The DCIT, Circle-2, Surat V. M/s. M.S. Corporation, Surat

ITA 1152/AHD/2010

• Counselvise Citation: 115220514 RSA 2010
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 15-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MATHIVANAN
• Assessee Lawyers: K N BHATT
• Keywords: Depreciation; Additional depreciation

Judgement Text

, , , , B , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ # ## #. .. .% $% % $% % $% % $%, , , , &' ( &' ( &' ( &' ( & ' & ' & ' & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER) ITA.NO.1152/AHD/2010 [ASSTT. YEAR : 2006-2007] DCIT, CIR.2 SURAT. /VS. M/S. M.S. CORPORATION SHED NO.4, PLOT NO.316 ROAD NO.3, GIDC SACHIN, SURAT. PAN : AALFM 9494 M ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ( . / &/ REVENUE BY : SHRI M. MATHIVANAN 12 . / &/ ASSESSEE BY : SHRI K.N. BHATT 3 . 24'/ DATE OF HEARING : 8 TH AUGUST, 2012 5%6 . 24'/ DATE OF PRONOUNCEMENT : 07-09-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-II, SURAT FOR THE ASSESSMENT YEAR 2006-2007. 2. THE ONLY GROUND RAISED IN THIS APPEAL OF THE REV ENUE IS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE B Y THE AO OF RS.16,26,407/- ON ACCOUNT OF DISALLOWANCE OF CLAIM OF ADDITIONAL DEPRECIATION ON EMBROIDERY MACHINES. 3. THE LEARNED DR SUBMITTED THAT THE ASSESSEE IS DO ING ONLY JOB WORK AND JOB WORK COULD NOT BE TAKEN AS A MANUFACTURING OF A RTICLE OR THING, AND THEREFORE THE ASSESSEE WAS NOT ENTITLED TO ADDITION AL DEPRECIATION CLAIMED BY IT. ITA.NO.1152/AHD/2010 -2- HE SUBMITTED THAT THE ASSESSEE IS DOING EMBROIDERY WORK ON CLOTH, AND THEREFORE, NO NEW ARTICLE OR THING IS MADE OR MANUF ACTURED BY THE ASSESSEE AND THE CLAIM OF THE ADDITIONAL DEPRECIATION ON THE MAC HINERY FOR EMBROIDERY WAS NOT ALLOWABLE TO THE ASSESSEE. HE RELIED ON THE DE CISION IN STATE OF WEST BENGAL VS WARREN TEA LTD., 266 ITRR 226 (CAL) AND FRIENDS CASTING P. LTD. VS COMMISSIONER OF INCOME-TAX, 340 ITR 305 (P&H) IN SUPPORT OF HIS ARGUMENTS. 4. THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED THAT THERE IS NO CONDITIO N FOR ALLOWANCE OF ADDITIONAL DEPRECIATION THAT THE ASSESSEE SHOULD HAVE OWN PR ODUCTION OF ARTICLE OR THING. HE SUBMITTED THAT THE EMBROIDERY WORK DONE BY THE A SSESSEE ON PLAIN CLOTH IS VERY MUCH A VALUE ADDITION ON PLAIN CLOTH. HE SUBM ITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF ITAT, AHMEDABAD BENCH IN MADHU INDUSTRIES LTD. VS. ITO, 132 TTJ 233 (AHD). 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSEE WAS IN T HE JOB WORK OF EMBROIDERY ON PLAIN CLOTH. THE EMBROIDERY WORK DONE ON THE PL AIN CLOTH IS DEFINITELY A VALUE ADDITION OF THE CLOTH. WE FIND SUBSTANCE IN THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THERE IS NO SUCH COND ITION FOR ALLOWANCE OF ADDITIONAL DEPRECIATION THAT IT SHOULD BE OWN PRO DUCTION OF THE ASSESSEE. THE DECISION OF THE ITAT, AHMEDABAD IN THE CASE OF MADH U INDUSTRIES LTD. (SUPRA) SUPPORTS THE CASE OF THE ASSESSEE. IN THIS CASE TH E ASSESSEE HAS ENHANCED ITS CAPACITY BY INSTALLING A NUMBER OF SEWING MACHINES DURING THE YEAR UNDER CONSIDERATION WHICH RESULTED IN INCREASE IN THE INS TALLED CAPACITY, AND ACCORDINGLY, THE TRIBUNAL HAS ALLOWED THE ADDITIONA L DEPRECIATION CLAIMED BY THE ASSESSEE. THE CIT(A) IN THE IMPUGNED ORDER HAS RECORDED THAT THE ASSESSEE CUT THE PIECES, GOT THEM EMBROIDERED, PACKED THEM I NTO BOXES AND EXPORTED THEM. THIS MEANS THAT THE END PRODUCT WAS COMPLETE LY DIFFERENT FROM THE BALE OF CLOTH OR FINISHED FABRIC PRIOR TO BEING EMBROIDE RED. THE CIT(A) HAS FURTHER ITA.NO.1152/AHD/2010 -3- RECORDED THAT MARKET RECOGNITION OF THE EMBROIDERED FINISHED PRODUCT NECESSARILY HAD TO BE DIFFERENT FROM THE FINISHED F ABRIC PRIOR TO BEING EMBROIDERED. TO SUCH EXTENT, SUCH ACT OF EMBROIDE RY COULD ALSO BE TREATED AS MANUFACTURE. WE BEING IN AGREEMENT WITH THE DECISI ON OF THE LEARNED CIT(A), CONFIRM HIS ORDER ON THIS ISSUE AND THE GROUND OF T HE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( #.% $% /A.MOHAN ALANKAMONY) &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD