2014 (5) TMI 311

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..... Whether ld. CIT(A) was correct On facts and circumstances of the case and in law in deleting the disallowance of Rs. 6,72,040/- made by the AO on account of capitalization on continuing fees/ royalty expenses." 2. Brief facts are: The assessee is engaged in the business of providing food services and manufacturing eatables and supplying them to different parties. The assessee claimed additional depreciation of Rs. 8,69,139/- on the ground that it is engaged in the production of food articles which are different from the raw-material. Assessing officer, however, disallowed the same relying on Hon'ble Supreme Court judgment in the case of Indian Hotels Ltd. Vs. ITO & others 112 Taxman 48 (SC), holding the activity to be neither manufactu....

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....te to set aside the order of the Ld. CIT(A)-VII and restore the matter to his file for deciding the issue afresh and passing a speaking order as the earlier order passed was a cryptic order wherein it was not explained as to which specific products are manufactured by the assessee or what are the ingredients used therein or what is the manufacturing process involved and how the assessee fulfills the conditions stipulated under sec. 32(1)(iia) of the Act." 3.1. Thus the issue of royalty i.e. ground no. 2 of the Revenue's appeal stands concluded in assessee's favour. 3.2. The issue of additional depreciation after setting aside was redecided by CIT(A) holding that the assessee was into manufacture and production of article or thing in t....

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....and takes the name of its shape. The assessee company manufactures to types of pastas; oven baked and sautéed pastas. 3.6. Ld. Counsel relied on Finance (No. 2), Act 2009, brought on statute w.e.f. 1-4-2009, a definition of the term "manufacturing" by inserting a new clause (29 BA) to section 2 as under: "(29BA) "manufacture", with its grammatical variations, means a change in a non-living physical object or article or thing, - (a) Resulting in transportation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structur....

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.... in the facts in the year under appeal as compared to the facts of earlier years. This fact has not been controverted by the Ld. D.R. by bringing any contrary material on record. We further find that the Hon'ble J.K. High Court in the case of Pankaj Jain (supra) after distinguishing the Hon'ble Apex Court in the case of Indian Hotels (supra) has held the manufacture of bread to be a manufacturing activity. Thus, in view of the totality of facts of the case, we hold that the issue before us is covered with the decision of Hon'ble J.K. High Court in the case of Pankaj Jain Prop Aagan Food Industries (supra) in favour of the assessee and we are of the view that the assessee is an industrial undertaking and the activity of production of the ....