TMI Blog2023 (9) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... ADRAS HIGH COURT] would apply wherein similar additional depreciation has been allowed for AY 2011-12. Therefore, the assessment order could not be termed as erroneous or prejudicial to the interest of revenue on both these scores. Eligibility to claim deduction u/s 32AC - We find that this issue is covered in assessee s favor by the decision of co-ordinate bench of this Tribunal in DCIT vs. M/s Indian Ocean Garnet Sand Company [ 2017 (10) TMI 1641 - ITAT CHENNAI] - In that case, the assessee was engaged in similar activity of separation of garnet sand from beach sand and claimed the same to be manufacturing process. The bench, relying on the cited decision of Apex Court in Sesa Goa Ltd. (supra), held that this process is one of manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 in the matter of an assessment framed by Ld. AO u/s.143(3) of the Act on 28-12-2017. The grounds taken by the assessee are as under: - 1) The order of the Principal Commissioner of income Tax Chennai 3 passed order u/s. 263of the ACT is contrary to the law facts of case and material on the record. 2.1. The PCIT failed to assume valid jurisdiction under section 263 of Income tax ACT as held by the various judicial decisions. 2.2. The PCIT ought to have detailed the reasons as to how the decisions relied by the appellant company are distinguishable. 3. The PCIT erred in not appreciating that the word production appearing in sec. 32AC has a wider connotation in comparison to manufacturer . 3.2. The PCIT failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of impugned order, it could be seen that the assessment is subjected to revision on three issues viz. (i) claim of deduction u/s 32AC; (ii) claim of additional depreciation u/s 32(1)(ii); (iii) Disallowance u/s 14A. 4. On the issue of claim of deduction u/s 32AC, the Ld. Pr. CIT observed that the assessee was only extracting / separating minerals such as granite, limenite, rutile, zircon, monazite etc. in its original form from mineral sand available in certain beaches. It was noted that the aforesaid minerals were extracted by the assessee from the sand and thereafter, plain sand was dumped back in to beaches. The assessee thus does not manufacture any items and the stated extraction process do not fit into the defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Hon ble High Court of Madras in the case of CIT vs. T.P. Textiles Private Limited (79 Taxmann.com 411), wherein the balance additional depreciation was allowed for AY 2011-12. On the issue of disallowance u/s 14A, the assessee relied in various decisions to submit that in the absence of any exempt income, the provisions of Sec.14A could not be invoked. 6. However, Ld. Pr. CIT distinguished the case of Sesa Goa Ltd. (supra) on the ground that in that case, the assessee was extracting iron ore whereas in the present case, the assessee was merely extracting minerals from beach sand. Pertinently, in the original return of income, the assessee made claim u/s 35(2AB) but withdrew the same which would lead to conclusion that assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned, the undisputed position that emerges is that the assessee has not earned any exempt income during this year. In such a case, no disallowance u/s 14A is called for in terms of binding decision of Hon ble High Court of Madras in Chettinad Logistics Ltd. (80 Taxmann.com 221). So far as the issue of additional depreciation is concerned, we find that ratio of decision of Hon ble High Court of Madras in T.P. Textiles P. Ltd. (supra) would apply wherein similar additional depreciation has been allowed for AY 2011-12. Therefore, the assessment order could not be termed as erroneous or prejudicial to the interest of revenue on both these scores. 9. So far as the assessee s eligibility to claim deduction u/s 32AC is concerned, we fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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