TMI Blog2021 (4) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... his is an appeal filed by the assessee against the order dated 01.12.2016, passed by the CIT(A)-1, Bhubaneswar for the assessment year 2009-2010, on the following grounds of appeal :- 1) That the order dtd. 01-12-2016 as passed in the appeal No.0308/15-16 by the learned Commissioner of Income Tax-Appeal(CITA) is unjustified, arbitrary, contrary to the facts and bad in law. 2) That the learned CITA is simply influenced by the decision of the learned AO without going through the merits, facts and circumstances of the case. 3) That the addition of ₹ 15,71,130/- made by the learned AO and confirmation of the same by the learned CITA, by disallowing the additional depreciation claimed in the return, is illegal as the same is based on a irrelevant case law, the facts of which are totally different and the decisions were given in different context. The learned CITA have completely ignored a direct case law of the Supreme Court which is in favour of the assessee. 4) That the learned CITA is totally biased by the decision of the learned AO and completely ignored the submissions of the assessee that it is engaged in the production activities by installing the require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferring to the Section 32(1)(iia) of the Act, held that the assessee was not eligible for additional depreciation and added into the total income of the assessee to the tune of ₹ 15,71,130/-. 3. Feeling aggrieved from the order of AO, the assessee filed appeal before the CIT(A) and the CIT(A) after relying certain judgments, which have been incorporated in the CIT(A) s order, dismissed the appeal of the assessee. 4. Aggrieved from the order of the CIT(A), the assessee filed this present appeal before the Income Tax Appellate Tribunal. 5. Ld. AR before us filed his written submissions as under :- That, the appellant company derives income from the business of sea foods, prawn culture production and export of processed prawns and filed IT return for the Asst. Year:2009-10 showing total income at ₹ 61,31,758/- on dt.24/09/2009 and the case of the appellant has under scrutiny U/s. 143(3) of the IT Act where the Ld. AO has determined the total income at ₹ 69,10,310/-, thereby making an extra addition of ₹ 7,78,552/-. That, the case has again reopened U/s. 147 of the IT Act on the basis of the report of the audit wing which leads to the satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e4n the assessee's factory and whether the use is for production or processing or for bringing about any change in the materials used in the manufacture/production of a final product. In that case, the 'machines, machinery, plant, equipment, apparatus, tools or appliances' used for producing or processing of any goods or for bringing about any change in substance for the manufacture/production of the final product. The machineries/equipments installed and used for storing, processing, stacking, handling, packaging and bringing together various materials/components used in the manufacture/production is regarded as used for processing of goods in relation to the manufacture of a final product. Unless the prawns are brought to a final shape in size, shape, structure, preservation and packaging for human consumption or edible level by way of manufacturing process, the exports to foreign countries are neither feasible nor acceptable to consumers. The learned AO came to conclusion without considering. these processing or manufacturing aspects of raw prawns changed to edible form for human consumption, thereby committed error in law and in fact which needs judicial interferenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also. Here the word production has much wider meaning and shall include processing activities of the assessee. Further, the word production should be interpreted taking into the objective of the section which induces for fresh investment in Plant and machinery in an industrial undertaking. Regarding the court decisions quoted by the learned CIT(M/s Sterling Foods V. State of Karnataka), We would like to mention here that the Hon'ble Supreme Court has decided in this case, whether the nature of a particular product changes its original character after it goes through different production process. This judgment was given in the context of whether the assessee is eligible to tax benefit available, if the same nature of the product is exported which was purchased. Accordingly, the Hon'ble Supreme Court was to decide whether the original nature of the product is remaining or not in the processed product. Here the Hon'ble Supreme Court has never defined whether a particular process amounted to production or not. Therefore, this decision of this Hon'ble Supreme Court is totally irrelevant for the matter and facts of the assessee in claiming additional deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the term has to be understood as meaning of the production of articles for use from raw or prepared materials by giving such materials new forms, qualities or combinations, whether by hand labour or machines. Further it was held that the process of curing of Coffee starts with the drying of coffee and thereafter there comes the stage of hulling which means removing Outer husk of coffee bean and thereafter, there is a process of roasting which gives brown colour to coffee and there is also change in chemical component and that the process of roasting brings with it splendid aromatic qualities and pleasing taste. Thus, disallowance of additional depreciation by the learned AO which was upheld by the learned CIT (A) without due application of mind is not sustainable in the eyes of law and additional depreciation u/s.32(l)(iia) is allowable as per existing laws, facts and circumstances of this case. In view of the aforesaid facts and circumstances of the case the additional depreciation may kindly be allowed by this Hon'ble Tribunal. In addition to the above written submissions, ld. AR also relied on the judgment of the coordinate bench of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer, apart from doubting the activities of assessee, being that of manufacturer, has also objected, from the details of assets, that they are not installed in factory as the so called factory of the assessee is located at Lawrence Road and these items are utilized for offices or residential or show room purposes; that all of these items cannot be termed as plant machinery e.g., the distribution penal at Faridabad is falling under the category of furniture fixture and not under plant and machinery; that same is the case with other items also e.g. Air Conditioners are more in nature of office appliances rather than plant Machinery; and that Inkjet printer installed at Faridabad is undoubtedly an office appliance and not plant Machinery. It cannot be disputed that by virtue of proviso to section 32(l)(iia) of the Act, no additional depreciation is allowable the following eventualities. The relevant proviso reads as under : Provided further that no deduction shall be allowed in respect of- (A) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or (B) any machinery or plant instal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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