DCIT, Tuticorin V. Indian Ocean Garnet Sand Company, Tuticorin

ITA 1271/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5902 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 09-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Depreciation; Additional depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , ! . , ' BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER , AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1271/MDS/2016 /ASSESSMENT YEAR: 2012-13 THE DY. COMMISSIONER OF INCOME- TAX, CIRCLE-I, TUTICORIN. VS. M/S.INDIAN OCEAN GARNET SAND COMPANY, 15,16 & 17 SIDCO INDUSTRIAL ESTATE, PHASE II, TUTICORIN. [PAN: AACFI 9137 N ] ( & /APPELLANT) ( '(& /RESPONDENT) DEPARTMENT BY : MR.ARV.SREENIVASAN, JCIT A SSESSEE BY : MR.B.RAMAKRISHNAN, CA * /DATE OF HEARING : 26.10.2017 * /DATE OF PRONOUNCEMENT : 26.10.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.1271/MDS/2016 IS AN APPEAL FILED BY THE REV ENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-1, MADURAI, IN ITA NO.0072/2015-16 DATED 24.02.2016 FOR THE AY 2012-13 . 2. MR.ARV.SREENIVASAN, JCIT REPRESENTED ON BEHALF O F THE REVENUE AND MR.B. RAMAKRISHNAN, CA, REPRESENTED ON BEHALF OF TH E ASSESSEE. ITA NO.1271/MDS/2016 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.DR THAT THE ONLY ISSU E IN THE REVENUES APPEAL WAS AGAINST THE ACTION OF THE LD.CIT(A) IN D ELETING THE DISALLOWANCE OF THE ADDITIONAL DEPRECIATION ON THE COST OF WIND MILL MADE BY THE AO ON THE GROUND THAT THE ASSESSEE WAS NOT ENGAGED IN THE MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. IT WAS A SUBMI SSION THAT THE ASSESSEE IS PROCESSING GARNET SAND. THE ASSESSEE HAD PURCHA SED A WIND MILL AND HAD CLAIMED ADDITIONAL DEPRECIATION IN RESPECT OF T HE SAME. IT WAS A SUBMISSION THAT AS THE ASSESSEE WAS NOT DOING ANY M ANUFACTURING ACTIVITY AND WAS ONLY CLEANING AND SEGREGATING GARNET THROUG H CENTRIFUGAL WORKS UNDERTAKEN BY THE ASSESSEE, THE AO HAD DENIED THE B ENEFIT OF THE CLAIM OF ADDITIONAL DEPRECIATION. IT WAS A SUBMISSION THAT THE LD.CIT(A) HAD ALLOWED THE ASSESSEES CLAIM OF ADDITIONAL DEPRECIA TION ON THE GROUND THAT THE PROVISIONS OF SEC.2(29BA) DEFINING THE TERM MA NUFACTURE INTRODUCED W.E.F. 01.04.2009 PROVIDED FOR ANY CHANGE IN A NON- LIVING PHYSICAL OBJECT RESULTING IN TRANSFORMATION OF THE OBJECT INTO A NE W AND DISTINCT OBJECT HAVING A DIFFERENT NAME, CHARACTER AND USE. IT WAS A SUBMISSION THAT THE LD.CIT(A) HAD RELIED UPON BY THE DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF SESA GOA LTD. (142 TAXMANN 16) WHEREIN IT HAS BEEN HELD THAT EXTRACTING AND PROCESSING OF IRON ORE AMOUNTS TO PR ODUCTION OF AN ARTICLE OR THING. IT WAS A SUBMISSION THAT THE ASSESSEE WA S ONLY DOING SEPARATION OF GARNET SAND FROM BEACH SAND BY USING VARIOUS PRO CESSES AND THEREFORE THE SAME COULD NOT BE HELD TO BE MANUFACTURE. IT W AS A SUBMISSION THAT THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE REVERSE D. ITA NO.1271/MDS/2016 :- 3 -: 4. IN REPLY, THE LD.AR SUBMITTED THAT THE MANUFACTU RING PROCESS HAS BEEN EXTRACTED IN PAGE NO.3 OF THE ORDER OF THE LD. CIT(A). IT WAS A SUBMISSION THAT THE LD.CIT(A) HAD ALSO GRANTED THE ASSESSEE THE BENEFIT OF ADDITIONAL DEPRECIATION ON THE GROUND THAT THE PROVISIONS OF SEC.32(1)(IIA) HAD BEEN AMENDED W.E.F. 01.04.2013 T O PROVIDE THAT EVEN IF THE ASSESSEE IS ENGAGED IN THE BUSINESS OF GENER ATION OF POWER EXCLUSIVELY, THE ASSESSEE WOULD BE ENTITLED TO THE BENEFIT OF ADDITIONAL DEPRECIATION. THE LD.AR FURTHER PLACED BEFORE US C OPIES OF THE ASSESSMENT ORDER FOR THE AY 2003-04, WHEREIN UNDER SCRUTINY ASSESSMENT, THE ASSESSEE HAS BEEN GRANTED THE BENEF IT OF DEDUCTION U/S.80HHC. IT WAS A SUBMISSION THAT AS PER THE PRO VISIONS OF SEC.80HHC(3)(A), THE ASSESSEE BEING A MANUFACTURER AND EXPORTER, HAS BEEN GRANTED THE BENEFIT OF DEDUCTION U/S.80HHC. I T WAS A SUBMISSION THAT THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE UP HELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE DECISION RELIED UPON BY THE AO IN THE ASSESSMENT ORDER SHOWS THAT THE DECISION RELATED TO ASSESSMENT YEARS BEFORE THE AMENDMENT TO SEC.2(29BA) PROVIDING FOR THE DEFINITION OF TERM MANUFACTURE. ADMITTEDLY, THE PROCESS INVOLVED IN THE CONVERSION OF THE BEACH SAND INTO G ARNET SAND AS HAS BEEN EXTRACTED IN PAGE NO.3 OF THE LD.CIT(A) CLEARLY SHO WS THAT THE PROCESS IS ONE OF MANUFACTURE. THIS VIEW OF OURS ALSO FIND SU PPORT FROM THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SESA GO A LTD. REFERRED TO SUPRA. FURTHER, IT IS NOTICED THAT THE REVENUE HAS GRANTED THE BENEFIT OF ITA NO.1271/MDS/2016 :- 4 -: DEDUCTION U/S.80HHC FOR THE AY 2003-04. THUS, EVEN WITHOUT THE DEFINITION OF THE TERM MANUFACTURE U/S.2(29BA), THE REVENUE HAS BEEN HOLDING THAT THE ASSESSEE IS DOING THE BUSINESS OF MANUFACTURING. NOW, TO HOLD THAT THE ASSESSEE IS NOT DOING MANUFACTURING O NLY FOR THE PURPOSE OF DENYING THE BENEFIT OF ADDITIONAL DEPRECIATION IS N OT PERMISSIBLE. IN THESE CIRCUMSTANCES, WE FIND NO ERROR IN THE FINDINGS AS ARRIVED AT BY THE LD.CIT(A) AND CONSEQUENTLY, IT STANDS UPHELD. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 26, 2017, AT CHENNAI. SD/- SD/- ( . ) ( A. MOHAN ALANKAMONY ) ! /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER /CHENNAI, 0 /DATED: OCTOBER 26, 2017. TLN * '12 32 /COPY TO: 1. & /APPELLANT 4. 4 /CIT 2. '(& /RESPONDENT 5. 2 ' /DR 3. 4 ( ) /CIT(A) 6. /GF