Appellate Tribunal denies additional depreciation claim for marine product processing, ruling in favor of Revenue.

The Appellate Tribunal ruled in favor of the Revenue in a case concerning the eligibility of an assessee's activities in processing and exporting marine products for claiming additional depreciation under section 32(1)(iia) of the Act for the assessment year 2006-07. The Tribunal held that the processing of marine products by the assessee did not amount to production, based on a Supreme Court precedent, and thus denied the additional depreciation claim. Consequently, the Tribunal allowed the Revenue's appeal, overturning the decision of the Ld. CIT(A) on the matter of claiming additional depreciation for manufacturing or production activities.

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Issues involved: Whether activities of the assessee can be considered as manufacture or production for claiming additional depreciation u/s. 32(1)(iia) of the Act.

Summary:
The appeal before the Appellate Tribunal ITAT COCHIN concerned the assessment year 2006-07, where the Revenue challenged the Order of the Ld. CIT(A)-IV, Kochi. The main issue was whether the activities of the assessee, involved in processing and exporting marine products, qualified as manufacture or production for claiming additional depreciation u/s. 32(1)(iia) of the Act.

The assessee procured raw marine products like shrimp, squid, and fish, processed them through various activities like grading, cleaning, peeling, cutting, freezing, and packing, and claimed additional depreciation under section 32(1)(iia). The Assessing Officer rejected the claim stating that the processed products remained the same and did not result in the emergence of a new product. The Ld. CIT(A) allowed the claim, leading to the Revenue's appeal.

The Revenue argued that the processes undertaken by the assessee only involved cleaning the marine products for export, without creating a new product. On the other hand, the assessee's counsel referred to the National Industrial Classification manual, stating that processing and preservation of fish is classified as a manufacturing activity. It was contended that the processed products were distinct commercially and fit for human consumption after the processes.

The Tribunal referred to a Supreme Court case where it was held that processing of shrimps did not amount to production. Citing the judgment, the Tribunal concluded that the processing of marine products by the assessee did not qualify as production, thus denying the additional depreciation claim u/s. 32(1)(iia) of the Act.

Therefore, the Tribunal allowed the appeal of the Revenue, setting aside the order of the Ld. CIT(A) on the issue of claiming additional depreciation for manufacturing or production activities.

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