AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 1076
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....see is engaged in construction activity. It claimed additional depreciation on new plant and machinery amounting to Rs. 24,59,505/- on the ground that the new plant and machinery comprising of Transit Mixer, Tata Trucks and Ashok Leyland Trucks were utilised for manufacturing of readymix concrete. The case of the Assessing Officer is that they are road transport vehicles and hence, not eligible for additional depreciation. The case of the assessee was that the transit mixer and other vehicles are suitably adopted to mount the mixer and intended for use for a specific purpose and they are defined as 'construction equipment vehicles' under Central Motor Vehicle Rules; Hence they have to be considered as 'non transport vehicles'. The Assessing Officer, however, was of the opinion that merely because the Transit Mixer, Tata Trucks and Ashok Leyland Trucks are adopted to suit a specific purpose, it would not alter the basic character of the vehicle as road transport vehicle. He further observed that readymix concrete is the outcome of mixing only and it cannot be considered as manufacturing activity and the final product which is known as 'readymix concrete (RMC)' is a mixture of sand, ....
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....ivity carried out by the assessee is a manufacturing activity. 5. By placing reliance on the above findings of the ITAT, Delhi Bench, the Ld. Judicial Member observed that the machinery used for preparing readymix concrete is entitled for additional depreciation. 6. The Ld. Judicial Member also observed that in the instant case, they are not merely engaged in the construction of building. Vide para 9, the Ld. Judicial Member observed that readymix concrete is also supplied to the person engaged in the construction of building and this factual aspect was not disputed by the revenue. Though construction of a building, road, dam etc., may not come within the meaning of expression "manufacture" of an article or thing, the Ld. Judicial Member chose to follow the decision of the ITAT, Delhi Bench in the case of YFC Projects (P) Ltd. (cited supra) to hold that the assessee is entitled for additional depreciation. 7. With regard to the question whether the transit mixer, Tata truck or Ashok Leyland truck are plant and machinery, the Ld. Judicial Member observed that specialized chamber is mounted on the transit mixer, Tata truck or Ashok Leyland truck for transporting readymix concrete ....
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....Y (I.T.A. Nos. 1217/Del/2011and 1752/Del/2011 vide its order dated 15-05-2012) wherein the claim of additional depreciation on plant and machinery and tipper was rejected on the ground that the assessee was engaged in road construction contract and manufacture and production of concrete mix. Hence, the Ld. Accountant Member held that the assessee is not entitled to the claim of additional depreciation u/s. 32(1)(iia) on Transmit Mixer, Tata Trucks and Ashok Leyland Trucks. 13. The main issue that arises for my consideration is whether preparation of 'ready mix concrete' amounts to manufacture or production of an article or thing. If it amounts to manufacture, automatically the assessee would become entitled for additional depreciation. Under these circumstances, the Division Bench requested the Hon'ble President for nominating Third Member to decide the limited issue as to whether the assessee's production of readymix concrete amounts to manufacture. 14. The Ld. Counsel appearing for the assessee relied upon the order passed by the Ld. Judicial Member and the ratio laid down by the ITAT, Delhi Bench in the case of YFC Projects (P) Ltd. to submit that production of readymix concre....
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....ter, it cannot be converted back into raw material, i.e., once RMC is prepared, it cannot be segregated into sand, cement, water, etc. Thus the assessee can be said to be engaged in construction activity. 15. It may noticed that the order passed by the Delhi Bench was set side by the Hon'ble Delhi High Court and the ITAT in its order dated 23rd January 2015 observed that in the light of the decision of the Apex Court in the case of N.C. Budharaja & Co., the matter has been restored by Delhi High Court to the file of the Tribunal to ascertain whether RMC was sold to outside parties or not. When the Ld. Counsel submitted that common parlance test has to be applied to understand the expression 'manufacture', the Bench pointed out that under the common parlance, readymix concrete is ordinarily prepared by a mason who is not a qualified engineer and it is never treated as manufacturing activity; Similarly, the Hon'ble Kerala High Court, in the case of CIT vs. Casino (Pvt) Ltd. 91 ITR 289, observed that conversion of raw material into 'food' in a hotel cannot be considered as manufacture or production of food materials, though, once the food is prepared, it cannot be converted into wate....
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...., takes in bringing into existence new goods by a process which may or may not amount to manufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods. The Court approved the observations of the earlier decision of the Apex Court in the case of NC. Budharaja & Co. (cited supra). 17. In the case of N.C. Budharaja & Co., the Court observed (in page 434 of the report) that only movable objects can be considered as 'article'. Thus "production" has wider connotation than the word "manufacture". When the product itself cannot be considered as manufacture, then intermediate product, in my considered opinion, cannot be considered as manufacture or production of an article or thing. Such intermediate product should emerge in the course of manufacturing process, as observed by the Apex Court in the case of N.C. Budharaj & Co. (cited supra). 18. The Ld. DR submitted that the Hon'ble Delhi High Court in the case of CIT vs,. Minocha Brothers (P) Ltd., 160 ITR 134 observed that manufacture of doors, windows for a building is not qualified as manufacture of article or thing because the real activity of the asses....
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....ruction of building, roads etc. In the instant case, the assessee has not furnished any material at any stage of the proceedings to prove that it was solely engaged in processing of readymix concrete and sale thereof without captive consumption. He thus relied upon the order passed by the Ld. Accountant Member. 20. I have heard the rival submissions and perused the record. It is common knowledge that an uneducated mason does the work of preparation of readymix concrete for construction of houses and it is never treated as manufacturing activity either in the common parlance or in the commercial parlance. The readymix concrete can be produced in huge volume with the help of machines with less manpower but merely because there is increase in volume, it cannot automatically be treated as manufacturing activity. At any rate, the end product is only an intermediate product which is used for construction of buildings, roads, dams etc. and when the end product is not considered as manufacturing activity, then it is difficult to hold that the intermediate product can be classified as manufacture or production of article or thing. 21. The Ld. Judicial Member, while following the decision ....