Tribunal allows additional depreciation for embroidery work under manufacturing process

The Tribunal allowed the Assessee's appeal against the disallowance of additional depreciation u/s 32(1)(iia) based on the argument that the embroidery work qualified as a manufacturing process, as supported by relevant legal interpretations and precedents.

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Issues involved: Appeal against disallowance of additional depreciation u/s 32(1)(iia) of the Income Tax Act.

Summary:
1. The appeal was filed by the Assessee against the order of the Learned CIT(Appeals)-II, Surat, challenging the Assessment order on the grounds that it was bad in law and facts.
2. The main issue was the disallowance of additional depreciation u/s 32(1)(iia) by the Assessing Officer, which the Assessee argued was eligible due to the embroidery work being a manufacturing process covered under the Technology Up-gradation Fund Scheme.
3. The Assessee contended that the embroidery work transformed plain fabric into value-added products, eligible for additional depreciation, citing relevant case laws and the ITAT Ahmedabad decision in a similar case.
4. The Assessing Officer disallowed the additional depreciation, stating it was only applicable to businesses engaged in manufacturing or production of articles.
5. The ITAT Ahmedabad decision in a similar case supported the Assessee's claim, emphasizing that embroidery work resulted in the production of new articles with different commercial value, making it eligible for additional depreciation.
6. The Tribunal, following the precedent set by another Bench, allowed the Assessee's appeal, directing the allowance of the claim for additional depreciation on the embroidery machine.

In conclusion, the Tribunal allowed the Assessee's appeal against the disallowance of additional depreciation u/s 32(1)(iia) based on the argument that the embroidery work qualified as a manufacturing process, as supported by relevant legal interpretations and precedents.

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