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2010 (9) TMI 1152 - ITAT AHMEDABADAdditional depreciation u/s. 32(iia) - computer embroidery machine - assessee claimed that it is manufacturing concern entitled for additional 20% depreciation - According to AO in view of details furnished, it is engaged in the business of embroidery work on job work basis which is not a manufacturing activity - CIT(A) allowed the claim - HELD THAT:- The expressions ‘manufacture’ and ‘produce’ have not been defined in the Act at the relevant point of time but the dictionary meaning of “manufacture” is to transform or fashion new material into a changed form for use. Because of the above operations carried out by assessee, the look of the fabric is changed substantially and the new article is commercially known differently from the original fabrics. Even otherwise, the word “product” has a wider connotation than the work “manufacture” Considering decision in the case S.S.M. Brothers (P) Ltd. & Others v. CIT [1999 (1) TMI 2 - SUPREME COURT] held that Sec.32(1)(iia) also provides for additional depreciation in respect of new machinery and plant purchased by assessee who is engaged in the business of manufacture of production of any article or thing. In the above case the Hon’ble Supreme Court has already held that assessee was using machinery in production of processed textile i.e. embroidery work and thus, the fact embroidery work is regarded as production cannot be denied. Additional depreciation claimed by assessee is required to be allowed as plant and machinery is used in the production of embroidery fabrics. Disallowance of interest expenditure - assessee has taken huge interest bearing loan, therefore, why the interest be not disallowed to the extent of 12% on this sale amount of outstanding in the case of sister concern - assessee replied that it is a commercial transaction - HELD THAT:- As find that factually this is a commercial transaction and now before me the Ld. SR-DR could not adduce anything that this transaction is a loan or deposit given to sister concern. In the absence of anything CIT(A) has rightly deleted the addition holding the transaction as commercial transaction. Accordingly, confirm the order of CIT(A) on this issue and Revenue’s issue is dismissed.
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