M/s. Ujjal Transport Agency, Asansol V. D.C.I.T., Central Circle-XVI, Kolkata, Kolkata

ITA 1601/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1529 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 31-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K TIBREWAL FC A AMIT AGARWAL
• Keywords: Revision of order; Depreciation; Additional depreciation; Reason to believe; Reassessment proceedings
• Section: 143(3); 153A; 147; 148; 6; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI A.T.VARKEY, JM & SHRI M.BALA GANESH, AM ] I.T.A NO. 1601/KOL/20 14 ASSESSMENT YEAR : 2007-0 8 M/S UJJAL TRANSPORT AGENCY, -VS- DCIT, CENTRAL, CIRCLE-XVI, KOLKATA G.T.ROAD(EAST), MURGASOLE ASANSOL PAN : AAAFU 6732 H] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : A. K. TIBREWAL, FC A AMIT AGARWAL, ADV. FOR THE RESPONDENT : NONE DATE OF HEARING : 11.07.2017 DATE OF PRONOUNCEMENT : 14.07.2014 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL-II , KOLKATA [ IN SHOR T THE LD CITA] IN APPEAL NO. 109/CC-XVI/CIT(A)C-II/13-14 DATED 13.05.2014 AGAINS T THE ORDER PASSED BY THE DCIT, CENTRAL CIRCLE XVI, KOLKATA [ IN SHORT THE LD AO] U NDER SECTION 147/143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 21. 01.2014 FOR THE ASST YEAR 2007-08. 2. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS O F APPEAL, WE FIND THAT THE CENTRAL ISSUE REVOLVES ON THE POINT OF ADMISSIBILITY OF ADD ITIONAL DEPRECIATION ON PLANT & MACHINERY USED IN THE BUSINESS OF MINING OF COAL. T HE BRIEF FACTS OF THE CASE IS THAT THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 WA S FILED BY THE ASSESSEE ON 30.10.2007 DECLARING TOTAL INCOME OF RS. 82,47,737/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT, ON 14.08.2008 ACCEPTING THE RETURNED INCOM E. IN THE SAID RETURN, THE ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT AMOUNTING TO RS. 2 ITA NO.1601/KOL/2014 UJJAL TRANSPORT AGENCY A.YR.07-08 2 1,27,20,257/-. SUBSEQUENT TO THIS, THERE WAS A SE ARCH IN THE PREMISES OF THE ASSESSEE AND PURSUANT TO THE SAME, ASSESSMENT WAS FRAMED U/S 153A/ 143(3) OF THE ACT ON 31.12.2010 WHEREIN, THE ISSUE OF ADMISSIBILITY OF A DDITIONAL DEPRECIATION @ 20% ON NEWLY PURCHASED ASSETS WERE DULY EXAMINED AND ALLOW ED BY THE LD. AO. THIS SEARCH ASSESSMENT FRAMED U/S 153A OF THE ACT WAS SUBJECT M ATTER OF REVISION PROCEEDINGS U/S 263 OF THE ACT BY THE LD. CIT FOR WITHDRAWAL OF GRA NT OF ADDITIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT FOR THE SUM OF RS. 1,27,20,25 7/-. THE SAID ORDER OF LD. CIT U/S 263 OF THE ACT WAS APPEALED BY THE ASSESSEE BEFORE THE TRIBUNAL AND THIS TRIBUNAL IN I.T.