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2016 (6) TMI 780 - ITAT MUMBAI

2016 (6) TMI 780 - ITAT MUMBAI - [2016] 48 ITR (Trib) 588 - Additional Depreciation claim - engagement or non engagement in activity of "production" - assessee is engaged in designing of the magazines, procurement of raw material such as paper, ink, chemicals, etc, the printing, binding and packing of magazines - Held that:- We notice that the Assessing Officer has himself mentioned in the assessment order that the assessee was involved in the business of manufacturing of greetings, magazines, e .....

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le article, as a distinct product comes into existence. It was further held that it is not necessary that an industrial undertaking must manufacture a commercially new product. It was further held that, in any case, this activity shall amount to "production". As per section 32, an undertaking, engaged in "manufacturing" or "production" shall be eligible to claim additional depreciation. Thus, in view of this, the controversy becomes narrower. Therefore, the assessee is eligible for the benefit o .....

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ary 3, 2011, for the assessment year 2006-07. 2. In the first ground, the assessee has challenged the action of the learned Commissioner of Income-tax (Appeals) in confirming the addition of ₹ 17,60,000 being the amount of unsecured loans, as unexplained cash credit under section 68 of the Income-tax Act, 1961, and also the amount of interest disallowed on the said loans. 3. Brief facts of the case as emerged from the assessment order are that the assessee had shown unsecured loans of S .....

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see and rejected the same. The Assessing Officer gave benefit of doubt regarding three directors and one other person who had advanced the loans. The Assessing Officer was of the opinion that the creditworthiness of 28 creditors was not proved. He was of the view that the assessee failed to prove the creditworthiness of the creditors, the genuineness of the transactions, and also the identity of the 28 creditors of loans for different amounts aggregating to ₹ 73,15,000. Therefore, he disal .....

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the Assessing Officer. The learned Commissioner of Income-tax (Appeals) called for the remand report. In the remand report, the Assessing Officer stated that he had made observations only after examining the details filed by the assessee. The Assessing Officer accepted the loans of 12 persons for aggregate amount of ₹ 21,55,000. The learned Commissioner of Income- tax (Appeals) accepted the finding of the Assessing Officer in respect of ₹ 21,55,000. In respect of 11 creditors, the As .....

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itors. The Assessing Officer also observed that there is no return of income and some of the returns are generated for this purposes only and some are identical to that of another. Therefore, the Assessing Officer was of the opinion that these documents are manufactured evidences for accepting the loans as genuine. Since the Assessing Officer observed these discrepancies about 16 creditors, the Assessing Officer invoked the provisions of section 68 of the Act for these creditors. 5. In reply to .....

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tails called for. It was requested that notice be issued to these persons to verify the loan credits ; (d) The Assessing Officer had sent the order hurriedly without inti mating the assessee. The assessee was in a position to produce all the loan creditors for personal verification during the course of assessment proceedings ; (e) The income of one year cannot be the criteria to arrive at a deci sion that the creditworthiness of the lender was doubtful. Out of the 11 loans creditors, balance-she .....

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nt. The assessee further stated that none of the loans was treated by the Assessing Officer as non-genuine. The assessee also filed details of the each creditor. 6. After considering the submissions of the assessee, the learned Commissioner of Income-tax (Appeals) gave part relief to the assessee. Aggrieved by the order of the learned Commissioner of Income-tax (Appeals) in confirming the addition of ₹ 17.60 lakhs, the assessee has filed this appeal before this Tribunal. 7. During the cour .....

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6 lakhs 2 Satish S Tirodkar 1 lakh 3 Panbai Virji Dedhia 1 lakh 4 Maneklal N Parekh 1.5 lakhs 5 Sameer S Kamat 1.10 lakhs 6 Popatlal Nanji Visaria 1 lakh 7 Vandana Atul Gala 1 lakh 8 Vishanji Lakhamshi Gala 1 lakh 9 M P Khanduri 4 lakhs 8. With respect to all the parties, the learned counsel submitted that the complete documentary evidences were submitted to show that these parties are assessed to Income-tax and the amount was received through account payee cheques. Various evidences in the for .....

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erial in the possession of the lower authorities, adverse inference were drawn by both the lower authorities on the basis of presumption and guess work and the addition has been confirmed. 9. The learned Departmental representative reiterated the facts of the case and relied on the orders of the authorities below. In response to our specific query with respect to the documentary evidences placed by the assessee, he was not able to point out any discrepancy or defects therein. 10. We have gone th .....

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bank pass book ; and (f) Copy of ledger account. 11. It is further noted that there is no adverse material in the possession of the lower authorities to controvert the evidence filed by the assessee. The learned Commissioner of Income-tax (Appeals) has confirmed the addition on the ground that the assessee was not in a position to explain the source of income. In our view, once the transaction stands confirmed and the assessee has explained source of amount received in its possession, then the a .....

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Officer with a direction to properly examine the documentary evidence furnished by the assessee. The assessee is also directed to co-operate with the Assessing Officer for speedy disposal of the issue. The Assessing Officer is at liberty to take judicious view after providing fair and reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes. 12. In the second ground, the assessee is challenging the action of the learned Commissioner of Income-tax (Ap .....

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he magazines, procurement of raw material such as paper, ink, chemicals, etc, the printing, binding and packing of magazines are akin to a manufacturing process and as such they are entitled for additional depreciation. The assessee also relied upon some judicial pronouncements but the Assessing Officer rejected the claim of the assessee and added the same to the total income of the assessee. 14. Being aggrieved by the abovesaid decision of the Assessing Officer, the assessee contested this matt .....

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that of earlier product, therefore, it cannot be said that the paper on which printing has been done by the assessee is a manufacturing activity carried on by the assessee. Therefore, the learned Commissioner of Income-tax (Appeals) upheld the action of the Assessing Officer. 15. Being aggrieved by the order of the learned Commissioner of Income- tax (Appeals), the assessee is before us. 16. Before us, the learned counsel submitted that the disallowance has wrongly been made by the Assessing Off .....

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her submitted that subsequently, in another judgment the hon'ble Bombay High Court has properly considered the facts and thereafter decided the issue in favour of the assessee in the case of CIT v. Emptee Poly-yarn P. Ltd. [2008] 305 ITR 309 (Bom), wherein after considering the judgment of Jaypee Dyeing House (supra), it was held that process of designing, printing magazines waterproofing, etc., conducted in cotton fabrics, wooden fabrics and man-made fabrics, would amount to manufacture. Fi .....

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