AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 1103
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....fficer under section 271(1)(c) of the Income Tax Act, 1961." 3. 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 production or an article or thing which is mandatory requirement for claiming additional depredation u/s. 32 (1)(iia) of the Income Tax Act. Therefore, the AO held that the assessee company is not entitled for additional depreciatio....
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....entioned 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 arguments. He argued that the Memorandum and Articles of Association of the assessee company outlines the objects to be pursued by the company and the main object as per Memorandum and Articles of Association is "to carry on all or any of the....
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.... 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 2007-08 and the claim of the assessee needs to be examined in view of amended law. The ld. DR has also relied on the following case laws to drive home the point that every activity cannot be treated as ma....
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.... 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. Further, he argued that the natural gas before compression and after compression remains a fuel in the form of natural gas. 17. On going through the audit report, he argued that there has been ....
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....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 of manufacturing of compressed natural gas (CNG), all the compressors are filled with a close circuit type cooling system and also safety valve at each stage. The compressed natural gas (CNG) manufacturing p....
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....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 Vs. Hindustan Petroleum Corporation Ltd. (Supra) cited by learned A.R. of the assessee. In this case, the issue before the Hon'ble High Court was that as to whether the activity of the assessee of bottling LPG gas amounts to prod....
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....e 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, the test to determine whether 'manufacture' has taken place is satisfied. Without undergoing the process of compression natural gas in its original form cannot be used as fuel for the automobile industry. It is only upon undergoing the p....