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2014 (1) TMI 1938 - HC - Income TaxAdditional depreciation - a new plant and machinery were installed at Mother Dairy - “processing of Milk” v/s “not manufacturing of any item” - treatment to the process of making skimmed milk powder from milk as “manufacture” or “production” - whether production of skimmed milk powder is nothing but milk without water content? - HELD THAT:- The plant here is of making milk powder and process of producing the milk powder is complex and it is a completely different commercial commodity from the main ingredient milk. The decision of Aspinwall & CO.Ltd [2001 (9) TMI 3 - SUPREME COURT] requires reference wherein held the word “manufacturing” has not been defined in the Income-tax Act but in the absence definition of word “manufacture” has to be given a meaning as is understood in a common parlance. It is to be understood as meaning the production of articles for use from raw or prepared materials by giving such materials new forms, qualities or combinations whether by hand labour or machines. If the change made in the article results in a new and different article, then the same would amount to manufacturing activity. We can take note of the complex process explained by the assessee in making milk powder which is completely a different commodity. There is no way in which the final product could be restored to the original product. This process involves four different stages namely (I) Standardization (ii) Preheating( iii)Evaporation and (iv) Spray dying. A distinct commodity is thus arising from the entire complex process and it is a commercially distinct marketable commodity resulting from this process and such transformation is irreversible and thus, the plant and machinery installed by the assessee for the purpose of manufacturing the milk powder has been rightly given the benefit of additional depreciation by the authorities. Thus, the whole process of conversion of the raw material when leads to production of new article and when its character, use and nature also indicate complete transformation bringing into existence the new product altogether. The assessee has rightly been allowed the benefit of additional depreciation by both the revenue authorities.
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