DCIT, Calicut V. M/s/Mathrubhoomi Printing & Publishing Co. Ltd, Calicut

ITA 104/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77480 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 17-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 14-03-2014
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Assessee Lawyers: A S NARAYANAMOORTHY
• Keywords: Depreciation; Additional depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO. 104/COCH/2014 ASSESSMENT YEAR : 2008-09 THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), KOZHIKODE. VS. M/S. MATHRUBHUMI PRINTING AND PUBLISHING CO. LTD., MATHRUBHUMI BUILDINGS, K.P. KESAVA MENON ROAD, KOZHIKODE-673 001. [PAN: AAACT 8521G] (REVENUE -APPELLANT) (ASSESSEE-RESPONDEN T) REVENUE BY SMT. LATHA V. KUMAR, JR. DR ASSESSEE BY SHRI A.S. NARAYANAMOORTHY, CA DATE OF HEARING 17/07/2014 DATE OF PRONOUNCEMENT 25/07/2014 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 19- 12-2013 PASSED BY THE CIT(A), KOZHIKODE FOR THE ASS ESSMENT YEAR 2008-09. 2. THE ONLY ISSUE RAISED BY THE REVENUE FOR OUR CON SIDERATION IS WITH REGARD TO GRANTING OF ADDITIONAL DEPRECIATION @ 20% ON PLA NT AND MACHINERY. 3. THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION ON PLANT AND MACHINERY DURING THE ASSESSMENT YEAR UNDER CONSIDERATION AS P ER PROVISIONS OF SECTION 32(1)(IIA) OF THE I.T. ACT WHICH WAS DENIED BY THE ASSESSING OFFICER ON THE I.T.A. NO.104 /COCH/2014 2 REASON THAT THE ASSESSEE IS ENGAGED IN PRINTING OF NEWSPAPERS AND THE SAID ACTIVITY OF THE ASSESSEE DOES NOT AMOUNT TO MANUFAC TURING OR PRODUCTION OF A NEW ARTICLE OR THING. 4. ON APPEAL, THE CIT(A) ALLOWED THIS CLAIM OF THE ASSESSEE BY PLACING RELIANCE ON THE CBDT LETTER IN F.NO. 91/60/66-ITJ D ATED 09-05-1967. HE ALSO RELIED ON THE JUDGMENTS OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF AJAY PRINTERY (P) LTD., (1965) 58 ITR 811, HONBLE MADRA S HIGH COURT IN THE CASE OF CIT VS. COMMERCIAL LAWS OF INDIA PVT. LTD. (1977) 1 07 ITR 22 AND HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF ADDL. CIT VS. A. M UKHARJEE & CO. (P) LTD. (1978) 11 ITR 718, AS PER CIRCULAR NO. 347 DATED 07-07-198 2, IT HAS BEEN CLARIFIED THAT ..BOOK PUBLISHING COMPANIES EVEN THOUGH THEY MAY THEMSELVES NOT BE ENGAGED IN THE PRINTING OR BINDING OF BOOKS QUALIFY TO BE TREATED AS INDUSTRIAL COMPANIES FOR THE PURPOSE OF SECTION 104 AS WELL AS FOR THE CONCESSIONAL TAX TREATMENT GIVEN TO INDUSTRIAL COMPANIES. IN VIEW OF THESE CLARIFICATIONS, THE CIT(A) OBSERVED THAT THE ASSESSEE IS AN INDUSTRIAL COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OR PROCESSING OF ANY ARTI CLE OR THING AND THEREFORE, IT IS ENTITLED FOR ADDITIONAL DEPRECIATION @ 20% ON PL ANT AND MACHINERY. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE LD. DR SUBMITTED THAT BY RELYING ON T HE LETTER OF THE CBDT IN I.T.A. NO.104 /COCH/2014 3 F.NO.91/60/66-ITJ DATED 09-05-1967, THE CIT(A) HAS ERRED IN DECIDING THE CASE AS THE CONTENT OF THE LETTER DOES NOT APPLY TO THE ASSESSEES CASE. THE LD. DR SUBMITTED THAT THAT CBDTS LETTER RELIED UPON BY TH E CIT(A) IS ON LOWER RATE OF TAX BENEFIT FOR INDUSTRIAL COMPANIES AND NOT REGARD ING ADDITIONAL DEPRECIATION AVAILABLE FOR ASSESSEES ENGAGED IN THE BUSINESS OF PRINTING AND PUBLISHING. THE LD. DR FURTHER SUBMITTED THAT THE ACTIVITY OF PRINT ING AND PUBLISHING OF NEWSPAPER IS NOT INCLUDED IN THE LIST OF ARTICLE OR THINGS MENTIONED IN THE ELEVENTH SCHEDULE FOR AVAILING ADDITIONAL DEPRECIAT ION U/S. 32(1)(IIA) OF THE ACT. 6. ON THE OTHER HAND, THE LD. AR BY RELYING ON THE FOLLOWING JUDGMENTS OF THE HIGH COURTS SUBMITTED THAT THE ACTIVITY OF PRIN TING OF NEWSPAPERS IS ALSO MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING: 1. CIT VS. DELHI PRESS PATRA PRAKASHAN 355 ITR 1 4(DELHI). 