TMI Blog2011 (9) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... his appeal by the assessee is against the order of the CIT(A)- V, Mumbai dated 04.03.2010. 2. Assessee is contesting the issue of withdrawing the additional depreciation of Rs. 56,87,343/- on the plant and machinery originally allowed in the assessment order dated 30th March 2007 but withdrawn consequent to the revision order under section 263 by the CIT. 3. Briefly stated, the assessee is in the business of manufacturing needle rollers, needle bushes, needle roller cages, needle bearing cylindrical roller, spherical roller, needle roller ball and taper roller bearings. It has various units situated at different locations across India as follows: i. Pokhran Road, Thane ii. MIDC Industrial Area, Chikalthana, Aurangabad iii. Additional MIDC Industrial Area, Jalna iv. MIDC Waluj, Aurangabad v. Uppal Inddustrial Estate, Hyderabad 4. Assessee claimed additional depreciation under section 32(1)(iia) in respect of new plant and machinery acquired and installed by the assessee in an unit situated at MIDC Waluj, Aurangabad. The installed capacity of the said unit had increased from 23,000 numbers as on 31st March 2004 to 32,500 numbers as on 31st March 2005. Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... city has to be considered of the business as a whole while assessee claimed installed capacity on a unit situated at Aurangabad. He was of the opinion that provisions of section 32(1)(iia) does not refer to the installed capacity of any particular unit of the industrial undertaking but to the industrial undertaking in respect of an assessee engaged in the business of manufacturer or production. He accordingly confirmed the order. 6. Learned counsel submitted that assessee had units at four different places and the MIDC Unit at Waluj, Aurangabad has increased its capacity by installing new machinery and the additional depreciation claimed was only with reference to that unit alone. He then referred to the provisions of section 32(1)(iia), the certificate issued by the Chartered Accountant and referred to the 'industrial undertaking' and 'new industrial undertaking' as per the provisions. He also referred to the proforma prescribed to submit that there is a distinction between assessee as a whole and a new industrial undertaking or existing industrial undertaking referred to in the provisions. Relying on the provisions of the Act and principles of law on the issue, it was his submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed as deduction under clause (ii) : Provided that such further deduction of fifteen per cent shall be allowed to (A) a new industrial undertaking during any previous year in which such undertaking begins to manufacture or produce any article or thing on or after the 1st day of April, 2002; or (B) any industrial undertaking existing before the 1st day of April, 2002, during any previous year in which it achieves the substantial expansion by way of increase in installed capacity by not less than ten per cent: Provided further that no deduction shall be allowed in respect of (a) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or (b) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house; or (c) any office appliances or road transport vehicles; or (d) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or other-wise) in computing the income chargeable under the head "Profits and gains of business or profession" of any one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Cos. Ltd. (supra) held as under: - "That from the certificate of the engineer it was quite clear that the new kiln at each factory worked independently of the old kilns and if on account of lack of demand, production had to be curtailed, any of the kilns, whether old or newly erected, could be stopped. The certificate also specified the main auxiliary machinery installed together with the kiln such as crusher, raw mill, coal mill, cement mill, compressors, transformers and quarry machinery. Further, the certificate also disclosed that whereas in respect of the kilns at Bhupendra, Kistna, Chaibasa and Shahabad, the capacity of new kilns was stated to be 1,00,000 tonnes, 1,65,000 tonnes, 1,00,000 tonnes and 1,00,000 tonnes, respectively, in respect of the newly erected klin at Kistna, the capacity of the newly constructed kiln alone was much more than the capacity of the entire factory which had been shown to be only 90,000 tonnes. The certificate also showed that several amounts running into several lakhs were spent in construction of building, purchase of plant and machinery, construction of water works and railway siding and tram lines, purchaser of rolling stock and expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y with reference to the earlier capacity, as made out by the A.O., would be justified. But assessee has claimed only additional depreciation of the unit at Waluj, Ahmedabad. As already stated this unit was independently established in 1990. Therefore Assessing Officer's action in comparing increased capacity with reference to the whole of the business when assessee claimed additional depreciation on only one unit is not correct. 12. Even if one were to consider that the capacity of the entire business has to be considered, this is not practicable if assessee is manufacturing different products. Consider an example of a company which is manufacturing tooth paste, tooth brush, soap, cosmetics, etc. The entire business may have different units and different factories manufacturing different products at different places. If that company installs additional machinery with reference to production of tooth brushes and claims additional depreciation it is not possible to compare the increased capacity with reference to other products as different parameters exists. One can only compare similar products in a given situation. Thus examination of a condition for granting additional deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As far as application of s. 32(1)(iia) is concerned, what is required to be satisfied in order to claim the additional depreciation is that the setting up of a new machinery or plant should have been acquired and installed after 31st March, 2002 by an assessee, who was already engaged in the business of manufacture or production of any article or thing. The said provision does not state that the setting up of the new machinery or plant, which was acquired and installed upto 31st March, 2002 should have any operational connectivity to the article or thing that was already being manufactured by the assessee. Therefore, the contention that the setting up of a wind mill has nothing to do with the industry, namely, manufacture of oil seeds etc. is totally not germane to the specific provision contained in s. 32(1)(iia). It cannot also be said that setting up of a windmill will not fall within the expression setting up of a new machinery or plant. There is no error in the conclusion of the Tribunal." As far as application of section 32(1)(iia) is concerned, what is required to be satisfied in order to claim the additional depreciation is that the setting up of a new machinery or plan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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