(SS). A. NO. 58/KOL/2013 DATED 19.10.2016 HAD Q UASHED THE REVISION ORDER PASSED BY THE LD. CIT U/S 263 OF THE ACT. WHILE THIS IS SO , THE ASSESSMENT FOR THE ASSESSMENT YEAR 2007-08 WAS SOUGHT TO BE REOPENED BY THE LD. A O U/S 147 OF THE ACT. IN THE SAID REASSESSMENT PROCEEDINGS, THE LD. AO DISALLOWED THE ADDITIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT IN THE SUM OF RS. 1,27,20,257 /- ON THE GROUND THAT THE ASSESSEE DURING THE YEAR WAS ENGAGED ONLY IN CONTRACTORS JOB AND NOT INVOLVED IN ANY MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING S O AS TO BE ELIGIBLE FOR ADDITIONAL DEPRECIATION. HE ALSO CONCLUDED THAT THE COAL MININ G ACTIVITY DOES AMOUNT TO MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING A ND FOR THIS PROPOSITION, HE PLACED RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF LUCKY MINERALS PVT. LTD. VS. CIT REPORTED IN (2001) 116 TAXMAN 1 ( SC). THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT(A). AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEALS ) GROSSLY ERRED ON FACTS AND LAW IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER ASSES SING THE INCOME U/S 147/143(1) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AT RS. 2,09,67,690/- AS AGAINST THE INCOME ASSESSED U/S 153A/143(3) OF THE ACT AT RS. 8 4,35,250/-. 2. THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEALS ) GROSSLY ERRED ON FACTS AND IN LAW IN SUSTAINING THE ACTION OF THE ASSESSING OFFICER I N INITIATING PROCEEDINGS U/S 147 OF THE ACT AND SUSTAINING THE ADDITION OF RS. 1,27,20,257/ - BEING DISALLOWANCE U/S 32(1)(IIA) OF THE ACT NOTWITHSTANDING THE FACT THAT THE LD.. COMM ISSIONER OF INCOME-TAX HAS ALREADY INITIATED THE PROCEEDINGS U/S 263 OF THE ACT ON THE SAME ISSUE ON WHICH RE-ASSESSMENT HAS BEEN FRAMED AND ORDER U/S 263 OF THE ACT WAS PA SSED ON 21.03.2013. 3 ITA NO.1601/KOL/2014 UJJAL TRANSPORT AGENCY A.YR.07-08 3 3. THAT BOTH THE LD. COMMISSIONER OF INCOME-TAX (AP PEALS) AND THE ASSESSING OFFICER FAILED TO APPRECIATE THAT IN LAW WHEN PROCEEDINGS U/S 263 OF THE ACT ARE CONCLUDED, THEN AUTOMATICALLY NO PROCEEDINGS U/S 148 OF THE AC T CAN BE INITIATED. 4. THAT BOTH THE LD. COMMISSIONER OF INCOME-TAX (AP PEALS) AND THE ASSESSING OFFICER FAILED TO APPRECIATE THAT EXERCISING OF JURISDICTIO N U/S 147 OF THE ACT IS ERRONEOUS IN LAW ONCE ACTION U/S 263 IS TAKEN BY THE C.I.T. AND IN T HIS VIEW OF THE MATTER THERE CAN BE NO REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T. THE ORDERS OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) AND THE ASSESS ING OFFICER REQUIRES TO BE ANNULLED. 5.I) THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEA LS) GROSSLY ERRED ON FACTS AND IN LAW IN FAILING TO APPRECIATE THAT ONCE THE PROCEEDI NGS U/S 153A OF THE ACT HAVE BEEN INITIATED THEN THERE EXISTS NO ORDER U/S 143(1) AS THE SAME ABATES AND ONLY AN ORDER U/S 153A/143(3) EXISTS. 5.II) THAT THE LD. COMMISSIONER OF INCOME-TAX (APPE ALS) HAS FAILED TO APPRECIATE THAT THE ORDER U/S 143(1) NOT BEING IN EXISTENCE, THERE CAN BE NO NOTICE U/S 147/148 OF THE ACT FOR REOPENING SUCH PROCEEDINGS. