TaxTMI 
TaxTMI 
2015 (10) TMI 589
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....32,89,944/-. 4. Brief facts of the case are that the assessee is a firm engaged in the business of embroidery work on grey synthetics cloth. It has filed its return of income on 29.9.2008 declaring NIL income. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued on 8.8.2009 which was duly served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee has claimed depreciation of Rs. 60,87,545/- on the plant & machinery of having value of Rs. 1,69,46,773/-. The assessee had calculated the depreciation at normal rate of 15% plus additional depreciation at 20%. This calculation has been made as under: Total depreciation as per computation Less: Depreciation wh....
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....en argued that the embroidery on fabric amounts to manufacturing process and eligible for additional depreciation u/s. 32(l)(iia). It was further submitted that the issue is covered by the decision of the IT AT, Ahmedabad by its decision in the case of M/s. Aswani Industries, Surat (213/Ahd/2010, dated 29.10.2010) and Haripriya Processors Pvt. Ltd. (1569/Ahd/2010, dated 08.09.2009) wherein it was held that embroidery work done was an activity of manufacturing and entitled to additional depreciation u/s. 32(l)(iia). 2.1 I have gone through the facts of the case. There is no dispute regarding purchase and ownership of machinery as normal depreciation has been allowed. The only dispute is regarding grant of additional depreciation which has ....
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....expression "manufacture" has been defined in section 2(29)(B)(a) which read as under: "(29BA) "manufacture", with its grammatical variations, means a change in a non-living physical object or article or thing,- (a) resulting in transformation 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 structure". 9. However, expression "production" has not been defined in the Act. The expression "manufacture" as well as production have fallen for their interpretation and construction not only at the level of ITAT but before the Hon'ble S....
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....roduction of articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or combinations, whether by hand labour or machine". Thus by process of manufacture something is produced and brought into existence which is different from that, out of which it is made in the sense that the thing produced is by itself a commercial commodity capable of being sold or supplied. The material from which the thing or product is manufactured may necessarily lose its identity or may become transformed into the basic or essential properties. (See Dy. CST (Law), Board of Revenue (Taxes) Coco Fibres [1992] Supp. 1 SCC 290). 12. Manufacture implies a change but every change is not manufacture, yet every change of an....
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....anufacture. (See Collector of Central Excise v. Rajasthan State Chemical Works [1991] 4 SCC 473). x x x x x x x x x x x x x x x x x x x x x x 14. To put it differently, the test to determine whether a particular activity amounts to "manufacture' or not is: Does a new and different good emerge having distinctive name, use and character. The moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether be it the result of one process or several processes 'manufacture' takes place and liability to duty is attracted. Etymologically the word 'manufacture' properly construed would doubtless cover the transformation. It is the trans....
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....from that, which originally existed. The new product is a different commodity physically as well as commercially. The Hon'ble Court also explained broader test to determine whether manufacture is there or not, it is propounded that when a change or series of changes are brought out by application of processes which take the commodity to the point where, commercially, it cannot be regarded as the original commodity but is, instead recognized as a distinct and new article that has emerged as a result of the process. 16. Thus, in our opinion, the moment the assessee has carried the embroidery work, the character of sari had changed. It does not remain the original grey synthetic cloth. It has its independent market and value in the market....