JUDGMENT Prakash Krishna, J.
1. The applicant No. 1 is a new unit within the meaning of Section 4A of U.P. Trade Tax Act (here in after referred to as the Act). The applicant No. 1 is one of its partners. It is engaged in the business of manufacturing of Decoiling, Annealing/ processing and corrugation of Iron and Steel tubes. The date of production of the Unit is 4-12-2000 and it applied for grant of eligibility certificate under Section 4A of the Act on 25-04-2001. The Fixed Capita! Investment was declared: ;
2. The Divisional Level Committee by its initial order dated 15-07-2002 granted the eligibility certificate taking Fixed Capital Investment (here in after referred to as FCI) at Rs.60,00,126/- and disallowed a sum of Rs 13,24,760/- . Aggrieved by the aforesaid curtailment in the FCI an appeal was filed before the Tribunal which was allowed and remanded back: by order-dated 22-05-2003 to the Divisional Level Committed with a direction to give reasons for disallowing the FCI as the order of the Divisional Level Committee was not speaking order. After remand a show cause notice was issued by the Divisional Level Committee after affording opportunity of hearing to the applicant the Divisional Level Committee passed a fresh order-dated 4-02-2004. This time the Divisional Level Committee accepted the claim of the dealer to the extent of Rs.59,25,526/- towards the FCI account arid thus it disallowed a sum of Rs. 12,50,160/- . Again the applicant filed an appeal before the Tribunal. The Tribunal by order under revision has confirmed the order passed by the Divisional Leve;l Committee.
3. Heard Sri Umesh Narain Sharma, Senior Advocate, assisted by Sri Rohit Pandey, for the applicant and the learned Standing Counsel Sri B.K. Pandey, for the department.
4. Learned Counsel for the applicant submitted that disallowance of certain amount in the head of land, building and machinery by the Tribunal being illegal, is liable to be set aside. The applicant claimed total investment of Rs. 12,56,040/- in land, but the Divisional Level; Committee has granted the benefit under this head for a sum of Rs. 3,26,700/- only on the ground that the said sum represented the entire investment made by the applicant. Learned Counsel for the: applicant challenged the legality and propriety of the order of the Tribunal oh the basis of Notification No. TT-2-780/11 dated 31-3-1995. Strong reliance was placed by the learned Counsel on Clause (5) of the said notification and it was contended by him that investment in land is to be determined with reference! to the circle rate fixed by the Collector of the land in question, under Stamp Act. It was further contended that although in the sale deed dated 31-3-2000 the total sale consideration of Rs. 3, 26,700/- has been mentioned which was paid over to the vendor, but the stamp duty was paid on much higher amount on the basis of circle rate fixed by the District Magistrate. It was further contended that valuation of the land as disclosed by the dealer in the application under Section 4A of the Act has been certified by the Chartered Accountant as well as by Punjajb National Bank. Therefore, for the purposes of FCI the valuation of the land should be taken as declared by the Chartered Accountant \ and the Punjab National Bank. Secondly, it was submitted that the Tribunal was not correct in excluding Rs. 1,90,000/- towards the cast of Generator on the ground that alternator of a different company was fitted in the Generator. Lastly, it was submitted that the Tribunal Was not correct in not allowing the investment made by the dealer towards the cost of raising sheds for labourers.
5. In Contra learned Standing Counsel submitted that on a proper construction of relevant notification the Tribunal has rightly allowed the FCI in "land". The certificate of the Chartered Accountant are given by the Nationalized "Bank is of little consequence in view of the availability of actual investment made by the applicant in 'Hand". Similarly, learned Standing Counsel supported the order of the Tribunal disallowing certain sum in Plant, machinery and building.
6. Fixed Capital Investment in Land:
Indisputably, the applicants have purchased the land in question by means of a registered rale deed for a sum of Rs. 3, 26,700/- which includes the cost of stamp duty and registration etc. The observation of the Tribunal that on examination of books of account it is dear that only a sum of Rs. 3,26,700/- was actually invested in the land inclusive of expenses for registration of sale deed, is not in dispute. Learned Counsel submitted that the agreement to sale was executed earlier and the sale deed was executed subsequently and in the meantime there has been rise in the price of land and that is the reason that the District Magistrate had fixed the market value of the land for the purposes of payment of stamp duty, commonly known as circle rate at a higher price and charged the stamp duty accordingly. But the fact remains that it is not in dispute that as a matter of fact only a sum of Rs.3,26,700/- was spent by the applicant in purchasing the land. This figure being not in dispute, in my view, was correctly taken by the Tribunal as FCI in "land".