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD, INCLUDING THE PAPER BOOK FILED BY THE ASSESSEE COM PRISING OF THE ORDER OF THIS TRIBUNAL IN I.T. (SS).A. NO. 58/KOL/2013 DATED 19.10.2016 FO R ASSESSMENT YEAR 2007-08 (ENCLOSED IN PAGES 1 TO 14 OF THE PAPER BOOK); ORDE R PASSED BY THE LD. CIT U/S 263 OF THE ACT FOR THE ASSESSMENT YEAR 2007-08 (ENCLOSED IN PA GES 15 TO 18 OF THE PAPER BOOK); SUCH ASSESSMENT FRAMED U/S 153A DATED 31.12.2010 FO R ASSESSMENT YEAR 2007-08 (ENCLOSED IN PAGES 19-26 OF THE PAPER BOOK) AND COP Y OF INCOME TAX RETURN OF THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 TOGETHER WITH TAX AUDIT REPORT IN FORM 3CA AND 3CD TOGETHER WITH ITS ANNEXURES, COMPUTATION OF TO TAL INCOME, AUDITED BALANCE SHEET, PROFIT AND LOSS ACCOUNT TOGETHER ITS SCHEDULES THER EON ENCLOSED IN PAGES 27 TO 59 OF THE PAPER BOOK. THE BRIEF FACTS ARE THAT THE ASSESSEE I S A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF EXCAVATION, TRANSPORTATION OF COAL AND OTHER ALLIED ACTIVITIES INCLUDING THE ACTIVITIES CARRIED OUT ON JOB WORK BASIS. WE FIND F ROM THE TRADING ACCOUNT FOR THE YEAR ENDED ON 31.3.2007, THE ASSESSEE HAD EARNED CONTRAC T RECEIPTS TO THE TUNE OF RS. 28,94,62,202/-AND HAD INCURRED OPERATIONAL EXPENDIT URE IN THE FORM OF OPERATIONAL 4 ITA NO.1601/KOL/2014 UJJAL TRANSPORT AGENCY A.YR.07-08 4 CHARGES FOR RAISING OF COAL WITH CORRESPONDING ALLI ED MINING ACTIVITIES TO THE TUNE OF RS. 3,63,18,647/-, CONTRACT AND MACHINERY MAINTENANCE T O THE TUNE OF RS. 14,16,76,618/-, LABOUR CHARGES TO THE TUNE OF RS. 88,78,458/-, ROAD REPAIRING AND MAINTENANCE TO THE TUNE OF RS. 3,01,745/-, CONSTRUCTION OF WOODEN BRIDGE TO THE TUNE OF RS. 2,55,685/-, DEWATERING CHARGES OF RS. 2,31,528/-, SCAFFOLDING & GUARDING TO THE TUNE OF RS. 1,01,268/-. APART FROM THIS, THE ASSESSEE HAS ALSO EARNED INTEREST INCOME OF RS. 12,27,942/- , MISCELLANEOUS RECEIPTS OF RS. 43,30,0 60/- DIVIDEND INCOME OF RS. 15,00,525/-, NET PROFIT FROM SWAGAT R.O. TO THE TUN E OF RS. 1,01,283/-. THE ASSESSEE HAS ALSO INCURRED VARIOUS ADMINISTRATIVE AND SELLING EX PENSES AND FINALLY HAD EARNED NET PROFIT BEFORE DEPRECIATION TO THE TUNE OF RS. 7,03, 03,355/-. WE ALSO FIND FROM THE BALANCE SHEET OF THE ASSESSEE FOR THE YEAR ENDED 31 .3.2007 THAT THE ASSESSEE HAD MADE ADDITIONS TO PLANT & MACHINERY DURING THE YEAR UND ER APPEAL TO THE TUNE OF RS. 10,35,95,370/- COMPRISING OF EIGHTEEN ITEMS AND HAD CLAIMED ADDITIONAL DEPRECIATION IN RESPECT OF TWELVE ITEMS THEREON AMOUNTING TO RS. 1, 27,20,257/-. NOW THE SHORT QUESTION TO BE DECIDED IS AS TO WHETHER THE ASSESSEES ACTIV ITY OF EXCAVATION, TRANSPORTATION OF COAL AND OTHER ALLIED ACTIVITIES INCLUDING CONTRACT JOB WORK WOULD MAKE ASSESSEE ELIGIBLE FOR CLAIMING ADDITIONAL DEPRECIATION U/S 32(1)(IIA ) OF THE ACT OR NOT. IN THIS REGARD, WE FIND THAT THE FOLLOWING DECISIONS WOULD COME TO RES CUE OF THE ASSESSEE:- A) DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. MERCANTILE CONSTRUCTION CO. REPORTED IN (1994) 74 TAXMAN 