2. CIT VS. AJAY PRINTERY PRIVATE LIMITED 58 ITR 811 (GUJARAT). 3. ORIENT LONGMAN LIMITED VS. CIT 130 ITR 477 (D ELHI). 4. CIT VS. HINDUSTAN TIMES LIMITED 241 ITR 509 ( DELHI). 5. CIT VS. EASTERN BOOK COMPANY 322 ITR 605 (ALL AHABAD). 6. CIT VS. HINDUSTAN NEWS PRINT 30 DTR 58 (KERAL A). THE LD. AR ALSO RELIED ON THE FOLLOWING CBDT CIRCUL ARS IN SUPPORT OF HIS CONTENTION. 1. F.NO. 91/60/66 ITJ DATED 09-05-1967. 2. CIRCULAR NO. 347 DATED 07-07-1982 137 ITR 14 (ST) 3. CIRCULAR NO. 8 OF 2002 DATED 27-08-2002 258 ITR (ST) 4. CIRCULAR NO. 3 OF 2006 DATED 27-02-2006 281 I TR (ST) 222. I.T.A. NO.104 /COCH/2014 4 7. WE FIND THAT THE DELHI HIGH COURT IN THE CASE OF CIT VS. DELHI PRESS PATRA PRAKASHAN LTD. (2013) 355 ITR 14 (DELHI) HAD AN OCC ASION TO CONSIDER SIMILAR SITUATION WITH REGARD TO GRANTING OF DEDUCTION U/S. 80I OF THE ACT WHEREIN IT WAS HELD AS UNDER: THE RAW MATERIALS USED WERE PAPER, INK AND OTHER CONSUMABLES WHICH WERE COMPLETELY DISTINCT FROM THE PRINTED PAPER THA T RESULTED FROM THE ACTIVITIES CARRIED ON IN THE SECOND AND THIRD UNITS . THE PRINTING DID ALTER THE CHARACTER OF THE PAPER USED AND THERE WAS A DISTINCTION BETWEEN THE RAW PAPER AND THE RESULTANT PRODUCT. T HE PURPOSE AND USAGE OF A BLANK PAPER WAS COMPLETELY DIFFERENT FRO M THE USE AND PURPOSE OF A PRINTED MAGAZINE OR PERIODICAL. ONCE THE BLANK PAPER UNDERWENT THE PROCESS OF PRINTING, THE CHARACTER OF BLANK PAPER CHANGED COMPLETELY AND THE CONTENT OF THE PRINTED M ATERIAL BECAME THE IDENTITY OF A PRINTED PAPER. BLANK PAPER AND TH E PRINTED ARTICLE ARE NOT ONE AND THE SAME AND IT CANNOT BE SAID THAT PRI NTING CARRIED OUT IN AN INDUSTRIAL UNDERTAKING WOULD NOT AMOUNT TO MANUF ACTURING. A PRINTED MAGAZINE OR PERIODICAL EVEN IF IT IS NOT BO UND HAS A DEFINITE IDENTITY AND ITS USAGE IS COMPLETELY DIFFERENT FROM THE BLANK PAPER ON WHICH IT IS PRINTED THE EXPRESSION USED IN SECTION 80-1(2)(III) IS MANUFACTURE OR PRODUCE ANY ARTICLE OR THING. THE WORD PRODUCE IS SIMILAR TO THE WORD PRODUCTION AND WHILE EVERY MA NUFACTURE CAN BE CHARACTERIZED AS PRODUCTION, EVERY PRODUCTION NEED NOT AMOUNT TO MANUFACTURE. THERE WAS NO REASON TO EXCLUDE THE PRI NTED PAPER PRODUCED BY THE ASSESSEE IN ITS SECOND AND THIRD UN ITS FROM THE AMBIT OF THE EXPRESSION ARTICLE OR THING. THE LANGUA GE OF SECTION 80- I(2)(III) THUS CLEARLY INDICATES THAT THE SECOND AN D THIRD UNITS DID MANUFACTURE OR PRODUCE AN ARTICLE OR THING. THUS , EVEN IF THE PRINTED MATERIAL, AS PRODUCED BY THE SECOND AND THIRD UNITS , WAS TAKEN AS AN INTERMEDIATE PRODUCT WHICH REQUIRED TO BE FURTHER B OUND FOR MAKING IT MARKETABLE, THE WORD PRODUCE, OCCURRING IN SECTIO N 80-I(2)(III), WOULD INCLUDE IT WITHIN ITS AMBIT. BEING SO, AS HELD BY THE HONBLE DELHI HIGH COURT I N THE CASE OF CIT VS. DELHI PRESS PATRA PRAKASHAN LTD. CITED SUPRA, THE ASSESSE E IS SQUARELY COVERED BY THE ABOVE DECISION AND PRINTING ACTIVITY CAN BE CONSIDE RED AS MANUFACTURING ACTIVITY. ACCORDINGLY, THE GRANTING OF ADDITIONAL DEPRECIATIO N BY THE CIT(A) IS JUSTIFIED. I.T.A. NO.104 /COCH/2014 5 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 25-07-2014. SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 25TH JULY, 2014 GJ COPY TO: 1. M/S. MATHRUBHUMI PRINTING AND PUBLISHING CO. LTD ., MATHRUBHUMI BUILDINGS, K.P. KESAVA MENON ROAD, KOZHIKODE-673 001. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1( 1), KOZHIKODE. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN