TaxTMI 
TaxTMI 
2017 (10) TMI 1503
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....2(1)(iia) of the Income Tax Act, 1961 amounting to Rs. 34,02,72,223/-. 3. The assessee in the present case is a company which is engaged in the business of generation and distribution of electricity. The return of income for the year under consideration was filed by it on 12.10.2010 declaring a total income at NIL. In the said return, additional depreciation under section 32(1)(iia) was claimed by the assessee amounting to Rs. 34,02,72,223/-. In this regard, it was submitted by the assessee while explaining the nature of its business during the course of assessment proceedings before the A.O. that it has hydel generating stations in the District of Darjeeling, Uttar Dinajpur and Birbhum where power is generated in the voltage 440 V to 11.5 KV. It was also submitted that the assessee has to convert this available power from one voltage to another voltage level at different sub-stations throughout West Bengal with the help of machineries and evacuate the power at consumers and through transmission and distribution lines of different voltage level. From this explanation offered by the assessee, the AO was of the view that the assessee was not actually engaged in manufacturing activi....
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....'s (supra) were reiterated by the Hon'ble Supreme Court in India Cine Agencies vs CIT (2009) 308 ITR 98, 102-104 (SC), in Vijay Ship Breaking Corporation vs CIT (2009) 314 ITR 309, 312 (SC), in ITO vs Arihant Tiles and Marbles Pvt. Ltd. (2010) 320 ITR 79, 87 (SC), also followed by the Hon'ble High Courts in Girnar Industries vs CIT (2010) 230 CTR 401 (Ker), in CIT vs Ramsons Organics Ltd. (2010) 228 CTR 502 (Del), by the learned Tribunal in ACIT vs Leebo Metals Pvt. Ltd. (2010) 4 ITR (Trib) 275 (Mum) and by the Hon'ble Allahabad High Court in CIT vs Jansons & Co. (2006) 283 ITR 175 (All.). 4. It is respectfully submitted that various other decisions dealing with the meaning of the expression 'manufacture / production', e.g. Chrestien Mica Industries Ltd. vs State of Bihar (1961) 12 STC 150 (SC) - splitting of mica, Aspinwall & Co. Ltd. vs CIT (2001) 251 ITR 323, 327-328 (SC) - making coffee beans from raw berries held to be a manufacturing activity, Vijay Ship Breaking Corporation vs CIT (2009) 314 ITR 309 (SC) - case of Ship breaking, India Cine Agencies vs CIT (2009) 208 ITR 98 (SC) - conversion of Jumbo rolls of photographic films into small flats and rolls of different....
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.... State of Andhra Pradesh vs National Thermal Power Corporation Ltd. (2002) 5 SCC 203 (SC). 7. In National Thermal Power Corporation's case (supra), the Hon'ble Supreme Court also recognized that generation of electricity was nothing but production thereof - kindly see paragraphs 21 & 29 of the said judgment. 8. In Advanced Law Lexicon - P. Ramanatha Aiyar, Third Edition, 2005, at page 346, the word 'article' has been defined to include 'coal gas' - Cox vs Cutler & Sons Ltd. and Hampton Court Gas Co. (1948) 2 All ER 665, 667 (CA); water in the filter beds has also been treated as an 'article' - Longhurt vs Guildford Godalmiry and District Water Board (1961) 3 All ER 545, 550 (HL). 9. In Advanced Law Lexicon - P. Ramanatha Aiyar, Third Edition, 2005, at page 4680, it has been stated that the word 'thing' is of extensive signification, and in common parlance may intend all matters of substance, in contradistinction to person. Whatever may be possessed or owned or be the object of a right, is a thing. 10 In Black's Law Dictionary, the following meanings are assigned to the expression 'things': 'Things. The objects of dominion or property as contradistinguished from....
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....ion is that generation and distribution of electricity was manufacture / production of any article or thing for the purpose of Income Tax Act. It is however seen that the case laws relied upon by it i.e. CIT vs Sesa Goa Ltd. and CIT vs N.C. Budharaja & Co. & Anr. Supra have considered the usage of the word production and held that the same of the wider meaning than manufacture the other case laws relied upon the appellant also however do not relied to issue of generation and distribution of electricity. The only decision which can be directly considered on this issue is not of an Indian Court but that of USA i.e. Court of Appeals in the State of Michigan in the case of Detroit Edison Co. vs Department of Treasury, the judgment delivered 9th January, 2014, relied upon by the appellant. It is also observed that the issue is in that case was different as there the term used was 'processing' and the claim of Detroit Edison Co. was for exemption of 'Industrial Processing' whereas the terms used in the section 32(1)(iia) are 'manufacture or production', which by definition are different from processing. 4.2.1 It is also seen that this section has been amended by Finance Act, 2012 w.e.....
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....nition of 'goods' and the process of generation of electricity is akin to manufacture of article or thing. It was held that generation of electricity thus is a manufacturing activity and the assessee engaged in the business of generation of electricity was entitled for additional depreciation under section 32(1)(iia). The learned counsel for the assessee has also pointed out that the effect of amendment made in section 32(1)(iia) with effect from 01.04.2013, which is relied upon by the Ld. CIT (A) in his impugned order to decide the issue against the assessee, was also considered by the Tribunal in the case of M. Satish Kumar (supra) and it was held that the said amendment give impetus to the view that the generation of electricity is a manufacturing process eligible for the benefit under section 32(1)(iia). 7. The learned counsel for the assessee has also relied on the decision of Bangalore Bench of this Tribunal in the case of DCIT vs Hutti Gold Mines Co. Ltd. (2013) 26 ITR (Trib.) 600 wherein it was held that the power generated by the windmill was a product by the assessee company and since it was covered under the words 'article' or 'thing' which was tradable or identifiable....
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....thing to do with the Power Industry, namely, manufacture of oil-seeds thus was totally not germane to the specific provision contained in section 32(1)(iia) of the Act and the assessee was entitled for additional depreciation under section 32(1)(iia) on plant & machinery installed in windmills. 9. Keeping in view the submissions made by the learned counsel for the assessee, we find that the issue involved in the present case relating to the assessee's claim for additional depreciation under section 32(1)(iia) is squarely covered in favour of the assessee inter alia by the decision of coordinate benches of this Tribunal in the case of M. Satish Kumar (supra) and Hutti Gold Mines Co. Ltd. (supra) as well as by the decision of Hon'ble Madras High Court in the case Hi Tech Arai Ltd. (supra) and that of Hon'ble Karnataka High Court Gold Co. Ltd. (supra). The learned DR, on the other hand, has not been able to bring to our notice any judicial pronouncements on this issue either of the Hon'ble Jurisdictional High Court or any other High Court which is in favour of the revenue. We, therefore, respectfully follow the aforesaid judicial pronouncements cited by the learned counsel for the a....
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....as relied on the provision of sub-section (2) of section 14A which stipulates that the Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under the Act in accordance with such method as may be prescribed (Rule 8D) if the Assessing Officer having regard to the accounts of the assessee is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under the Act. The assessing Officer thus was required to record his dissatisfaction with the correctness of the claim of the assessee in respect of expenditure incurred in relation to exempt income before invoking Rule 8D and since there was no such dissatisfaction recorded by the AO as agreed even by the Ld. DR, we find merit in the contention of the learned counsel for the assessee that the disallowance under section 14A made by applying Rule 8D is not sustainable. We, therefore, delete the disallowance made by the A.O. under section 14A read with Rule 8D and sustained by the Ld. CIT (A). Ground no 3 of the assessee's appeal is accordingly allowed w....