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2015 (12) TMI 377 - AT - Income TaxRectification of mistake - CIT(A) quashed the order passed by the AO u/s 154 by holding that disallowance of depreciation in this case was not a prima facie mistake - Held that:- CIT(A) quashing the rectification order passed by the AO, has placed reliance on M/s. Hari Fashion vs. ACIT [2011 (5) TMI 931 - ITAT AHMEDABAD] wherein Tribunal observed that because of the above processes, which have to be carried out in a very careful manner, the embroidered fabric acquires entirely different looks and has different commercial value and that thus, because of the said operations, an entirely new commodity emerges. It was held that because of these operations, the look of the fabric changed substantially and the new article is commercially known differently from the original fabric; that even otherwise, the word “produce” has a wider connotation than the work “manufacture”; that in “S.S.M. Brothers (P) Ltd. and others vs. CIT”(1999 (1) TMI 2 - SUPREME Court ), development rebate claimed u/s 33(1)(b)(B)(i) of the Act was allowed by holding that the plant and machinery were used in the production of processed textiles (embroidery) and, therefore, machinery was entitled to the development rebate claimed; that the decision in “S.S.M Brothers (P) Ltd. & others” (supra), was directly applicable to the facts of this case, because section 32(1)(iia), like section 33(1)(b)(B)(i), also provides for additional depreciation in respect of new machinery and plant purchased by an assessee engaged in the business of manufacture or production of article or thing; that since section 32(1)(iia) also uses the expression ‘production of any article or thing’, any product with embroidery work is an article or thing; that the provisions of section 31(1)(iia) are larger in scope than those of section 33(1)(B)(b)(i) in as much as section 32(1)(iia) provides for additional depreciation on plant and machinery, which is used in the production/manufacture of any article or thing, whereas section 33(1)(b)(B)(i) pertains to development rebate on plant and machinery which is used in the construction, manufacture or production of any article or thing, as listed in the Fifth Schedule; that even from the angle of Excise Duty under the Central Excise Act, embroidery is subject to levy of duty and is considered as manufacture under Tariff item 5810. CIT(A) was correct in quashing the rectification order passed by the Assessing Officer. - Decided against revenue.
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