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TMI Blog2004 (10) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rs. 9,26,410 and had claimed exemption on the entire turnover for the assessment years 1994-95 and 1995-96. 3.. The assessing authority after rejecting the returns filed by the assessee, had issued a pre-assessment notice, proposing to levy tax at 5 per cent on the rentals received for leasing diesel generating sets. In response to the pre-assessment notice, the assessee had filed its objections, and in that, had specifically contended that the income derived from the leasing of diesel generator sets is not one of the items enumerated in the Seventh Schedule to the Karnataka Sales Tax Act up to March 31, 1996 to become liable to pay tax under section 5-C of the Act. The assessing authority has dropped the proposal made in the pre-assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is not liable for payment for the turnover tax. 5.. The revising authority being of the view that the order passed by the assessing authority as well as the first appellate authority is erroneous and prejudicial to the interest of the Revenue, had issued a notice to the assessee, proposing to set aside the order of the assessing authority and the first appellate authority and had proposed to direct the assessing authority to levy tax under sections 5-C and 6-B of the Act on the lease rentals received during the years 1994-95 and 1995-96. 6.. After receipt of the notice issued by the revising authority, the assessee had filed its objections. In that, apart from others, the assessee had specifically contended, that, the assessing authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion in these appeals by the assessee being aggrieved by the same. 8.. Sri Sathyanarayana, learned counsel appearing for the appellant vehemently contends before this court that the diesel generating sets cannot be included under the "plant" and "machinery" of the Seventh Schedule to the Act and therefore, the revising authority is not justified in setting aside the orders passed by the assessing authority as well as the first appellate authority. Learned counsel could further contend that the diesel generating sets would fall under entry No. 56 of the Fifth Schedule to the Act and therefore, the first appellate authority was justified in setting aside the levy of turnover tax levied by the assessing authority. 9.. Per contra, Sri Anan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant/assessee for the relevant assessment years had exempted the turnover of the assessee in so far as lease rentals received on the leasing of the diesel generating sets by applying the notification issued by the State Government dated March 30, 1994. The language of the notification is clear. Alternatively it is not ambiguous. However, the assessing authority applies the notification and grants exemption on the lease rentals received by the assessee. A perusal of the notification would clearly indicate that what is exempted under the notification is the sale of diesel captive generation units to persons other than industrial units located in the State of Karnataka and not the rentals received for leasing the diesel captive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said decision, the court has observed as under: "(iii) That 'plant' was not necessarily confined to an apparatus which was used for mechanical operations or process or was employed in mechanical or industrial business. But in order to qualify as 'plant', the particular article had to have some degree of durability. The test to be applied was: Did the article fulfil the function of a plant in the assessee's trading activity? Was it a tool of his trade with which he carried on his business? If the answer was in the affirmative, it would be a 'plant'." 17.. The term "machinery" is also not defined under the Act and in the absence of such statutory definition, the word has to be given the ordinary meaning. The expression "machinery" in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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