, then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier Act'." Thus the honourable Supreme Court took the view that subsequent legislation may be looked into in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. Therefore, subsequent notification can be looked into for interpreting the true meaning of expression "fixed c....
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....s originally framed, it was expressly stated that the Government granted the facility of exemption in order to encourage the capital investment and establishment of industrial units in the State. The scheme contained various rules for grant of such exemption. The section itself has referred to the purpose for which the Government could grant such exemption........... 11.. In Commissioner of Income-tax, Amritsar v. Strawboard Manufacturing Co. Ltd. [1989] 177 ITR 431; (1989) Supp 2 SCC 523; 1989 UPTC 1300 (SC) this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd., Bombay v. Commissioner of Income-tax, Bombay City-III, Bombay [1992] 196 ITR 188 (SC); (1992) 3 SCC 78; 1992 UPTC 857 (SC), it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. 12.. We find that the object of granting exemption from payment of sales tax has always been for encouraging cap....
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....al investment is to be computed or determined or in column 5 of annexure 1 to notification as was done in notification of 1995. 19.. The last submission on behalf of the respondents is that a circular was issued by the Commissioner of Trade Tax dated June 30, 1993 whereby it was clarified that the facility of exemption to the units undertaking expansion, modernisation or diversification shall be to the extent of 100 per cent to 150 per cent of the additional fixed capital investment. It is submitted that in view of the above clarification also the fixed capital investment used in column 5 of annexure 1 to the notification dated July 27, 1991 fixed capital investment in respect of units undertaking modernisation, etc., shall be only relatable to additional fixed capital investment. Shri Bharat Ji Agrawal has, however, pointed out that if the contention of the revisionist that fixed capital investment as used in column 5 of annexure 1 to notification dated July 27, 1991 is construed as additional fixed capital investment then the circular letter shall be in contravention to the notification which is statutory notification. There is substance in the submission of Shri Agrawal. Noti....
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....ssued by the State Government in exercise of powers under section 4-A of the Act read with section 21 of the Uttar Pradesh General Clauses Act and notifications dated 29th January, 1985 (annexure 3) and 26th December, 1985 (annexure 5) were issued by the State Government in exercise of powers under sub-section (5) of section 8 of the Central Sales Tax Act, 1956 read with section 21 of the General Clauses Act................. Thus the period of exemption of seven years having been specified by the State Government by notification, and the said notification being a statutory instrument, could not be modified or reduced to a lesser period by administrative instructions or clarifications issued by the Government under letters, dated 17th March, 1988 and 23rd March, 1988." Therefore, in my view, the circular cannot override the statutory notification. 20.. For the foregoing discussions T.T.R. No. 700 of 1997 deserves to be allowed. Trade Tax Revision No. 53(L) of 1997 21.. In this revision dispute relates to the benefit to which the dealer was entitled as additional fixed capital investment made during the period from April 1, 1990 to March 28, 1994. The dealer had claimed b....
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....ot applied under sub-section (5)(a) within six months from the relevant date of the commencement of the facility and applies for such facility later than the date specified in clause (a) then the notified under sub-section (1) shall be computed from the date of the application till the end of the period of such facility. It is also submitted by Shri Mehta that the company had undertaken expansions on August 15, 1990 and December 28, 1991 and had increased production capacity from 12,000 M.T. to 26,000 M.T. and 26,000 M.T. to 40,000 M.T. respectively. It is submitted that on September 16, 1994 three separate applications for these expansions were filed though subsequently the same were withdrawn on November 21, 1994 and revised combined application was filed. It is further pointed out that from time to time separate industrial licences to raise production capacity were obtained. This clearly indicates that there were three separate distinct expansions, the last being dated March 28, 1994. His submission is that since no separate applications for availing of the facility of exemption as required by section 4-A(5)(a) and (b) are moved the Divisional Level Committee has rightly rejecte....
