TaxTMI 
TaxTMI 
2010 (7) TMI 1094
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....he DCIT by way of disallowance out of depreciation claimed on machineries, purchased under TUFS of the Govt. of India. 2. It is therefore prayed that the addition of Rs. 16,46,849/- confirmed by the Hon. CIT (Appeals) may please be deleted". 2. Briefly, the facts of the case are that the AO disallowed depreciation of Rs. 16,46,849/- out of total depreciation of Rs. 36,27,189/- claimed @ 50% on plant and machinery under Technology Up-gradation Fund Scheme (TUF) for Textile and Jute Industries. In the assessment order the AO has stated that the assessee company is engaged in the business of manufacturing and trading of texturised yarn. The same activity was undertaken by the assessee company in the last year and unit was started in the ....
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....t the issue is covered in favour of the assessee. The learned DR reiterated the stand of the departmental appeal as is earlier argued by the learned DR in the case of Agarwal Rayons Pvt. Ltd. (supra). 4. On consideration of the rival submissions we are of the view that the issue is covered in favour of the assessee by the order of the Tribunal in several cases particularly in the case of Agarwal Rayons Pvt. Ltd. (supra) in which the submissions of the parties and findings of the Tribunal are reproduced as under: "5. The Ld. A.R. submitted that Tribunal has taken a view that texturising and twisting activities are part of the processing and are covered under Appendix-1 Part-A, III at Sr.No.6 which has been referred to by A.O. on....
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....acturing of Grey Fabrics, Sizing, textile rising and twisting of yarn. 5. Agarwal Rayons P. Ltd. Manufacturing of Yarn. From the above table following inferences could be drawn. 1. All the four appellants were engaged in the composite activity of manufacturing of Yarn and art Silk Cloth. 2. They had separate unit for manufacturing of Yarn & art Silk Cloth. 3. The yarn manufactured by them was used for captive consumption of the appellants themselves to manufacture art silk cloth. 4. There was perfect backward and forward linkage between manufacturing process of yarn and art silk cloth. In light of the above inferences what one could safely conclude is benefit of depreciation at higher rate allowed by the Hon'ble I....
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....of sec. 80HHC also specifies allowability of deduction u/s. 80HHC to such "supporting manufacturer" subject to fulfillment of certain specific terms and conditions. Above facts squarely applicable to appeal under consideration. It is also humbly submitted that the view expresse by the Supreme Court in the case of IPCA Laboratories (266 ITR-521) which can act as guiding force in the instant case also. The Supreme Court opined in its order (supra) that an incentive provision has to be strictly interpreted and if the wordings of the section is clear, then benefits which are not available cannot be conferred by ignoring or misinterpreting words in the section." 7. We have considered the rival submissions and perused the material on record....