Appellate Tribunal affirms additional depreciation for printing business under Income Tax Act

The Appellate Tribunal upheld the CIT(A)'s decision to allow additional depreciation at 20% on plant and machinery for an assessee engaged in printing and publishing activities. The Tribunal dismissed the Revenue's appeal, citing that printing of newspapers constituted manufacturing activity, making the assessee eligible for the additional depreciation under section 32(1)(iia) of the Income Tax Act. The decision was based on precedents from various High Courts and a CBDT circular, ultimately favoring the assessee's claim for additional depreciation.

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Issues:
Granting of additional depreciation @ 20% on plant and machinery.

Analysis:
The appeal before the Appellate Tribunal ITAT Cochin was regarding the order passed by the CIT(A), Kozhikode for the assessment year 2008-09. The main issue raised by the Revenue was the granting of additional depreciation at the rate of 20% on plant and machinery. The assessee had claimed this additional depreciation under section 32(1)(iia) of the Income Tax Act, which was initially denied by the Assessing Officer on the grounds that the printing of newspapers did not amount to manufacturing or production of a new article or thing.

The CIT(A) allowed the claim of the assessee based on a CBDT letter and judgments from various High Courts. The CIT(A) observed that the assessee qualified as an industrial company engaged in manufacturing or processing of an article or thing, making them eligible for the additional depreciation. The Revenue challenged this decision before the Appellate Tribunal.

During the hearing, the Revenue argued that the CBDT letter relied upon by the CIT(A) did not apply to the assessee's case, as it pertained to lower tax rates for industrial companies and not additional depreciation for printing and publishing businesses. The Revenue contended that printing and publishing of newspapers were not included in the list of articles or things eligible for additional depreciation under section 32(1)(iia) of the Act.

On the other hand, the assessee's representative cited judgments from High Courts and CBDT circulars supporting the claim that printing of newspapers constituted manufacturing activity. The Appellate Tribunal noted a decision by the Delhi High Court which held that printing activities could be considered as manufacturing, thus justifying the granting of additional depreciation to the assessee.

Ultimately, the Appellate Tribunal dismissed the appeal filed by the Revenue, upholding the decision of the CIT(A) to allow the additional depreciation on plant and machinery for the assessee engaged in printing and publishing activities. The judgment was pronounced on 25-07-2014.

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