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....t in the same is pointed out. Therefore, the value of the fixed capital investment in respect of the building, plant and machinery, etc., has been rightly accepted by the Tribunal. 26.. As to the second submission of Sri Mehta the reply of Shri Bharat Ji Agrawal is that the expansion was undertaken under one integrated plan though in phases. It is submitted that this is evident from annexure 4, letter dated January 28, 1997 written by the convener of the Divisional Level Committee wherein the expansion in first phase and second phase is stated. It is further submitted that the argument is substantiated by the report of the Trade Tax Department, i.e., the report of the assessing authority as contained in annexure 5 to the counter-affidavit in which it was specifically mentioned that the total investment under the scheme of expansion was Rs. 54,46,59,544 and the unit was entitled for exemption for a period of 9 years on the turnover in the excess of the base production. It is also submitted that the department has admitted before the Tribunal that the expansion was made in three phases. Besides this he has relied upon a circular dated September 26, 1996 copy whereof is encl....
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....tha. Atha is punji viniyojan ki vartman vistarikaran ke liye nahi kiya ja sakta." He submits that from the above observations and findings of the Divisional Level Committee it appears that the contention of the dealer that integrated expansion scheme had been prepared much before was not disputed by the Divisional Level Committee. It had rather observed that the expansion was made in phases but denied the claim on two grounds, viz., (i) application phasewise expansion was not given and (ii) for obtaining production of 40,038 M.T. investment was made earlier in two phases which cannot be included in the instant expansion scheme. No other ground was taken by the Divisional Level Committee for rejecting the claim of the unit under the expansion scheme with regard to additional fixed capital investment of 40,038 M.T. in earlier first phase and second phase. It appears from the order passed by the Tribunal that the argument was placed before the Tribunal that the provisions of section 4-A(5) being not clear, separate applications were moved for grant of eligibility certificate in respect of expansion undertaken in three phases. However, subsequently the definition of fixed capital....
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.... unit. The eligibility certificate was effective from August 16, 1988, the date of first sale. The declared base production was 12,000 M.T. After first expansion in the year 1990 the eligibility certificate was got amended and production capacity was got increased from 12,000 M.T. to 26,000 M.T. Similarly after carrying out second expansion in the year 1991 the capacity was got increased from 26,000 M.T. to 40,000 M.T. He has submitted that this facility was availed of by the dealer as a "new unit". Once the unit had availed of the facility of exemption by increasing the base production capacity as a new unit, the unit of the assessee cannot avail of the same benefit as a unit undertaking expansion in respect of additional fixed capital investment in the first and second expansions. Shri Bharat Ji Agrawal, learned Senior Counsel appearing for the dealer has challenged the submission of Shri Mehta on the ground that there was only one integrated scheme of expansion which was carried out in phases. He has next submitted that the present benefit of exemption was on being availed of beyond 40,038 M.T. base production. 30.. Explanation (2) to section 4-A of the Act defines and clarif....
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....t eligibility certificate in respect of first and second expansions dated August 15, 1990 and December 28, 1991 in respect of additional fixed capital investment to the tune of Rs. 11,14,95,641 and Rs. 12,50,66,080 respectively when base production was increased from 12,000 M.T. to 26,000 M.T. and from 26,000 M.T. to 40,000 M.T. In this regard his first submission is that the three expansions dated August 15, 1990, December 28, 1991 and March 28, 1994 were distinct and separate expansions and if the unit wanted to avail of the facility of exemption from tax on the ground of exemption, distinct and separate applications ought to have been moved in accordance with the provisions of section 4-A(5)(a) of the Act which provides that the application for availing of the facility can be moved within six months from the relevant date of the commencement of the period of facility. In the alternative his argument is that if this is not done then the total period of facility to be availed of has to be curtailed. In reply Shri Bharat Ji Agrawal, learned Senior Counsel has submitted that the expansion was undertaken under one integrated plan though in phases. Shri Agrawal refers to annexure 4 to....