41 ( CAL) : THE BUSINESS OF THE ASSESSEE WAS RAISING OF COAL I N COLLIERIES WHERE OPEN CAST MINING OF COAL WAS UNDERTAKEN. THE WORK OF THE ASSESSEE CO NSISTED, INTER ALIA, OF CUTTING EARTH, DRILLING AND BLASTING STONES, REMOVING THE OVERHEAD S, REMOVING THE COAL AND TRANSPORTING AND DUMPING AT THE COAL YARD. FOR THIS PURPOSE, THE ASSESSEE EMPLOYED NEW MACHINERY LIKE BULLDOZERS, COMPRESSORS, DRILLS, ETC., AND OTHER HEAVY EARTHMOVING MACHINERY. THE ENTIRE WORK WAS TAKEN UP BY THE ASSE SSEE WITH ITS OWN MACHINERY AND WORKMEN. NONE OF THE MACHINERIES WAS MADE OVER BY T HE ASSESSEE TO THE COLLIERIES. IT WAS PAID FOR THE VARIOUS JOBS AT THE RATES STIPULAT ED IN CONTRACT. FOR THE ASSESSMENT YEAR 1981-82, THE ASSESSEE CLAIMED THAT THE MACHINERY US ED FOR THE SAID MINING JOBS WAS ENTITLED TO INVESTMENT ALLOWANCE UNDER SECTION 32A. THE ITO HELD THAT THE MERE FACT OF BEING ENGAGED IN REMOVING OVER-BURDEN AND EXTRACTIO N OF COAL FOR OTHERS WOULD NOT 5 ITA NO.1601/KOL/2014 UJJAL TRANSPORT AGENCY A.YR.07-08 5 MAKE THE ASSESSEE-FIRM AN INDUSTRIAL UNDERTAKING. H E ALSO OBSERVED THAT IT WAS MERELY LETTING THE MACHINERY ON HIRE AND IT WAS IMMATERIAL HOW SUCH MACHINERY WAS BEING USED. HE, THEREFORE, DISALLOWED THE ASSESSEE'S CLAI M FOR INVESTMENT ALLOWANCE. HELD THE FACT THAT COAL IS AN ARTICLE WHICH IS PROD UCED WOULD BE EVIDENT FROM THE PROVISIONS OF THE ACT ITSELF. IN THE ACT PROVISIONS HAVE BEEN MADE FOR ALLOWANCE OF DEVELOPMENT REBATE OR INVESTMENT ALLOWANCE, THE BAS IC NATURE OF SUCH ALLOWANCE BEING THE SAME. IN SECTION 33(1) (B)(8), RELATING TO DEVE LOPMENT REBATE, THE PLANT AND MACHINERY REFERRED TO IS, - '. . . FOR THE PURPOSES OF BUSINESS OF CONSTRUCTION, MANUFACTURE OR PRODUCTION OF ANYONE OR MORE OF THE ARTICLES OR THINGS SPECIFIED IN THE LIST IN THE FIFTH SCHEDULE. ' IN THE LIST OF THE FI FTH SCHEDULE, ITEM NO. (3) IS : '(3) COAL, LIGNITE, IRON ORE, BAUXITE, MANGANESE OR E, DOLOMITE, LIMESTONE, MAGNESITE AND MINE OIL' ALL THESE ITEMS ARE MINERALS. IT WAS THUS ABSOLUTEL Y CLEAR THAT THE ACT TREATS THE RAISING OF COAL OR OTHER MINERALS AS MANUFACTURE OR PRODUCT ION OF AN ARTICLE OR THING. FURTHER, IN ALUMINIUM CORPN. OF INDIA LTD. V. COAL BOARD AIR 1959 CAL. 222, APPROVED BY THE SUPREME COURT IN EMPIRE INDUSTRIES LTD. V. U NION OF INDIA [1986] 162 ITR 846, IT HAS BEEN HELD THAT RAISING OF COAL, EVEN IF IT D ID NOT AMOUNT TO MANUFACTURE, WAS CERTAINLY PRODUCTION OF AN ARTICLE. IN THE INSTANT CASE, COAL WAS NOT THERE TO START WI TH. WITH HUMAN SKILL AND LABOUR IT HAD TO BE RAISED FROM THE MINES AND MADE FIT FOR CONSUM PTION OR FOR MARKETING. SUCH PROCESS OF RAISING THE COAL AMOUNTED TO PRODUCTION OF THE COAL. THEREFORE, IT WAS TO BE HELD THAT IT WAS NOT CORRECT TO SAY THAT COAL WAS N OT PRODUCED. THE CONTENTION OF THE REVENUE THAT THERE WAS LETTIN G OUT OF THE MACHINERY AND AS SUCH THERE WAS NO INDUSTRIAL UNDERTAKING ENGAGED IN THE PRODUCTION OF