2015 (10) TMI 1091

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... "Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in deleting the disallowance made on account of claim of additional depreciation u/s. 32(iia) on embroidery machine of Rs. 74,92,303/- where the use of the input and the output remains the same even after doing the embroidery work ?" 2. The assessment year is 2008-2009 and the relevant accounting period is 1.4.2007 to 31.3.2008. The assessee, a firm, filed its return of income for assessment year 2008-2009 declaring total loss of Rs. 86,86,713/-. The Assessing Officer framed assessment under section 143(3) of the Act vide order dated 24.12.2010 whereby he disallowed claim of additional depreciation amounting to Rs. 74,92,303/- and added th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... v. Commissioner of Income Tax (Central) Madras, 243 ITR 418 (SC). 4. Mr. Sudhir Mehta, learned senior standing counsel for the appellant assailed the impugned order by submitting that the Tribunal has failed to appreciate that the assessee was doing job work of embroidering finished cloths supplied by its client. Embroidering is neither a manufacturing activity nor a processing activity and that the same amounted to a mere value addition of product already in existence without changing its composition and nature. It was submitted that it is only those assessees who are in the business of manufacture or production of any article of a thing, who are eligible for the benefit under section 32(1)(iia) of the Act and that since the activity ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....der section 32(1)(iia) of the Act. Sub-section (1) of section 32 of the Act to the extent the same is relevant for the present purpose provides that in respect of depreciation of- (i) buildings, machinery, plant or furniture, being tangible assets; owned, wholly or partly, by the assessee and used for the purpose of the business or profession, the deductions laid down therein shall be allowed. Clause (iia) of section 32(1) of the Act to the extent the same is relevant for the present purpose reads thus: "(iia) in the case of any new machinery or plant (other than ships and aircraft), which have been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....production of processed textiles and is therefore, eligible for the development rebate. Under section 33(1)(b)(B)(i) an assessee was entitled to development rebate in respect of machinery or plant installed for the purpose of business of construction, manufacture or production of any one or more articles or things specified in the list in the Fifth Schedule. Therefore, for the purpose of availing development rebate the assessee was required to be engaged in the business of manufacture of any one or more articles specified in the schedule. Similarly, under section 32(1)(iia) of the Act the assessee is entitled to additional rebate subject to fulfilling the conditions laid down thereunder, provided it is engaged in the business of manufacture....