2016 (4) TMI 341 - AT - Income Tax

Appellate Tribunal Upholds CIT(A) Decisions on Deductions: Manufacturing Activities Key

The Appellate Tribunal upheld the CIT(A) decisions regarding the disallowance of deduction u/s 10B and additional depreciation. The Tribunal emphasized ... Disallowance of claim of deduction u/s 10B - eligibility of additional depreciation - Held that:- As the business of the assessee is proved beyond doubt that it involves in the manufacturing activities, in the result, it is eligible to claim deduction u/s 10B as well as it is eligible to claim additional depreciation, as the same was eligible to be claimed by those assessee's who are in the business of manufacture or production of any article or thing. Hence, in our opinion, the assessee is eligible to claim additional depreciation as a manufacturer. - Decided in favour of assessee. Issues Involved:- Disallowance of deduction u/s 10B of the Income-tax Act, 1961- Disallowance of additional depreciation claimed by the assesseeAnalysis:Disallowed Deduction u/s 10B:The Appellate Tribunal, ITAT Hyderabad, dealt with the disallowance of deduction u/s 10B for the AYs 2010-11 and 2011-12. The Assessing Officer (AO) disallowed the claim of deduction u/s 10B by stating that the extraction and processing of granite block did not constitute manufacturing activity. The AO also mentioned that the quarry leased to the assessee company was earlier awarded to a sister concern. However, the CIT(A) allowed the claim of the assessee, stating that the business activities of cutting, sizing, polishing, and slicing of granites made the assessee eligible for claiming deduction u/s 10B. The Appellate Tribunal, after considering the submissions and previous decisions, upheld the CIT(A) order, emphasizing that the assessee was engaged in production activities, making them eligible for the deduction u/s 10B.Disallowed Additional Depreciation:Regarding the disallowance of additional depreciation claimed by the assessee, the AO held that the assessee was not involved in the business of manufacture or production, hence not eligible for additional depreciation. However, the CIT(A) allowed the claim of additional depreciation, following the decision in AY 2009-10. The Appellate Tribunal upheld the CIT(A) decision, stating that the business of the assessee involved manufacturing activities, making them eligible to claim additional depreciation. The Tribunal dismissed the revenue's appeal, emphasizing that the assessee was eligible for additional depreciation as a manufacturer.Conclusion:The Appellate Tribunal dismissed both appeals by the revenue, as the issues and facts were materially identical for AY 2010-11 and 2011-12. The Tribunal upheld the decisions of the CIT(A) regarding the disallowed deduction u/s 10B and additional depreciation, emphasizing the manufacturing activities of the assessee as the basis for eligibility. The appeals were dismissed, and the assessee's claims were allowed based on the manufacturing nature of their business activities.