ANY ARTICLE OR THING WAS ALSO NOT CORRECT AS THE MACHINERY WAS NOT LET O UT AND ITS POSSESSION ALWAYS REMAINED WITH THE ASSESSEE. IT WORKED THE MACHINERY WITH ITS OWN STAFF AND LABOUR. THE CONDITION PRECEDENT FOR HIRING (WHICH IS A CONTRACT OF BAILMENT) IS THAT POSSESSION MUST BE TRANSFERRED TO HIRER. FURTHER, THE ASSESSEE WAS REQUIRED TO DO BLASTING, REMOVE OVER- BURDENS; EXPOSE COAL, REMOVE SUCH COAL AND STACK TH E SAME. THESE WERE ALL MINING OPERATIONS. THE FACT THAT THE ASSESSEE WAS NOT THE OWNER OF THE MINERAL WAS IMMATERIAL FOR DETERMINING WHETHER THE ASSESSEE WAS AN INDUSTR IAL UNDERTAKING ENGAGED IN THE PRODUCTION OF AN ARTICLE OR THING. EVEN IF THE WORK WAS UNDERTAKEN AS A JOB WORK IT DID NOT IN ANY WAY AFFECT THE NATURE OF THE UNDERTAKIN G OR THE ACTIVITY UNDERTAKEN BY IT VIDE IN THE CASE OF UNITY TOOLS V. CIT [1990]185 ITR 1/5 0 TAXMAN 5 (MAD). IN THAT CASE THE MADRAS HIGH COURT REJECTED THE CONTENTION OF THE RE VENUE THAT THE ASSESSEE WAS NOT ENTITLED TO DEVELOPMENT REBATE SINCE IT PRODUCED GOODS OUT OF RAW MATERIALS SUPPLIED BY THE CUSTOMER. MOREOVER, EVEN IN A CASE WHERE COMMERCIAL ASSET WAS EXPLOITED BY LETTING OUT THE SAME, THE INVESTMENT ALLOWANCE COULD NOT BE DENIED THEREF ORE, THE REQUIREMENTS OF SECTION 6 ITA NO.1601/KOL/2014 UJJAL TRANSPORT AGENCY A.YR.07-08 6 32A(2)(B)(II) WERE FULLY SATISFIED IN THE INSTANT C ASE AND THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION ON ACCOUNT OF INVESTMENT ALLOWANCE . B) DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. G.S. ATWAL & CO. REPORTED IN (2003) 128 TAXMAN 520 (CAL) : 8. WE FIRST DEAL WITH THE ASPECT OF PRODUCTION. IN SUB-SECTION (2) OF SECTION 32A, THE MACHINERY HAS TO BE INSTALLED IN AN INDUSTRIAL UNDE RTAKING 'FOR THE PURPOSES OF BUSINESS OF CONSTRUCTION OR MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING .. .' SUCH ARTICLE OR THING CANNOT BE IN THE ELEVENTH SCHEDULE BUT IT IS NOBODY'S CASE THAT COAL IS IN THE ELEVENTH SCHEDULE. 9. MR. AGARWALLA GAVE US SEVERAL CASES. AMONGST THO SE THE CASE OF CIT V. VENKATESWARA HATCHERIES (P.) LTD. [1999] 237 ITR 1741 (SC), CONT AINS DICTA TO THE EFFECT THAT PRODUCTION OF HICKS THROUGH THE ASSESSEE'S SPECIALI SED MACHINERY, WHICH AIDS SUCH FORMATION IS NOT, WITHIN THE MEANING OF THE ACT, PR ODUCTION OF AN ARTICLE OR THING. THE SUPREME COURT LAID EMPHASIS ON ITS VIEW THAT CHICKS WERE NOT ARTICLES OR THINGS. ALSO, IT SAID THAT THE ASSESSEE DOES NOT CAUSE THE FORMATION OF CHICKS, WHICH ARE FORMED BY NATURAL BIOLOGICAL PROCESSES. THE ASSESSEE'S WORK I S MERELY AIDING SUCH FORMATION. MR. AGARWALLA ALSO GAVE US THE CASE \ OF LUCKY MINMAT ( P.) LTD. V. CIT [2000] 245 ITR 830, WHERE IN RELATION TO RELIEF UNDER SECTION 80HH, THE SUPREME COURT OPINED AS FOLLOWS: ' ... THE CONVERSION INTO LIME AND LIME DUST OR CON CRETE BY STONE CRUSHERS COULD LEGITIMATELY BE CONSIDERED TO BE A MANUFACTURING PR OCESS WHILE THE MERE MINING OF LIMESTONE AND MARBLE AND CUTTING THE SAME BEFORE IT WAS SOLD IN THE MARKET COULD NOT BE SO CONSIDERED.' (P. 831) 10. THUS, MR. AGARWALLA ARGUED THAT IF THE MINING O F LIMESTONE IS NOT A MANUFACTURING PROCESS, THE WINNING OF COAL CANNOT ALSO BE EITHER MANUFACTURE OR PRODUCTION. 