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....ansions were completed on March 28, 1994 and the appellant had claimed benefit for exemption on the entire fixed capital investment and in the opinion of the Tribunal it will not be proper and justifiable to grant benefit of fixed capital investment only in respect of last phase of expansion. Sri Mehta has submitted that these findings of the Tribunal are not correct. At the outset it may be stated that these are the findings of fact and cannot be reversed unless found to be perverse or based on no material. It may further be seen that even the Divisional Level Committee in its order as contained in annexure 4 to the revision application had categorically observed that the dealer had made expansion in several phases. The observations of the Divisional Level Committee have already been reproduced above. It was pleaded before the Divisional Level Committee that the scheme for expansion was prepared earlier and under one and the same scheme the entire expansion was completed in the year 1993-94. It was also pleaded before the Divisional Level Committee that the total fixed capital investment was up to March 28, 1994 and the first date of production in excess of the base production of ....
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....ion was moved. It has already been found above that the finding of fact arrived at by the Tribunal is that there was one expansion scheme which was carried out in three phases. In these circumstances moving of three distinct applications was not very material for concluding that there were three distinct separate expansion schemes and not three phases of one integrated expansion scheme under which the dealer had undertaken expansion of his unit. It is true that sub-section (5) [section 4-A clauses (a) and (b)] provides that the facility of exemption from or reduction in rate of tax can be availed of if the manufacturer applies for such facility within six months from the relevant date of commencement of the period of facility or by September 13, 1992 whichever expires later in which case facility can be availed of for the entire period notified under sub-section (1) or in case he applies for such facility later than the date specified in the clause (a) only for part of the period notified under sub-section (1) which shall be computed from the date of application and not from the relevant date of commencement for the period of facility referred to in sub-section (1) till the end of ....
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....ing of court proceedings." 35.. In the instant case the unit of the dealer was established on August 16, 1988 when the first sale after establishment was made. The period of five years will come to an end in August, 1993. However, the last phase of expansion was completed on March 28, 1994 and the applications for availing of the benefit of exemption were moved within six months from March 28, 1994, i.e., September 16, 1994. These applications were subsequently withdrawn and revised combined application was moved on July 17, 1995. It cannot, therefore, be said that the applications for availing of the benefit of the scheme on the ground of expansion was not moved within the period provided under sub-section (5)(a) of section 4-A of the Act. Therefore, the argument advanced by Sri Mehta cannot be accepted. At best the unit could avail of the facility of exemption from payment of tax on the ground of expansion from the date of revised application, i.e., July 17, 1995. In the written argument also it was categorically mentioned that no exemption was claimed prior to July 17, 1995. Besides this the exemption has been claimed on the turnover in excess of base production of 40,038 M.T....
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..... 51,56,740 (C) Foreign technicians expenses ... Rs. 53,61,545 (D) Foreign travel expenses ... Rs. 21,47,781 39.. Total being Rs. 4,00,78,747 including the other expenses. It appears that the unit had taken loans from various financial institutions and had paid interest to the tune of Rs. 2,26,07,777. The Tribunal referred to the book Compodium of Statements and Standards Accounting on page B.87 and quoted below B.25 which reads as follows: "Interest on moneys which are specifically borrowed for the purchase of fixed asset may be capitalized prior to the asset coming under the production, i.e., during the erection stage. However once production starts under interest of borrowings for the purchase of machinery (whether for the replacement or renovation of existing plant), should be capitalised. For a extending business the interest paid for financing the completely new unit or a substantial expansion undertaken by the company may be capitalised. Only the interest on moneys specifically borrowed for the new expansion may be capitalised and that only for the period before production starts. Interest payable on the fixed assets purchased by the deferred credit basis, should....
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....t of Sri Mehta has to be considered in the light of the findings of the Tribunal. Explanation (4)(b) of section 4-A provides that for the purposes of determining investment in plant, machinery, equipment, apparatus, components, moulds, dyes, jigs and fixtures "only" the following shall be taken into accounts: (i) Investment whether by means of purchase, hire or lease 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 for some statutory obligation; and (iii) expenses incurred in erection and installation of such plant and machinery and bringing it to the site. 43.. It may be noted that term investment has not been defined in the Act or in section 4-A of the Act. It is well-settled that if a term is not defined in the Act its meaning in other similar enactments can be looked into. Explanation (4)(b)(i) further provides that the investment necessary for the establishment or running of the factory or workshop whether by means of purchase or hire or lease in the plant, equipment, etc., shall be taken into account. Thus, when an equipment or plant is taken o....