TMI Blog2021 (3) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... h. Rajat Jain, CA For the Revenue : Ms. Sunita Singh, CIT DR ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: The present appeals have been filed by the revenue against the orders of the ld. CIT(A)-35, New Delhi dated 28.08.2018. 2. The cases pertaining to assessment years 2011 -12 2012- 13 deals with the issue of reopening u/s 147 and allowing of additional depreciation u/ s 32 (1)(iia) of the Act. The issue of additional depreciation stands adjudicated by the order of the Tribunal in the case of the assessee for the assessment year 2013-14 in ITA No. 6489/ Del/2017 dated 05.01 .2021. Since, the issue of additional depreciation has been squarely covered by the order of the Tribunal, we hereby dismiss the appeal of the revenue on this ground. 3. With regard to the reopening u/s 147, since the main grounds having been dwelled on merits of the case, the adjudication on the issue of Section 147 would be only academic in nature and hence refrained to do so. 4. For the sake of ready reference, the order of the Tribunal in ITA No. 6489/ Del/2017 dated 05.01.2021 is reproduced here under: Indraprastha Gas Limited (IGL) is a joint venture of GAIL Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which gas is compressed different stages- a. First stage - ~ 18 bar to ~ 55 bar b. Second stage - ~ 55 bar to ~ 120 bar c. Third stage - ~120 bar to ~250 bar. First stage is double acting while second and third stage is single acting. Each stage consists of spring loaded suction and discharge valves. Safety valves, pressure and temperatures sensors, gas flame detectors are installed to ensure safe compression of gas. Further temperature increases whenever we compress the gas thus after every compression gas enters air cooler which cools the gas, using forced / induced draught fans, so that it can be compressed without much loss of energy in subsequent stages. Inlet gas consists of oil particles; along with this separate lubrication system is there to lubricate various parts of system. Oil separators installed at each stage to remove oil particles added during compression process. After cooling of gas moisture get condensed and to remove this condensate filtering system are there. All above-mentioned process are monitored controlled through automated digitally controlled systems. Priority panels are installed in every compressing unit to automatica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer (deemed manufacture). 13. However, the definition of the term manufacture as per Income Tax Act, 1961 as provided in Section 2 (29BA) is as under: manufacture , with its grammatical variations, means a change in a non- living physical object or article or thing,- (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure; These two definitions clearly suggest that the meaning of term manufacture is different for Income Tax Act and for Central Excise Act and a person considered as manufacturer for the purposes of Central excise Act may not be necessarily considered manufacturer for Income Tax Act. Therefore, merely because the assessee company is registered with the Central Excise Department and paying excise duty does not mean that it is manufacturing an article or thing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled IMFL Activity does not amount to manufacturing. [Shaw Scott Distilleries (P) Ltd. Vs ACIT (ITAT, SB- Cal) 76 ITD 89] vii. Electroplating - Not manufacture / production of article or thing since the original commodity still remains the same with the word coated added to it - It is only done to prevent it from rusting and no new goods were produced. viii. CIT Vs Hindustan Metal Refining Works (P) Ltd. (Cal) 128 ITR 472 Titanor Components Ltd Vs DCIT (ITAT, Del) 72 ITD 514 ix. Filling of mushroom powder in gelatine capsules to make it fit for marketing - No manufacturing or production of any commercially distinct commodity [DXN Herbal Mfg. (India) (P.) Ltd. Vs ITO (ITAT, Chennai) 110 ITD 99] x. Purchased seeds from agriculturists and sold them after processing - No manufacturing activity involved. [ITO Vs Daftri Agro (ITAT, Hyd.) 135 TTJ 729; 130 ITD 496]. xi. Peeling Freezing of Shrimps / processing of fish - No manufacturing - activity involved since there is no essential difference between raw shrimps and prawns and processed or frozen shrimps and prawns. xii. CIT Vs Relish Foods (SC) 237 ITR 59 xiii. Golden Hind Shipping (India) P. Ltd. Vs CIT (Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke of ready reference, the order of the Hon ble High Court detailing the issue is reproduced as under: Hon' ble Bharati Sapru,J. Hon' ble Vinod Kumar Misra,J Heard Shri Udit Chandra, learned counsel for the appellant and Shri Manish Goyal, learned counsel for the department. This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 against the order passed by the Tribunal dated 13 . 06 . 2014 for the assessment year 2008- 09. The question of law sought to be answered is as under: Whether the compressed natural gas produced by the appellant, having different name, character and use from natural gas can be said to be covered by the phrase manufacture or production? The facts of the case are that the appellant procures gas from GAIL Indian Limited and compresses it through the compressor for the manufacture of compressed natural gas (CNG), which is subsequently sold to the customers, as fuel for vehicles. The natural gas purchased by the appellant from GAIL India Limited is either sold through appellant- company' s own pipelines to factories and household etc. which sale is made as piped natural gas (PN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f natural gas into CNG amounts to manufacture. The schedule IV, Entry 8 of the U. P. Value Added Tax Act imposes the tax on natural gas other than compressed natural gas (CNG) @ 5 % and 21% when sold to registered and unregistered dealers; while compressed natural gas (CNG) is covered by Schedule V of the U. P. Value Added Tax Act. Thus, the natural gas and compressed natural gas (CNG) are two different products, being taxable at different rates of tax under the U.P. Value Added Tax Act. It is further stated that in the manufacturing process of CNG, there is a loss of 2- 3% of natural gas and even the selling prices of both the products are different. Piped natural Gas (PNG) is sold at the rate of ₹ 26/- per kg while the selling price of compressed natural gas (CNG) is ₹ 35/- per kg. The Tribunal has come to the conclusion that the compression of natural gas into compressed natural gas does not result in bringing into existence in a new product and the activity of compressing the natural into compressed natural gas would not amount to manufacture or production. The Tribunal records in paragraph 5 as hereunder: We have considered the rival submissions, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o interference is called for in the order of CIT (A) on this issue. Accordingly, ground No.1 of the assessee is rejected. From a reading of the facts above and the Tribunal' s order and other material on record, it comes to the fore that natural gas which comes through pipelines in its natural form cannot be used for the same purposes as compressed natural gas that is to be used as automobile fuel. The appellant on the other hand contends that it is manufactured compressed natural gas which is used for the automobile fuel, which is prepared by a process of manufacture, by which the natural gas is put through a plant/ machinery for compression and when the compressed gas comes out in its new form it is used for the automobile fuel. After undergoing the process of compression, natural gas acquires a new form by the name of compressed natural gas. It has a distinct use as automobile fuel and a distinct commercial name. The provisions of Section 2 (29BA) defines ' manufacture' as hereunder: (29BA)- manufacture with its grammatical variations, means a change in a non- living physical object or article or thing- (a) resulting in transformation of the object or article or th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