7. Counsel for both the parties have placed reliance upon Clause (5) of the aforesaid notification issued under Section 4A of the Act bearing No. TT-2-780 dated 31-3-1995. Relevant portion of the said | notification is reproduced below:
" 5-Fixed Capital Investment or, as the case may be, additional fixed capital investment may, unless otherwise established, be determined in the case of an industrial undertaking financed by a term loan advanced by a public financial institution or a scheduled Bank according to the certificate to: that effect issued by such institution or the Bank and in any other case according to-
(a) the value of the land certified by the Collector in accordance with the procedure laid down for determination of the value of land for the purpose of payment of stamp duty under the Indian Stamp Duty Act, 1899.
(b) The value of building certified by an evaluator approved by the Income Tax Department for the purpose.
(c) The value of plant, machinery, equipment apparatus, components, moulds, dyes, jigs and fixtures certified by a Chartered Accountant."
8. The aforesaid clause can be divided in two parts, in view of the words "only otherwise established". Firstly, where the investment! in fixed capital is "otherwise established." Secondly, where the investment in fixed capital is not otherwise established. In the case of sale deed, the deed invariably contains the price of the poroperty sold. In such cases, one can safely say that the investment made in the property purchased is established, sale deeds will, therefore, fall in first part of Clause-5 and will exclude the remaining part of clause 5 of the notification. The words "unless otherwise established" means, the investment which is shown in fixed capital.
9. Take a case of succession or inheritance of a property. In such cases the investment made by the person who has inherited the property is not there i.e. not established. To find out the FCI a mechanism has been provided for such cases and they fail under the second part of Clause-5 of the notification.
10. In the absence of actual investment in the Fixed Capital asset, the FCI shall be according to the certificate issued by a public Financial institution or the Scheduled Bank if it is financed by a term loan advanced by such public Financial institution or the Scheduled Bank. In absence of established FCI and/or the certificate issued by the public financial institution or the scheduled Bank the FCI is to be determined in the following manner:
(a) the value of the land certified by the Collector in accordance with the procedure laid down for determination of the value of land for the purpose of payment of stamp duty under the Indian Stamp Duty Act, 1899.
(b) The value of building certified by an evaluator approved by the Income Tax Department for the purpose.
(c) The value of plant, machinery, equipment apparatus, components, moulds, ayes, jigs and fixtures certified by a. Chartered Accountant."
11. Much emphasis was laid by the learned counsel for the applicant on sub clause (a) of clause (5) in respect of the plea that FCI in "land" should be taken as value of the land determined by the Collector for the purposes of payment of stamp duty. The said argument has no merit and is misconceived. The aforesaid sub- clause shall come in operation only in the eventuality when there is no established investment in the land and in absence of certificate by the Scheduled Bank or by public financial institutions which has financed the term loan.
12. Attention of the Court was drawn towards the certificate dated 8-11-2001 issued by Punjab National Bank, Annexure-8 to the stay application. In the said certificate, the Bank had informed the applicant no.2 that it has financed term loan of Rs. 20 lacs and the working capital of Rs. 15 lacs. It is mentioned there in that the value of security/valuation in land/building is Rs. 38.31 lacs. The said letter of the Bank is of no help to the applicant.
13. The finding of the Tribunal is in accordance with the plain language of the Notification No.780 dated 31-8-1995 under which the applicant is claiming grant of eligibility certificate.
