TaxTMI 
TaxTMI 
2016 (4) TMI 40
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.... bodies in the country. The assessee also set up a separate unit for manufacturing pipes, which was utilized for captive consumption in contract business as well as sold to outsiders also. The above manufacturing unit is registered with excise department and the details of manufacturing and sales are given below: AY Description of pipes Total value For use in works contract value Sold to others value 2007-08 All kinds of pipes namely MS pies, PSC pipes, RCC pipes MS Shell 9,24,57,161 (Quantity in numbers 9644) 9,10,33,008 14,24,153 2008-09 -do- 15,77,83,764 (Quantity in numbers 11102 14,59,09,168 1,18,74,596 2009-10 -do- 27,49,39,351 (Quantity in numbers 18198) 26,57,34,545 92,04,806 2010-11 -do- 31,70,02,299 (Quantity in numbers 11102 30,85,35,938 84,66,361 3. The main issue before us is, the assessee claimed additional depreciation u/s 32(1)(iia) on plant and machinery at Rs. 32,25,776/-. The Assessing Officer relied on the section 32(1)(iia) i.e. to claim additional depreciation, the assessee should be engaged in the business of manufacture or production of any article or thing. Assessing Officer also ....
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....end activity in itself. Under the circumstances, I am of the View that the appellant has been rightly held as not eligible for claim of additional depreciation. Ground No.5 is therefore decided against the appellant." 4. Aggrieved, the assessee is in appeal before us and has raised the following grounds of appeal: 1. The order of the Learned CIT(Appeals) is against law, weight of evidence and facts of the case. 2. The learned CIT(A) erred in law in not allowing additional depreciation under section 32(1)(iia) amounting to Rs. 32,25,776 when the appellant was engaged in manufacturing of pipes both for captive utilization in contract work and sale to out side parties, loosing sight of the fact that quantitative test is not a statutory criteria for allowing additional depreciation on business assets. 3. The learned CIT(A) ought to have appreciated that quasi judicial authorities are precluded from providing casus omisus and bring in new conditions while considering the imports of a statutory provision. 4. For the above grounds and such other grounds that may be urged at the time of hearing, the appellant prays that the appeal be allowed. The appellant craves leave to ad....
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.... The ld. DR on the other hand, submitted that the assessee has claimed additional depreciation on the premise that the assessee though is in the business of construction and infrastructure business and in the process using pipes by manufacturing themselves and also has sold such manufactured pipes to others. Referring to the case relied upon by the AO and assessee in the case of M/s Hi Tech Arai Ltd. (supra), the ld. DR submitted that in the said case, the assessee had already set up a separate and distinct business of production of power, which had nothing to do with the original business of manufacture of oil seeds, moulded rubber parts, seed value assemblies etc. The new windmills purchased were used for a separate production activity of power. But, in the present case, the assessee has not set up any separate production unit and has been making the pipes in his construction and infrastructure business, which is not an activity of manufacture or production as held in a plethora of cases. He, therefore, submitted that mere usage of machinery in making pipes would not amount to manufacture or production as provided u/s 32(1)(iia) as the condition precedent to section 32(1)(iia) is....
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....eady engaged in the business of manufacture or production of any article or thing. It is pertinent to note that the Assessing Officer had relied on this judgment to disallow the additional depreciation, whereas the revenue has no case on relying on this ratio of the judgment. 7.2 On the issue of dominant nature of business of manufacture, the Hon'ble Rajasthan High Court in the case Lake Palace Hotels and Motels (P.) Ltd., (supra), the Hon'ble Rajasthan High Court held as follows: 22. In that view of the matter, firstly we are of the opinion that the Circular dt. 29th July, 1991 [(1991) 96 CTR (St) 233], fully supports the view which the Tribunal has taken. Apart from that the Tribunal has also referred to the fact that the assessee is charging hire for providing the vehicle to its customers as independent business, which is corroborated by the fact that the vehicles were imported by the assessee with the approval of the RBI under the taxi quota only, giving out a clear intention that it is running them on hire. The assessee has also referred to the fact and which is not denied that the respondent-assessee is charging hire from the customers to use the vehicles for transporta....