11. HE FURTHER ARGUED ON THE BASIS OF THE SUPREME C OURT DECISION IN THE CASE OF CIT V. N. C.BUDHARAJA & CO. [1993] 204 ITR 4122 , THAT IF A CONSTRUCTION OF A DAM IS MADE, IT DOES NOT AMOUNT TO PRODUCTION OR MANUFACTURE OF AN ARTICLE, AS THE SUPREME COURT HAS CLEARLY OPINED. 12. WE TAKE NOTE THAT IN N.C. BUDHARAJA & CO.'S CAS E (SUPRA), THE SUPREME COURT CLEARLY STATED AT PAGE 423 THAT NOT ALL PRODUCTION IS MANUFACTURE, BUT ALL MANUFACTURE IS PRODUCTION. MR. BAJORIA APPEARING FOR THE ASSESSEE RELIED ON A DECISION OF OUR DIVISION BENCH GIVEN IN THE CASE OF CIT V. MERCANTILE CONSTR UCTION CO. [1994] 74 TAXMAN 41. 13. FOLLOWING AN OLD AND LONG STANDING DECISION GIV EN BY CHAKRAVARTTI, C.J., IN 1959, WHICH WAS LATER APPROVED BY THE SUPREME COURT, THE DIVISION BENCH OPINED THAT THE WINNING OF COAL S NO DOUBT PRODUCTION. AT PARAGRAPH 12 OF THE JUDGMENT IT SAID THAT AFTER WINNING COAL SOMETHING THAT WAS NOT THERE COM ES UP. AND IT IS, THEREFORE, A PRODUCTION OF COAL. THE DIVISION BENCH FOLLOWED ITS OWN DECISION IN THE LATER CASE OF KHALSA BROS. V. CIT [1996] 217 ITR 185. MR. BAJORIA ALSO RELIED ON THE INTERESTING CASE OF CIT V. SHAAN FINANCE (P.) LTD. [1998] 231 ITR 30 81 WHERE THE SUPREME COURT 7 ITA NO.1601/KOL/2014 UJJAL TRANSPORT AGENCY A.YR.07-08 7 OPINED THAT A FINANCIER OWNING MACHINERY MIGHT STIL L BE ENTITLED TO INVESTMENT ALLOWANCE EVEN IF THE MACHINERY IS ACTUALLY USED BY ITS LESSEE FOR THE PURPOSE OF PRODUCTION. GOING ON THE LANGUAGE OF SUB-SECTIONS ( 1) AND (2) OF THE SAID SECTION, THE SUPREME COURT FOUND, ON AN ACCURATE ASSESSMENT OF T HE LANGUAGE (WE SAY THIS WITH THE GREATEST RESPECT), THAT THE LANGUAGE DOES NOT DISEN TITLE THE FINANCIER FROM INVESTMENT ALLOWANCE IN THE ABOVE CIRCUMSTANCES. 14. EVEN CONSIDERING THE LATER SUPREME COURT DECISI ON GIVEN BY MR. AGARWALLA, WE ARE STILL OF THE OPINION THAT THE VIEW TAKEN BY OUR DIV ISION BENCH AS TO WINNING OF COAL BEING PRODUCTION IS, WITH DUE RESPECT, PERFECTLY SO UND AND CONSISTENT WITH COMMON SENSE. WE HAVE ABSOLUTELY NO REASON TO DIFFER FROM THE REASONING GIVEN IN MERCANTILE CONSTRUCTION CO. 'S CASE (SUPRA) AND WE RESPECTFULL Y ADOPT THE SAME. 15. THE POINT THAT THE ASSESSEE IS STILL NOT AN IND USTRIAL UNDERTAKING EVEN THOUGH IT MIGHT BE ENGAGED IN PRODUCTION OF COAL IS, IN OUR OPINION , ALSO TO BE DECIDED AGAINST THE REVENUE. UNDER THE DEFINITION OF AN INDUSTRIAL UNDE RTAKING GIVEN UNDER SECTION 33B OF THE ACT, EXPLANATION, MINING ACTIVITY WOULD BRING T HE ASSESSEE WITHIN THE DEFINITION OF AN INDUSTRIAL UNDERTAKING. BUT WE NEED NOT IMPORT T HE DEFINITION OF ANOTHER SECTION TO THE PRESENT ONE, ALTHOUGH ORDINARILY THE DEFINITION GIVEN IN ONE SECTION IN AN ACT CAN BE USED FOR THE PURPOSES OF ANOTHER SECTION UNLESS THE CONTEXT INDICATES OTHERWISE. 