TaxTMI 
TaxTMI 
2011 (11) TMI 502
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....Rs. 17,64,905/- without appreciating that the machinery on which additional depreciation was claimed was not used for any manufacturing or production activity and no new product came into existence, therefore additional depreciation is not allowable. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the assessee was engaged in the process of manufacturing activity and hence the additional machineries purchased and used for packaging were entitled for additional depreciation u/s 32(i)(iia) of the I.T. Act." 3. Brief facts are that the assessee company is engaged in the business of exporting of safety razor blades and twin track shaving system. The assessee filed return for Assessment Year 2006-07 on 28.11.2006, which was processed u/s 143(1) on 13.11.2007. Subsequently, the assessment of assessee was made under scrutiny by issuing notice u/s 143(2) of the Act on 19.11.2007. The Assessing Officer during the course of assessment proceedings noted that it had claimed additional depreciation u/s 32(i)(iia) of the Act at 20% of actual cost of machinery and plant acquired and installed after 31.03.2005. The assessee claim....
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....s useful for packing into new cartons, it cannot be said that any new product has come into existence or manufacturing has taken place. viii. The Company is exporting its products and hence, the products should naturally be of good standards. The kind of activity undertaken by the assessee does not create any exportable commodity." and disallowed the claim of additional depreciation. Aggrieved, assessee preferred appeal before CIT(A), who allowed the claim of assessee by giving following finding in paras 5.6 to 5.8 of his appellate order: "5.6 Keeping in view the above ratios and the principles which emerge from them, the facts of the case of the appellant are now examined. The raw material used by the appellant is primarily is semi manufactured blades. These blades are not by themselves usable for the purposes of shaving as they are merely small pieces of sharpened blade without any handle or coating. Through various processes these are transformed into usable blades. Further, it is to be noted that even usable blades with a handle cannot be sold in the market in that form. There is a definite requirement of packaging the same. The sum and substance of these facts i....
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....e not suitable for shaving therefore semi finished blades are go through the grinding process where the edges are sharpened. COATING: Semi finished blades after grinding are not suitable for shaving are go through the heating process within the limited temperature for coating of the blades. PRE HEATING AND SPRAYING: The blades along with the bio-net charger are allowed to go through inside the preheating furnace up to the required temperature of 150 degree centigrade for the admissible time, removed back for spraying while in hot condition with the coating solution LW-1200 with the help of spraying machine. SINTERING AND COOLING After the spray process is over, again these blades along with the charger kept inside the sintering furnace maximum temperature of 370 degree centigrade for melting the coating solution and allow it to spread over the edges. Then the blades along with the charger take out of the sintering furnace and the same to cooled up to the temperature of 100 degree centigrade in the cooling chamber. OILING: After the cooling the blades removed from the charger and shifted to stands for dip it into the liquid paraffin oil in tank kept separatel....
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....hat when assessee purchases unusable semi finished blades and make them usable for shaving by converting them into tucks, in commercial parlance the commodity is known as different from 'unusable blades' to 'marketable blades'. According to him, once in commercial parlance the commodity changes its character, the entire process employed by assessee is called manufacturing. Ld. Counsel for the assessee also displayed before us samples and process of manufacture adopted by filing raw material as well as finished product. Ld. Counsel for the assessee also referred to the definition of manufacture adopted by the Act by inserting section 29BA in section 2 by the Finance No. 2 Act, 2009, w.r.e.f 01.04.2009 and according to him, this in conformity with the manufacturing process of the assessee changing the character of its product and bringing a new commercially known product by bringing a change in a non-living physical object or article or thing resulting in transformation of the object or article or thing into a new or distinct object or article or thing having a different name, character and use. He also stated that the assessee is registered under Central Excise Act but by virtue of ....
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....sired according to the requirement, can be manufactured from the specific flat printed card board material into the form named as tucks with the help of cartooning machine meant for the special purpose. The each manufactured tucks is required to cover with a thin BOPP material for extra care of the product and to prevent blades from moisture with the help of cell phoning machine. This is a process of filling 10 no's of cell phoned tucks packed into a printed display boxes. After display box packing, these boxes in 10 no's inserted inside poly bags and passed into the sink wrapping machine after duly heating and sealing the poly bag for shrink wrapping. Finally 20 no's shrink wrapped packet of 10 display boxes each are to be packed in outer corrugated box duly stropped with gum tape and stropping rope through stropping machine for disposal of products. In view of this entire manufacturing process the semi finished ground blades come into a naked blade wrapped in wax paper and then packaging is done and that comes into commercially existent new product. We find that the assessee has employed sophisticated techniques of packing in view of delicate items involved in handling. Even the ....
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.... the additional duties. The term "levy" is an expression of wide import: it includes both imposition of a tax as well as its quantification and assessment. That apart, section 4 of the Amendment Act of 1980 has amended the relevant items in the Schedules to the Additional Duties Act. The expressions in section 3(1) of the Additional Duties Act must be read along with the Schedules. 8. We further find that Hon'ble Apex Court in Ujagar Prints (supra) has considered following passage of permanent edition of Words and Phrases referred to with approval in Union of India v. Delhi Cloth and General Mills' AIR 1963 SC 791 at 795, was referred to : "Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use." Even insertion of sub-section 29BA of section 2 of the Act by the Finance No. 2 Act, 2009, w.r.e.f. 01.04.2009 in the Act clarifies the definition of manufacture. The relevant sub-section 29BA of Section 2 of the Act reads as under: ....