TaxTMI 
TaxTMI 
2011 (3) TMI 1541
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....rgone for diversification. Thereafter, the applicant had undergone for the third diversification in the year 1997 and the first sale took place on July 5, 1997. The additional fixed capital investment was disclosed at Rs. 40,54,702. An application claiming exemption, under section 4A under the diversification scheme, was filed on December 24, 1997. This case is concerned with the claim of exemption under third diversification. The Divisional Level Committee rejected the application claiming exemption for third diversification mainly on the ground that the additional investment was less than the 25 per cent of the original fixed capital investment: According to the applicant, the additional fixed capital investment was more than 25 per cent of the original fixed capital investment of Rs. 99,54,118. The applicant filed the review application. On the application of the applicant, there was a difference of opinion in the Divisional Level Committee, hence the matter was referred to the State Level Committee. The State Level Committee vide order dated February 19, 2003, rejected the application on the ground that even the provision regarding additional fixed capital investment of 25 per....
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....on or diversification, it would lead to frustrate the meaning of the fixed capital investment as used in the 'Act'. 'Original fixed capital investment' incidentally has not been defined in the Act. The word 'original' has created conflict between the dealer and the State Level Committee. The use of this word in the statute has to be interpreted in the light of the purpose and context of the provision. When we apply this principle we find that 'original fixed capital investmenf may be 'original fixed capital investment' for first expansion or diversification but in case of second and third expansion and diversification it is not only the 'original fixed capital investment' but also the additional fixed capital investment which was before proposed expansion and diversification." Heard Sri Bharat Ji Agarwal, learned senior advocate, appearing on behalf of the applicant and Sri B. K. Pandey, learned standing counsel. The learned counsel for the applicant submitted that the object of section 4A is to increase industrialisation and the production. With this view the benefit has also been extended to even the existing units undergone for diver....
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....f such notification, and where no date is so specified from the date of first sale by such manufacturer, if such sale takes place within six months from the date of starting production and in any other case from the date following the expiration of six months from the date of starting production, and subject to such conditions as may be specified, be exempt from trade tax on sale of goods whether wholly or partly or be liable to tax at such reduced rate as it may fix:- Provided that no exemption shall be granted where the facility of concession or exemption has been availed under section 4AAA. ...... Explanation (4):- (4) 'Fixed capital investment' means value of land and building and such plants, machinery, equipment, apparatus, components, moulds, dyes, jigs and fixtures, as have not been used in any other factory or workshop in India:- P....
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.... 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 under some statutory obligation; and (iii) expenses incurred in erection and installation of such plant and machinery and bringing it to the site. (e) the State Government may, by notified order, specify the procedure for determining fixed capital investment. The condition as laid down in Explanation (5) and (5)(d) regarding additional fixed capital investment is given below:- "(5) 'Unit which has undertaken expansion, diversification or modernisation' means an industrial undertaking:- ..... &n....
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....is to be construed strictly. In the case of Union of India v. Suksha International and Nutan Gems reported in [1989] 39 ELT 503 (SC), the apex court held that unduly reconstructing the scope of a beneficial provision to be avoided so that it may not take away with on hand what the policy gives with the other. In the case of Commissioner of Income-tax, Amritsar v. Strawboard Manufacturing Co. Ltd. reported in [1989] 177 ITR 431 (SC) ; [1989] 2 JT SC 264, the apex court held that it is necessary to remember that when a provision is made in the context of a law providing any concessional right of tax for the purposes of encouraging an industrial activity, a liberal construction should put upon the language of the statute. The object of section 4A of the Act has been, considered, by the apex court in the case of Commissioner of Sales Tax v. Industrial Coal Enterprises reported in [1999] 114 STC 365 (SC); [1999] 2 SCC 607, the apex court has held that section 4A of the Act provides exemption from tax for the purposes of encouraging "production of goods" and promoting development of industry. The construction should be reasonable and purposive and should be liberally construed. In th....