16. SO FAR AS THE ASSESSEE IS CONCERNED, AN UNDERTA KING IT CERTAINLY IS. WE HAVE FOUND NO FACTS FROM WHICH WE CAN OPINE THAT THE ASSESSEE IS NOT AN INDUSTRIAL UNDERTAKING. ORDINARILY SPEAKING IF A MANUFACTURING ACTIVITY OR AN ARTICLE PRODUCING ACTIVITY IS CARRIED ON, AN UNDERTAKING CARRYING ON SUCH ACTIVIT Y IS TO BE CLASSED AS AN INDUSTRIAL ONE. IT MIGHT BE SMALL SCALE OR LARGE SCALE, THAT D OES NOT MATTER MUCH. EVEN IF AN UNDERTAKING IS MANUFACTURING OR PRODUCING ARTICLES, BUT IS STILL NOT TO BE CLASSED AS AN INDUSTRIAL ONE FOR THIS, CLEAR INDICATIONS HAVE TO BE GIVEN AS TO WHY THIS DIFFERENCE SHOULD BE MADE IN THE CASE OF THE UNDERTAKING IN QU ESTION, SO THAT IT STANDS OUT FROM THE GENERAL CATEGORY. WE WERE NOT SHOWN ANY SUCH PARTIC ULAR DIFFERENCE EXCEPTING THAT THE ASSESSEE WAS ALSO SAID TO CARRY ON TRANSPORT BUSINE SS. 17. IT SUFFICES IN THIS REGARD TO MENTION THAT ON T HE PRINCIPLE OF SHAAN FINANCE (P.) LTD. 'S CASE (SUPRA), IF THE ASSESSEE OWNS THE MACHINERY FOR WHICH INVESTMENT ALLOWANCE IS CLAIMED, AND SUCH MACHINERY IS USED FOR PRODUCTION THEN THE SECTION APPLIES; IT DOES NOT MATTER IF THE USE FOR PRODUCTION IS MADE BY THE LES SEE OR ONLY IN ONE INDUSTRIAL PART OF THE ASSESSEE'S BUSINESS UNDERTAKING. ACCORDINGLY, T HE TRANSPORT BUSINESS OF THE ASSESSEE DOES NOT TILT THE QUESTION ONE WAY OR THE OTHER. 18. AS SUCH THE QUESTIONS ARE ANSWERED ALL IN FAVOU R OF THE ASSESSEE, THE ACADEMIC QUESTIONS TAKING THE SAME FATE AS THE SUBSTANTIAL Q UESTION NO. 1; THE FIRST QUESTION IS ANSWERED IN THE AFFIRMATIVE AND SO ARE THE SECOND A ND THE THIRD ONES. WE FIND THAT THIS DECISION OF HONBLE HIGH COURT HA D DULY CONSIDERED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LUCKY MINERALS PVT. LT D. REPORTED IN 116 TAXMAN 1/ 245 ITR 830 8 ITA NO.1601/KOL/2014 UJJAL TRANSPORT AGENCY A.YR.07-08 8 (RELIED BY THE LD. AO) AND HAD DISTINGUISHED THE SA ME ON FACTS AND HELD THAT WINNING/ RAISING OF COAL, EXCAVATION OF COAL WOULD AMOUNT TO PRODUCTION OF ARTICLE OR THING. C) WE ALSO FIND FROM THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF JCIT VS. G.S. ATWAL & CO. (ENGG) PVT. LTD. FOR ASSESSMENT YE AR 2009-10 IN I.T.A. NO. 1516/KOL/2012 DATED 26.04.2017 IN THE CONTEXT OF GRANT OF ADDITIONAL DEPRECIATION HAD HELD AS UNDER: 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO TH E DISALLOWANCE OF ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE. THE A.O. DIS ALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION ON THE GROUND THAT THE ASSESSEE IS NOT ENGAGED IN ANY MANUFACTURING ACTIVITIES. THE ACTION OF AO WAS ALSO SUBSEQUENTLY CONFIRMED BY LD. CIT(A). FROM THE ORDER OF AO WE FIND THAT HE HAS GIVEN THE FINDING T HAT THE ISSUE OF ADDITIONAL DEPRECIATION WAS DISCUSSED ELABORATELY BUT NO