2015 (12) TMI 124

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....7,17,259/- made on account of disallowance of additional depreciation u/s.32(1)(iia) of the I.T. Act claimed on new plant and machineries. Without appreciating the fact that the assessee was doing job work in embroidering the finished cloths supplied by its clients. Embroidering is neither a manufacturing activity nor a processing activity. [2] On the facts and circumstances of the case and in law, the Ld. CIT(A)-II ought to have upheld the order of the Assessing Officer. [3] It is, therefore, prayed that the order of the CIT(A) may be set-aside and that of Assessing Officer may be restored to the above extent." 2. Briefly stated facts are that the case of the assessee was taken up for scrutiny assessment and assessment....

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....cessors Pvt. Ltd where Hon'ble ITAT has relied on the decision of Hon'ble Supreme court in the case of S.S.M. Brothers Pvt. Ltd & Others (243 ITR 418) and allowed the appeal of the M/s Haripriya processors Pvt. Ltd on 20% additional Depreciation. Since the decision of supreme court in the case of S.S.M. Brothers (P) Ltd is on different facts and circumstances as enumerated above and issue as discussed in Hon'ble TTAT decision is not squarely covered by the decision of the Hon'ble supreme Court and decision of Hon'ble ITAT is not acceptable. In view of that 20% additional depreciation claimed by assessee on Machines installed of Rs. 74,92,303/- is hereby disallowed and added back to total income bf the assessee." Howev....

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....cer the business of embroidery work on job work basis is not a manufacturing activity, hence, the additional depreciation claimed by assessee cannot be allowed and accordingly he made disallowance of additional depreciation claimed at Rs. 9,45,450/-. In the assessment order, AO noted that the assessee has claimed depreciation of Rs. 17,65,557/- on computer embroidery machine, which was purchased after 30-09- 2006 and assessee claimed depreciation @ 35%. The AO noted that depreciation allowable on plant & machinery is prescribed as per I.T. Rules, 1962 @ 15%. The assessee claimed that as per Section 32(1)(iia) of the Act if any new machinery and plant ii acquired and installed after 30-03-2005 in the manufacture or production of anything, ad....

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....d for the purpose of the business of production of textiles, including those dyed, printed or otherwise processed, made wholly or mainly out of cotton, the assessee is entitled to the deduction of the development rebate the under. What is important is that this development rebate is available if the machinery or plant is installed for the purposes of the business of the production of textiles, including those 'otherwise processed.' If the machinery or plant is required to be utilized in the production of such textiles, at whatever sage, the assessee is entitled to the benefit of the development rebate. It is not disputed fairly that if the assessee had been producing the embroidered cloth starting from scratch, that is, by starting ....