AI Drafter 
TaxTMI 
TaxTMI 
2021 (3) TMI 935
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....s having been dwelled on merits of the case, the adjudication on the issue of Section 147 would be only academic in nature and hence refrained to do so. 4. For the sake of ready reference, the order of the Tribunal in ITA No. 6489/ Del/2017 dated 05.01.2021 is reproduced here under: "Indraprastha Gas Limited (IGL) is a joint venture of GAIL India Ltd., the largest Natural Gas transmission company in India and Bharat Petroleum Corporation Limited (BPCL), one of the leading oil refining and marketing company in India and government of NCT of Delhi. The company is currently engaged in the business in the Delhi-NCR region including Noida, Greater Noida, Ghaziabad and Rewari. 4. IGL is a City Gas Distribution Company (CGD) which is engaged in the business of selling and distribution of Natural Gas to be used as industrial and household fuel in Commercial and Domestic sector respectively. Further IGL is also engaged in the manufacturing and selling of Compressed Natural Gas (CNG) which is used as a fuel to be used for running Automobiles. 5. The AO has held that the process of delivery of CNG to automobiles at the CNG filling centres does not amount to manufacture or producti....
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....parts of system. Oil separators installed at each stage to remove oil particles added during compression process. After cooling of gas moisture get condensed and to remove this condensate filtering system are there. All above-mentioned process are monitored & controlled through automated digitally controlled systems. Priority panels are installed in every compressing unit to automatically route the gas to dispensing units based on gas requirement. This is a complete integrated infrastructure comprising of pipe line network, compressor, dispensers and cascades to converts Natural gas into fuel. Natural gas as such cannot be used as commercial viable option for use as a fuel in automobile this CNG is a completely differently product from natural gas." 9. The ld. AR relied on the order of the Hon' ble High Court of Allahabad in the case Central UP Gas Ltd. Vs DCIT in ITA 224 of 2014. 10. The ld. DR Gaurav Dudeja, elaborately argued the case to prove that the assessee is not into manufacturing and hence not eligible for claim of additional depreciation. He has referred the audit report and the financials of the assessee company to buttress his ....
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....e two definitions clearly suggest that the meaning of term 'manufacture' is different for Income Tax Act and for Central Excise Act and a person considered as manufacturer for the purposes of Central excise Act may not be necessarily considered manufacturer for Income Tax Act. Therefore, merely because the assessee company is registered with the Central Excise Department and paying excise duty does not mean that it is manufacturing an article or thing for the purposes of Income Tax Act. Therefore, this argument of the assessee is not acceptable." 14. Regarding the argument of the audit report, the ld. DR submitted that the audit report cannot be basis for claim of additional depreciation but the additional depreciation has to be accorded only in the case, the assessee is eligible to claim the benefit u/s 32(1)(iia). 15. The ld. DR argued that the meaning of term 'manufacture or production of an article or thing' has been a subject matter of discussion of various Courts and Tribunal an there is no universal definition. Ld. DR further argued that the definition of term, ' manufacture' was introduced in the Income Tax Act w.e.f. 1.4.2009 therefore law has changed since AY 2007-0....
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....TAT, Chennai) 110 ITD 99] x. Purchased seeds from agriculturists and sold them after processing - No manufacturing activity involved. [ITO Vs Daftri Agro (ITAT, Hyd.) 135 TTJ 729; 130 ITD 496]. xi. Peeling & Freezing of Shrimps / processing of fish - No manufacturing - activity involved since there is no essential difference between raw shrimps and prawns and processed or frozen shrimps and prawns. xii. CIT Vs Relish Foods (SC) 237 ITR 59 xiii. Golden Hind Shipping (India) P. Ltd. Vs CIT (Del) 240 ITR 324 CIT Vs Poyilakada Fisheries P. Ltd. (Ker) 240 ITR 445 xiv. CIT Vs Sterling Foods (Bom) 213 ITR 851 xv. CIT Vs George Maijo (Mad) 250 ITR 440 16. Further, the ld. DR argued that the activity of the assessee is only of compressing the natural gas. In fact, as stated by the assessee, the natural gas which reached to CNG stations is already compressed to a pressure 18 to 26 bar and it is compressed up to 250 bar in three stages. Besides this, the gas is being filtered before its compression. And, in the whole process, the input and output remains same i.e. natural gas as the compression-process not change characteristics of natural gas. ....
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....aracter and use from natural gas can be said to be covered by the phrase manufacture or production?" The facts of the case are that the appellant procures gas from GAIL Indian Limited and compresses it through the compressor for the manufacture of compressed natural gas (CNG), which is subsequently sold to the customers, as fuel for vehicles. The natural gas purchased by the appellant from GAIL India Limited is either sold through appellant- company' s own pipelines to factories and household etc. which sale is made as piped natural gas (PNG) sale. The appellant also manufactures compressed natural gas (CNG) from the natural gas received by it from GAIL India Limited, which is sold from the vending station(s) as a fuel for running of vehicles. The natural gas is supplied by GAIL India Limited through pipelines which are connected with the compressor with suction pressure of 14 Bar to 22 Bar and the discharge pressure of 255 Bar, which are installed at CNG stations and is dispensed in the vehicle at a maximum pressure of 200 Bar through the dispense connected to the compressor. The safe compression and dispensing system during process....
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.... gas and even the selling prices of both the products are different. Piped natural Gas (PNG) is sold at the rate of Rs. 26/- per kg while the selling price of compressed natural gas (CNG) is Rs. 35/- per kg. The Tribunal has come to the conclusion that the compression of natural gas into compressed natural gas does not result in bringing into existence in a new product and the activity of compressing the natural into compressed natural gas would not amount to manufacture or production. The Tribunal records in paragraph 5 as hereunder: " We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the judgment cited by learned A.R. of the assessee. We find that it is noted by CIT (A) on page No. 6 of his order that the assessee' s activity of conversion of natural gas to compressed natural gas does not amount to bringing out a new and distinct object or article or thing having different character, use or chemical composition. In the light of these findings of CIT (A), now we examine the judgment of Hon' ble High Court rendered in the case of Commissioner of Income- tax V....
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....e natural gas is put through a plant/ machinery for compression and when the compressed gas comes out in its new form it is used for the automobile fuel. After undergoing the process of compression, natural gas acquires a new form by the name of compressed natural gas. It has a distinct use as automobile fuel and a distinct commercial name. The provisions of Section 2 (29BA) defines ' manufacture' as hereunder: "(29BA)- manufacture with its grammatical variations, means a change in a non- living physical object or article or thing- (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and used; or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure;" Learned counsel for the appellant has placed reliance on the judgments of the Apex Court in the case of Income Tax Officer Vs. Arihant Tiles and Marbles P. LTD. reported in 2010 320 ITR 79 (SC) in support of his case. On the face of it, it appears that compressed natural gas is a commodity having a distinct name, character and use and therefore, th....