SATIS FACTORILY REPLY WAS FILED. HOWEVER WE FIND THAT ALL THE DETAILS OF NEW PLANT & MACHINE RIES WERE DULY FILED BEFORE THE LOWER AUTHORITIES WHICH ARE PLACED ON PAGES 54 TO 60 OF T HE PB ALONG WITH THE REPORT IN FORM 3AA FOR ADDITIONAL DEPRECIATION. THUS THE AO HAS DI SALLOWED ON THE GROUND THAT THE ASSESSEE IS NOT ENGAGED IN THE MANUFACTURE ACTIVITI ES. IN THIS REGARD AT THE OUTSET, WE FIND THAT INSTANT ISSUE IS ALREADY COVERED BY THE D ECISION OF JURISDICTIONAL HIGH COURT IN THE SISTER CONCERN OF ASSESSEE IN THE CASE OF CIT V S. G.S. ATWAL & CO. REPORTED 254 ITR 592 (CAL). THE RELEVANT OPERATIVE PORTION OF THE JU DGMENT IS REPRODUCED BELOW:- ' 13. FOLLOWING AN OLD AND LONG STANDING DECISION G IVEN BY CHAKRAVARTI C.J. IN 1959, WHICH WAS LATER APPROVE BY THE SUPREME COURT, THE DIVISION BENCH OPINED THAT THE WINNING OF COAL IS NOT DOUBT PRODUC TION. AT PARAGRAPH 12 OF THE JUDGMENT IT SAID THAT AFTER WINNING COAL SOMETHING THAT WAS NOT THEE COMES UP, AND IT IS, THEREFORE, A PRODUCTION OF COAL. THE DIV ISION BENCH ALLOWED ITS OWN DECISION IN THE LATER CASE OF KHALSA BROS VS. CIT [ 1996J 217 ITR 185. MR. BAJORIA ALSO RELIED ON THE INTERESTING CASE OF CIT V. SHANN FINANCE (P) LTD [1998] ITA NO. 1146, 1138/KOL/2012-C-AM INTEGRATED COAL MINING LTD 23 ~ 231 ITR 308 WHERE THE SUPREME COURT OPINED THAT A F INANCIER OWNING MACHINERY MIGHT STILL BE ENTITLED TO INVESTMENT ALL OWANCE EVEN IF THE MACHINERY IS ACTUALLY USED BY ITS LESSEE FOR THE PURPOSE OF P RODUCTION. ' IT IS ALSO IMPORTANT TO NOTE THAT SIMILAR ISSUE IS ALSO COVERED BY THE ORDER OF ITAT IN THE CASE OF INTEGRATED COAL MINING LIMITED VS DCIT IN I TA 1146/KOL/2012 & 1138/KO1/20L2 VIDE ORDER DATED 30-11-2015. RESPECTF ULLY FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF G. S.ATWALA & CO. (SUPRA) WE REVERSE THE ORDER OF LD. CIT(A) IN THIS REGARD AND DIRECT T HE AO TO DELETE THE ADDITION. THIS GROUND OF ASSESSEE'S CO IS ALLOWED. ` 20. IN THE RESULT, ASSESSEE'S CO IS PARTLY ALLOWED . 9 ITA NO.1601/KOL/2014 UJJAL TRANSPORT AGENCY A.YR.07-08 9 4. RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS, WE HOLD THAT THE ACTIVITY CARRIED ON BY THE ASSESSEE WOULD AUTOMATICALLY FALL UNDER THE AMBIT O F PRODUCTION OF ANY ARTICLE OR THING AND THEREBY THE ASSESSEE IS INDEED ELIGIBLE FOR CLAIMIN G ADDITIONAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT IN THE SUM OF RS. 1,27,20,257- FOR THE ASST YEA R 2007-08. 5. SINCE, THE ISSUE IS ADDRESSED ON MERITS, THE OTH ER GROUNDS RAISED BY THE ASSESSEE ON THE VALIDITY OF REOPENING IS NOT ADDRESSED HEREIN. ACCO RDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 14.07.2017 SD/- SD/- [A.T.VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14.07.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. M/S UJJAL TRANSPORT AGENCY, ASANSOL 2. DCIT, CENTRAL CIRCLE-XVI, KOLKATA 3..C.I.T.(A)-4, KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S