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ACIT Versus M/s Gamma Pizzakraft (P) Ltd.

2015 (6) TMI 238 - ITAT DELHI

Disallowance on account of additional depreciation - CIT(A) deleted the disallowance - Held that:- Since the assessee was engaged in the activities of production/ manufacturing of an article or thing, therefore, was eligible for additional depreciation. - Decided against revenue.

Disallowance on account of capitalization of continuing fees/ royalty expenses @ 25% - CIT(A) deleted the disallowance - Held that:- Since the facts are identical with earlier years for AYs 2006-07, 2007-08 a .....

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. CIT(A), considering these facts, rightly observed that assessee had not received any permanent or enduring benefit through such license, which was limited to use by the assessee in the prescribed manner and liable to be rescinded by the licensor in certain conditions - Decided against revenue. - ITA No. 2123/Del/2013 - Dated:- 23-3-2015 - Shri S.V. Mehrotra And C.M. Garg JJ For the Appellant : Shri T. Vasanthan Sr. DR For the Respondent : Shri Suresh Malik CA ORDER Per S.V. Mehrotra, A.M:- .....

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₹ 32,48,219/-. 2.1. The assessee preferred appeal before ld. CIT(A), who allowed the asessee s appeal. 2.2. Being aggrieved with the order of ld. CIT(A), the department is in appeal before us and has taken following effective grounds of appeal: 1. Whether Ld. CIT(A) was correct on facts and circumstances of the case and in law in deleting the disallowance of ₹ 3,28,374/- made by the AO on account of additional depreciation. 2. Whether Ld. CIT(A) was correct on facts and circumstances .....

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pany was carrying on a food and beverage business through restaurant, home and office delivery, catering and dispensing of pizzas, pastas, health food and other food and beverages prescribed. The assessee had claimed additional depreciation of ₹ 3,28,374/- on the ground that it was engaged in the manufacture or production of food articles which were different from raw material. The AO denied the assessee s claim. However, ld. CIT(A) deleted the disallowance. 5. Having heard both the partie .....

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tables which are cut down to particular sizes after sanitizing. All the vegetables are kept in a chiller (1-4 degree Celsius). After opening the canned products, these are kept in the chiller. Frozen products, on the other hand, involves a 3 days thawing process. The frozen topping is kept in deep freezer at the same temperature. From here, packets are taken for thawing in chiller (1-4 degree Celsius). The toppings get ready to use in 3 days. The shelf life of all the toppings is only 4 hours. 3 .....

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The assessee company manufactures to types of pastas; oven baked and sautéed pastas. 3.6. Ld. Counsel relied on Finance (No. 2), Act 2009, brought on statute w.e.f. 1-4-2009, a definition of the term manufacturing by inserting a new clause (29 BA) to section 2 as under: (29BA) manufacture , with its grammatical variations, means a change in a non-living physical object or article or thing, - (a) Resulting in transportation of the object or article or thing into a new and distinct object o .....

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other food items are held to be manufacturing in nature. 8.8. From the manufacturing process started above one can easily conclude that the process of making pizza and pasta by the appellant company is a step-wise systematic process, which is strictly in accordance with the specification of the processes required by the Licensor and hence the appellant is eligible for claim of additional depreciation accordingly. 3.7. Reliance is placed on ITAT Ahmedabad Bench in the case of Deepkiran Foods (P) .....

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sment years and the claim of the assessee was allowed while framing the assessments framed u/s 143(3) and the assessments have attained finality. It was submitted that there was no change in the facts in the year under appeal as compared to the facts of earlier years. This fact has not been controverted by the Ld. D.R. by bringing any contrary material on record. We further find that the Hon ble J.K. High Court in the case of Pankaj Jain (supra) after distinguishing the Hon ble Apex Court in the .....

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rced from other parties). 3.8. Further reliance is placed on the ratio of decision of Hon ble Madras High Court in the case of CIT Vs. M.R. Gopal 58 ITR 598 (Mad.), holding as under: Manufacture means: Anything made from raw materials by the hand, by machinery, or by art, as clothes, iron utensils, shoes, machinery etc.; a manual occupation or trade to produce by labour especially now, according to an organized plan and with division of labour and usually with machinery . It seems unarguable hav .....

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al depreciation is allowable. 4. Ld. DR relied on the order of assessing officer. 5. We have heard rival submissions and gone through the entire material available on record. Apropos the issue of royalty, the ITAT in earlier years has decided the same in favour of the assessee. Respectfully following the same, we dismiss ground no. 1 raised by the revenue. 5.1. Apropos ground no. 1, i.e. additional depreciation, in our considered opinion relevant aspect of the issue stands decided by the coordin .....

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s assumption has been categorical dislodged by ITAT Ahmedabad Bench by holding that the raw material being in the form of wheat, potato etc. are totally different which is a new commercial commodity called by various names and distinctly sold in the market. Respectfully following the same we hold that the assessee is engaged in the activities of production and manufacture of article or thing and is eligible for additional depreciation. This ground of the revenue is dismissed. 5.1. The facts bein .....

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ions of Hon ble Supreme Court in the cases of Ssouthern Switch Gear Ltd. Vs. CIT 232 ITR 359; and Jonas Woodhead and Sons (India) Ltd. Vs. CIT 224 ITR 342 (SC), the AO held that these expenses were to be capitalized. He, accordingly, disallowed 25% of the aforesaid expenditure being capital expenditure and added the same to the total income f the assessee. 6.1. In appeal, the ld. CIT(A) following the order for AYs 2006-07, 2007-08 and 2008-09, allowed the claim of the assessee holding that the l .....

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