- (1.) This is a revision filed under section 11 of the U.P. Trade Tax Act, 1948 preferred against the order of the Tribunal August 27, 2003. The applicant is a company, incorporated under the Indian Companies Act, 1956. The applicant is also registered under the U.P. Trade Tax Act (hereinafter referred to as, "the Act"). The applicant established a new unit for the manufacturing of writing instruments in the year 1993. The date of production of the applicant-company was March 23, 1993. The first sale was dated May 3, 1993. The initial fixed capital investment was Rs. 99,54,118. The applicant applied for exemption under section 4A of the Act. The application was allowed and an eligibility certificate bearing No. 710, dated July 1, 1995 was issued. The applicant-unit had undergone 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.
(2.) 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 cent or more than the original fixed capital investment has not been complied with.
(3.) Being aggrieved by the order of the Divisional Level Committee, the applicant filed an appeal before the Trade Tax Tribunal. The Tribunal vide impugned order dated August 27, 2003, dismissed the appeal. Hence the present revision. The Tribunal held as follows : The dispute before us for determination is as to what is the meaning of 'original fixed capital investment'. At this stage it is relevant to note that the benefit of exemption in tax has been allowed not only to 'new units' as defined under section 4A of the 'Act' but later on in the year 1990 even existing old units were given benefit of exemption in tax if they undertook expansion or diversification under specified conditions. Thus, in both the cases even the old units were permitted the benefit of exemption in tax if they undertook expansion or diversification, etc. Among other conditions one condition was common that unit should make additional fixed capital investment of at least 25 per cent of the 'original fixed capital investment'. To our mind framers of the law did not contemplate a situation as in the present case, that units would undertake one after other various expansions and diversifications. We have seen cases of units which have undertaken expansion together and also expansion and diversification within one year of earlier expansion or diversification. This fact has in fact created this question for determination as to what is the meaning of 'original fixed capital investment' and its requisite additional fixed capital investment in case of expansion or diversification. If it was first expansion or diversification, there was no problem. In that case the 'original fixed capital investment of a unit was the basis for working out the requisite 25 per cent of additional fixed capital investment but the problem is when the unit undertakes one' after other several schemes of expansion or diversification. The meaningful interpretation to our mind would be and should be the fixed capital investment was prior to second or third expansion or diversification. If the interpretation of the learned counsel for the appellant is accepted then the original fixed capital investment shall be taken as original fixed capital investment in every expansion 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 investment' 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.;