TaxTMI 
TaxTMI 
2015 (6) TMI 238
X X X X Extracts X X X X
X X X X Extracts X X X X
.... account of additional depreciation; (ii) Disallowance of Rs. 8,12,054/- on account of capitalization of continuing fees/ royalty expenses @ 25% out of total expenditure of Rs. 32,48,219/-. 2.1. The assessee preferred appeal before ld. CIT(A), who allowed the asessee's appeal. 2.2. Being aggrieved with the order of ld. CIT(A), the department is in appeal before us and has taken following effective grounds of appeal: "1. Whether Ld. CIT(A) was correct on facts and circumstances of the case and in law in deleting the disallowance of Rs. 3,28,374/- made by the AO on account of additional depreciation. 2. Whether Ld. CIT(A) was correct on facts and circumstances of the case and in law in deleting the disallowance of Rs. 8,1....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... All the vegetables are kept in a chiller (1-4 degree Celsius). After opening the canned products, these are kept in the chiller. Frozen products, on the other hand, involves a 3 days thawing process. The frozen topping is kept in deep freezer at the same temperature. From here, packets are taken for thawing in chiller (1-4 degree Celsius). The toppings get ready to use in 3 days. The shelf life of all the toppings is only 4 hours. 3.4. On receiving orders from the customer, pizzas are prepared using desired toppings and put in ovens. All veg and non-veg toppings, sauces and cheese are kept in different bins at a defined temperature and are served according to order. 3.5. Likewise for manufacturing of pasta, a generic term for Italia....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... specification of the processes required by the Licensor and hence the appellant is eligible for claim of additional depreciation accordingly. 3.7. Reliance is placed on ITAT Ahmedabad Bench in the case of Deepkiran Foods (P) Ltd. Vs. ACIT 155 TTJ 57, holding that the assessee 's business of preparing food items like pratha, samosa, dhokla amount to manufacture and income was eligible for deduction u/s 10B. The ITAT besides relying on catena of judgments distinguished the applicability of ratio of decision in the case of Indian Hotels Ltd. Vs. ITO & others 112 Taxman 48 (SC) by following observations: "13. On the basis of material on record, we find that the assessee has claimed deduction u/s 10B in the past assessment years and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ving regard to the meaning of manufacture that the process employed in converting boulders into small chips of stones with the aid of labour and machinery is not a manufacturing process. Surely labour is employed and something is converted into something else, a product which is of value and is used, and in that sense the chips are a new production as a result of a manufacturing process." 3.9. Thus, the assessee's activity is of manufacture and production of article or thing and therefore additional depreciation is allowable. 4. Ld. DR relied on the order of assessing officer. 5. We have heard rival submissions and gone through the entire material available on record. Apropos the issue of royalty, the ITAT in earlier years has deci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....igible for additional depreciation. This ground of revenue is dismissed. 6. Brief facts, apropos ground no. 2, are that during the year under consideration the assessee had claimed royalty expenses/ continuing fees amounting to Rs. 32,48,290/-. Relying on the decisions of Hon'ble Supreme Court in the cases of Ssouthern Switch Gear Ltd. Vs. CIT 232 ITR 359; and Jonas Woodhead and Sons (India) Ltd. Vs. CIT 224 ITR 342 (SC), the AO held that these expenses were to be capitalized. He, accordingly, disallowed 25% of the aforesaid expenditure being capital expenditure and added the same to the total income f the assessee. 6.1. In appeal, the ld. CIT(A) following the order for AYs 2006-07, 2007-08 and 2008-09, allowed the claim of the assess....