14. It is fairly established that the order rate is fixed by the Collector for the purposes of payment of stamp duty and for that purpose calculation of market value of the land. It has no bearing for the purposes to determine the market value of the land under other Acts. Supreme Court in R.C. Bansal v. District Magistrate and Ors. reported in A.I.R. 1999 SC 2126 has held that the circle rate under Rule 340-A is merely a guideline and at best prima-facie rate of the area concerned and on the one hand parties to the deed ere entitled to say that actual valuation is less than the circle rate and on the other hand the Collector is also empowered to decide that the actual market value is more than the circle rate. In State of Punjab v. Mahavir Singh reported in A.I.R.1966 SC 2994 it was held that the circle rate is merely a guideline provided by the Statute which would only serve as prima- facie material and that no absolute higher or minimum value can be pre- determined. The Supreme Court has approved the judgment of Punjab and Haryana High Court reported in A.I.R. 1991 (P & H) 26 which held that the guide line cannot control the quasi judicial discretion to determine the corrects value of the property.
15. A Division Bench of this Court in Dinesh Kumar Mttral v. Income Tax Officer, 1991 U.P.T.C.1209 has observed that we can not recognize any rule of law to the effect that the value determined for the purposes of stamp duty is the actual consideration passing between the parties to a sale. The actual consideration may be more or may be less."
16. Therefore, in any view of the matter the circle rate as fixed by the Collector under Stamp Duty Act, has no value when actual investment in the land by way of sale consideration is not in dispute. The aforesaid argument of the learned counsel for the applicant also does not hold good in view of the aims and object of Section 4-A of the Act. Section 4A has been enacted with a view to encourage industrialization of Uttar Pradesh by granting tax holiday to new industries. It does not appeal to reason that a person would be entitled for benefit, on the amount not actually invested by him. The sub and substance of the above discussion is that in the case of sale-deed, as the present case is, the actual sale consideration is the investment in land for the purposes of aforesaid notification.
17. Fixed Capital Investment in "Machineries"
18. The next item of disallowance of FCI relates to the "Plant and machinery". A sum of Rs. 1, 90,000/- under this head was disallowed; by the Divisional Level Committee on the ground that the applicant purchased generator of Kirloskar brand, in which the "afternator" of Stamford Brand was found. The case of the applicant is that the alternator was replaced from Kirloskar to Stamford Brand due to technical fault. The Divisional Level Committee has not disbelieved the ease of the dealer that alternator of Kirloskar Brand was replaced to Standard Brand due to technical fault. In absence of any adverse material the Divisional Level Committee was not {justified in disallowing investment made by the applicant in the purchase of generator. If the Divisional Level Committee was not satisfied with the aforesaid explanation it should have examined the books of account from this angle. In reply to the show cause notice the applicant has placed reliance upon certain correspondence, which took place in between the applicant and A.J. Brothers & Company. Copies of the letter-dated 29-3-2000 and 2-04-2000, correspondence in between the applicant and A.J. Brothers & Company have been filed as Armexure- 13 and 14 to the stay application. The applicant by letter-dated 29-3-2000 had informed A.J. Brothers and Company that alternator supplied by it is not working and request to replace the alternator was made, because the supplied material is under the guarantee period. A.J. and Company offered Stamford alternator through letter-dated 2-4-2000 as the alternator of Kirloskar brand was not available, and the alternator of Stamford make is equally good as Kirloskar, Consequently, the alternator was got replaced. It was found that the alternator of Stamford Brand was there in the generator These documents have been totally ignored by the Divisional Level Committee as well as by the Tribunal, although they were relied upon in reply to the show cause notice. I am of the view that the Divisional Level Committee acted arbitrarily in disallowing Rs. 1,90,000/- towards the investment in machinery account simply on the ground that alternator of different make was found, which itself is hardly sufficient to disallow the claim. The possibility of replacement of certain part of machinery due to manufacturing fault cannot be ruled out. In absence of any incriminating circumstances the Divisional Level Committee was not justified in disallowing the above claim.
19. Fixed Capital Investment in Building:
20. Lastly the learned counsel for the applicant submitted that the Divisional Level Committee was not justified in disallowing certain investment made towards the cost of erection of shed for labourers. The finding is that the said sheds are not necessary for the purposes of funning Plant and machinery. Learned Counsel could not point out any illegality in the aforesaid disallowance and, as such, I find no i illegality in the order of the Tribunal in this account.
21. In the result the revision succeeds and is allowed in part, as indicated above. The Tribunal shall pass consequential order in view off Section 11 (8) of the Act. There will be however, no order as to costs.