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2017 (11) TMI 901 - AT - Income TaxDisallowance of additional depreciation U/s 32(1)(iia) relating to visicooler machine - Did the article fulfil the function of a plant in the assessee's trading activity? - Held that:- We note that the second condition cited by the AO in the impugned order is not borne from the provisions of Section 32(1)(iia) of the Act. The conditions laid down in Section 32(1)(iia) is that if the assessee is engaged in manufacture of article or thing then it is entitled to additional depreciation on entire additions to plant & machinery provided the items of addition does not fall under any of the exceptions provided in clauses (A) to (D) of the proviso. In the present case the assessee is engaged in the business of manufacture of cold drinks. This fact has not been disputed by the AO. The AO has categorically observed that the assessee's nature of business is manufacture of cold drinks. We therefore find that the assessee is legally entitled to avail the benefit of additional depreciation under Section 32(1)(iia) of the Act. The “visicooler” is a “plant & machinery”. The said item falls within the category of “plant & machinery” as laid down in the l.T. Rules, 1962. The “visicooler” also does not fall within the exceptions provided in clauses (A) to (D) of the proviso to Section 32(1)(iia) of the Act. We note that the assessee is in the business of manufacturing and sale of Coca-Cola, which is a soft drink. Since the assessee is situated at a long distance and the product has to be sold at long distance, the Coca-Cola becomes hot due to the humid weather in the State of West Bengal. It is a known fact that soft drink, like Coca-Cola, cannot be consumed in hot state, whereas it is preferred by majority of customers as a cold drink. So, the assessee, in order to sell its final product to the customers, in various parts of the state required to give the Coca-Cola, in cold state for which the assessee has purchased, the tool, to keep the same in cool condition by the machine called ‘Visicooler’. The test laid down by Hon’ble Supreme Court in the case of Scientific Engineering vs. CIT (1985 (11) TMI 1 - SUPREME Court), was: Did the article fulfil the function of a plant in the assessee's trading activity? Was it a tool of his trade with which he carried on his business? lf the answer was in the affirmative, it would be a plant. When the aforesaid test is applied in the case of Visicooler, the answer is in the affirmative, that is, the Visicooler is a tool which is necessary for carrying out, the business of the assessee, therefore, we do not find any infirmity in the order of CIT(A).Hence, we confirm the order passed by CIT(A). Appeal filed by the Revenue, is dismissed.
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