TMI Blog2010 (1) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... shape of sundry credit appearing in the books of account is unaccounted money of the assessee. The assessee has filed certificate from the bank indicating the facts that cheque issued by it were cleared - Held that:- Assessing Officer is not justified in making the disallowance of purchases made by the assessee. appeal filed by the assessee is allowed. - IT Appeal No. 4672 (Delhi) of 2007 - - - Dated:- 15-1-2010 - G.E. Veerabhadrappa, Rajpal Yadav, JJ. Hiren Mehta and S. Kwatra for the Appellant Anusha Khurana for the Respondent ORDER Rajpal Yadav, Judicial Member:- 1. The assessee is in appeal before us against the order of learned CIT (Appeals) dated 24-9-2007 passed for assessment year 2004-05. The grounds of appeal taken by the assessee are not in consonance with rule 8 of the ITAT's Rules, they are descriptive and argumentative in nature. The assessee has taken eight grounds of appeal, whereas the controversy raised in all these grounds of appeal revolves around two issues. The first issue is whether production of ready mixed concrete (RMC) amounts to manufacture or production of a goods or articles. If yes, then that would enable the assessee to claim a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Co. [1993] 204 ITR 412', Singh Engg. Works (P.) Ltd. v. CIT[1979] 119 ITR 891 (All.) and other number of decisions. On the strength of these decisions, he held that assessee-company is not manufacturing or producing any article, therefore, it is not an industrial undertaking which is entitled to additional depreciation within the meaning of section 32(l)(iia) of the Act. According to the Assessing Officer, the concrete cannot be called goods or articles or understand as goods by a common man. He also observed that business entity engaged in construction are not to be treated as industrial undertaking. 3. Dissatisfied with the denial of additional depreciation by the Assessing Officer, assessee carried the matter in appeal before the learned CIT (Appeals) and reiterated its contention. Learned First Appellate Authority has reproduced the written submissions of the assessee in paragraph No. 5.2 on page Nos. 4 to 12 of the impugned order. On a detailed analysis of assessee's submissions and the decision cited by it, learned CIT (Appeals) has rejected the contention of the assessee. Referring to the dictionary meaning of "concrete" in the Concise Oxford Dictionary, learned CIT (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of India Cine Agencies v. CIT [2009] 308 ITR 98', contended that conversion of jumbo rolls of photographic films into small flats and rolls in desired size has been considered as production of a different commercial commodity and assessees were allowed deduction under sections 80HH, 80-1 and investment allowance under section 32AB of the Act. He pointed out that in this decision, Hon'ble Supreme Court has considered all other decisions explaining the expression "manufacture and production". He pointed out that if cutting of a jumbo rolls into different size of small films can be considered as a manufacturing activity then assessee's case is on a better footing. He prayed that assessee should be allowed additional depreciation. 5. On the other hand, learned DR relied upon the order of learned CIT (Appeals) and contended that mixing of cement, flyash, sand and add-mixture with concrete could not amount to any manufacturing activity and, therefore, assessee is entitled to any additional depreciation under section 32(l)(iia) of the Act. He also emphasized that assessee cannot be considered as industrial undertaking. The learned counsel for the assessee in the rebuttal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authoritative observations of the Hon'ble Court are worth to note for understanding the meaning of word "manufacture": "2. As noted above, the core issue is whether the activity undertaken was manufacture or production. 3. In Black's Law Dictionary (5th edition), the word, "the "manufacture" has been defined as, "the process or operation of makings goods or any material produced by hand, by machinery or by other agency; by the hand, by machinery, or by art. The production of articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or combinations, whether by hand labour or machine". Thus, by a process of manufacture something is produced and brought into existence which is different from that, out of which it is made in the sense that the thing produced from that, out of which it is made in the sense that the thing produced is by itself a commercial commodity capable of being sold or supplied. The material from which the thing or product is manufactured may necessarily lose its identity or may become transformed into the basic or essential properties-Deputy Commissioner of Sales-tax (Law), Board of Revenue (Taxes) v. Coco Fibres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognized as a distinct and new article that has emerged as a result of the process. There might be borderline cases where either conclusion with equal justification can be reached. Insistence on any sharp or intrinsic distinction between "processing and manufacture", results in an oversimplification of both and tends to blur their interdependence-Ujagar Prints v. Union of India [1989] 3 SCC 488. 7. To put it differently, the test to determine whether a particular activity amounts to "manufacture" or not is : Do new and different goods emerge having distinctive name, use and character. The moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether it be the result of one process or several processes "manufacture" takes place and liability to duty is attracted. Etymologically the word "manufacture" properly construed would doubtless cover the transformation. It is the transformation of a matter into something else and that something else is a question of degre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack with the remarks "not known". Assessing Officer has disallowed the claim of the assessee on the ground that assessee failed to file confirmation from these persons in support of its purchases. Dissatisfied with the disallowance, assessee carried the matter in appeal before the learned CIT (Appeals). It is contended that assessee has shown net profit of Rs. 79.11 lakhs on the turnover of Rs. 884.81 lakhs. The net profit in terms of percentage is 8.94 per cent whereas the net profit in the immediate previous year was 4.79 per cent. It was also contended that Assessing Officer had issued notice to Shri Subhash Chand without mentioning father's name. In a village, it is quite difficult to find the person in the single name without mentioning of his father's name. There may be so many Subhash Chand. The assessee has produced evidence from its banker indicating the payment through the cheque. The bills raised by these two persons are bearing telephone numbers. Assessing Officer could verify by making a call to the truck owners who has carried the material to the site of the assessee-company. Learned CIT (Appeals) was not satisfied with the contention of the assessee and confirmed the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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