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Judgment
Dr. Satish Chandra, J.—Both the Cross Revisions have been filed u/s 11 of the U.P. Trade Tax Act, 1948 against the judgment and order dated 08.01.2002 passed by the Trade Tax Tribunal Lucknow in Appeal No. 112 of 2001. The brief facts of the case are that the assessee i.e. M/s. Associated Cement Companies Ltd., Gauriganj, District Sultanpur (hereinafter referred as ''ACC'') established a Unit for the manufacturing of Portland Pozzolana Cement (PPC) having fly ash etc. as raw materials. The unit started its production from 05.07.1998 and first sale was made on 25.08.1998. For getting the exemption u/s 4-A, the assessee has shown the fixed capital investment (for short ''FCI'') of Rs. 61,54,62,372/-. The District Level Committee has rejected the certain entries constituted the FCI. Being aggrieved, the assessee has filed an appeal before the Tribunal who vide its impugned order has allowed certain claims towards FCI but rejected the few claims. Being aggrieved, the assessee as well as the department has filed the present revisions.
Heard Sri N.C. Mishra, learned counsel for the revisionist and Sri H.P. Srivastava, learned Additional Chief Standing Counsel for the department and perused the pleadings of the revisions as well as the written submissions.
It appears that the first dis-allowance was made pertaining to the premium on land. From the record, it appears that the total area of land was allotted by the UPSIDC, out of which 35,850 sq. mtr. of land was ear-marked for construction of the Railway siding and 1587.50 sq. mtr. was also marked for three additional silos.
After hearing both the parties, it is evident that without the Railway, the Factory cannot function and earned in profit as the Transportation cost by road will increase the price of the product tremendously. The assessee has already entered into an agreement with the Railway Department and the work was in progress. The assessee has taken the land for 90 years lease from UPSIDC. So, no ownership is lying with the assessee but the fact remains that the premium was paid for the entire land. The Railway Siding/line is in the interest of the business of the assessee. Similarly three Silos were used for storing the raw materials and at later stage, the same can be used for finished goods. So, it is also in the interest of the assessee''s factories. The Tribunal has rightly allowed the claim of the assessee.
The next grievance is pertaining to the addition of Rs. 82,593/-, which were paid to UPSIDC for the approval of the land drawing. The DLC has disallowed the same and the Tribunal has also rejected it.
On perusal of the record, it appears that there is a difference between the development and approval of the land drawing. The charges paid for approval of the land drawing cannot be equated towards the land development charges. So, the Tribunal has rightly rejected the claim of the assessee.
The next grievance of the assessee is pertaining to the disallowance of Rs. 26,25,100/- paid to UPSIDC as interest on the deferred payment of installment of the premium. The Tribunal has rightly allowed the same as it is a certain liability. Hence, the order of the Tribunal is hereby sustained.
The next grievance of the assessee is pertaining to the addition of Rs. 1,32,235/- towards lease rent/occupancy charges of the land. The Tribunal has rightly allowed this amount towards the FCI for the reason that the amount will have to be paid and this is a certain liability. The same is hereby sustained along with the reasons mentioned in the impugned order.
Another grievance of the assessee towards the dis-allowance of Rs. 2,86,91,129/-, which was claimed for establishment of Fly Ash Extraction System at N.T.P.C. Unchahar-Rae Bareli. The Fly Ash is the basic component of the cement. The assessee has claimed this amount towards FCI. The Ash received free of cost in the wet form. By this system, the assessee made the Ash dry and transported to the factory but the fact remains that the site/land was provided by the NTPC free of cost. Towards it, an agreement between the NTPC and the assessee was examined by the Tribunal. For running the Plant, the electricity was available on the payment from the NTPC. Thus, the Fly Ash was available to the assessee without any cost. To run the Plant, electricity was available on payment basis. Thus, the claim of the assessee was rightly rejected by the DLC as well as by the Tribunal. The same is hereby sustained along with the reasons mentioned therein.
The next dis-allowance of Rs. 4,42,774/-, was claimed pertaining to the Tempo Traveller for transporting workers to and fro from the factory. This is the recurring expenditure and is revenue in nature. No capital is formed. So, it was rightly rejected by the DLC as well as by the Tribunal. The same is hereby sustained.
The next issue is pertaining to the dis-allowance of Rs. 2,73,000/-, claimed to have been spent for "Technical Study" for installation of Plant and Machinery. The Tribunal observed in its order that the DLC has rejected the claim as it is not directly related for the existing establishment and running of the factory. The expenses were technical in nature. So, the investment was rightly rejected towards the FCI.
The next issue is pertaining to the dis-allowance of Rs. 66,00,128/-, claimed being pre-operative expenses for creation of the fixed assets before the date of the first production. The Tribunal, after following the ratio laid down by the Hon''ble Supreme Court as well as by the Hon''ble High Court has rejected the claim of the assessee for the reason that out of the claim of Rs. 4,93,85,296/- as pre-operative expenses was allowed to Rs. 4,27,85,168/-. The allowed part includes expenses incurred on Staff Salary, Office Rent, Telephone, Telex, Power Connection, Loading of Plant and Machinery, Unloading, Insurance of Machinery, P.V.C. Pipe, Cables, Bricks etc. These were the expenses before the starting of the production and were rightly allowed by the DLC as well as by the Tribunal. The remaining items were not elaborated by the assessee. So, they were rightly disallowed to the FCI. The order of the Tribunal appears reasonable, hence, is hereby sustained.
Similarly, the Tribunal has rightly disallowed a sum of Rs. 3,40,000/- towards the investment in preparation of lay out and drawing for railway side, as this job will have to be performed by the Railway from its own resources.
In view of above, the Tribunal order is hereby sustained along with the reasons mentioned therein. In the result, both the revisions are hereby dismissed.