TMI Blog2015 (12) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It was held that because of these operations, the look of the fabric changed substantially and the new article is commercially known differently from the original fabric; that even otherwise, the word “produce” has a wider connotation than the work “manufacture”; that in “S.S.M. Brothers (P) Ltd. and others vs. CIT”(1999 (1) TMI 2 - SUPREME Court ), development rebate claimed u/s 33(1)(b)(B)(i) of the Act was allowed by holding that the plant and machinery were used in the production of processed textiles (embroidery) and, therefore, machinery was entitled to the development rebate claimed; that the decision in “S.S.M Brothers (P) Ltd. & others” (supra), was directly applicable to the facts of this case, because section 32(1)(iia), like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation in this case was not a prima facie mistake. 2. The facts of the case, as per the record, are that in this case the assessment was completed u/s 143(3) of the Income Tax Act, 1961 ( In short, the Act ) vide order dated 16.11.2009. The assessee is engaged in the business of embroidery work of cloth. During F.Y. 2006-07, relevant to A.Y. 2007-08, the assessee firm purchased and installed new machinery in the month of August, 2006 and started the business of embroidery work of cloth. During the year under consideration, the assessee firm claimed additional depreciation of ₹ 18,25,184/- u/s 32(1)(iia) of the Act. Subsequently, it was noticed form the assessment record of the assessee, that additional depreciation claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame, character and user, or b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure. It is clear from the above that the assessee has not using the Machinery for the purposes which may entitle the assessee for additional depreciation. The case Laws quoted by the assessee do not help him as the facts of the cases reported by the assessee are therefore distinguishable to the facts of the case of the assessee under reference. The claim of the assessee of additional depreciation on machinery is not in accordance with the provisions of section 32(1)(ii) of the Income Tax Act, 1961. Since the assessee has failed to fulfill the conditions laid down in secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... composition or integral structure; that herein, the assessee was not using the machinery for the purposes which may entitle the assessee for additional depreciation; and that the assessee s claim of additional depreciation on machinery was not in accordance with the provisions of section 32(1)(ii) of the Act. 7. Despite due service of notice, none has appeared before me on behalf of the assessee, nor has any application for adjournment been filed. However, finding that the matter can be proceeded with in the absence of the assessee, I am doing so. 8. I have considered the ld. DR s contentions in the light of the material on record. The issue to be considered is as to whether the ld. CIT(A) has rightly quashed the order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 243 ITR 418 (SC), development rebate claimed u/s 33(1)(b)(B)(i) of the Act was allowed by holding that the plant and machinery were used in the production of processed textiles (embroidery) and, therefore, machinery was entitled to the development rebate claimed; that the decision in S.S.M Brothers (P) Ltd. others (supra), was directly applicable to the facts of that case, because section 32(1)(iia), like section 33(1)(b)(B)(i), also provides for additional depreciation in respect of new machinery and plant purchased by an assessee engaged in the business of manufacture or production of article or thing; that since section 32(1)(iia) also uses the expression production of any article or thing , any product with embroidery work is an ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act. 12. In Ujagar Prints vs. U.O.I. (supra), the view expressed in Empire Industries Ltd. vs. U.O.I (supra), was held to be correct. It was held that the processes like bleaching, dyeing, printing, sizing, shrink-proofing, waterproofing, rubberizing, etc., of fabric are not so alien or foreign to the concept of manufacture that they could not come within that concept. Empire Industries Ltd. (supra) was affirmed in Sovrin Knit Works (supra), following Empire Industries Ltd., (supra) and Ujagar Prints (supra), inter-alia, embroidery of grey cloth was held to constitute production and manufacture in terms of Item No.32 of the Fifth Schedule of the Income Tax Act, 1961. To reiterate, herein also, the activity under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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