Smt. Manjudevi S.Fatehpuria, Surat V. The Income tax Officer,Ward-1(4), Surat

ITA 2086/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76735 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 24-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Depreciation; Additional depreciation
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M. & SHRI ANIL CHATURVED I, A.M.) I.T. A. NO. 2086/AHD/2011 (ASSESSMENT YEAR: 2008-09) MANJUDEVI S FATEHPURIA. PROP. OF ANURAG FABRICS B- 704, GREEN AVENUE APARTMENT, B/H UNION PARK, GHOD-DOD ROAD, SURAT V/S THE INCOME-TAX OFFICER, WARD 1(4), SURAT. (APPELLANT) (RESPONDENT) PAN: AABPF 1494N APPELLANT BY : SHRI MEHUL SHAH RESPONDENT BY : SHRI P.L. KUREEL, SR. D.R. ( )/ ORDER DATE OF HEARING : 29-05-2014 DATE OF PRONOUNCEMENT : 06-06-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-I, SURAT DATED 20.06.2011 FOR A.Y. 2008-09. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. ITA NO 2086/ AHD/2011 . A.Y. 2008- 09 2 3. ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF ANURAG FABRICS AND KARTIK EMBROIDERY. ASSESSEE ELECTRONICALLY FILED HER RETUR N OF INCOME FOR A.Y. 2008-09 DECLARING TOTAL INCOME AT RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U NDER SECTION 143(3) VIDE ORDER DATED 24.12.2010 AND THE TOTAL INCOME WA S DETERMINED AT RS. 21,43,290/-. AGGRIEVED BY THE ORDER OF A.O, ASSESS EE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 20.06.2011 D ISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFEC TIVE GROUND:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN C ONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING ADDITIONAL DEPRECIATION OF RS. 12,25 ,300/- ON INSTALLATION OF EMBROIDERY MACHINES. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAD PURCHASED NEW MACHINERY AMOUNTING TO RS. 61,26, 500/- AND HAD CLAIMED ADDITIONAL DEPRECIATION AT 20% IN ADDITION TO THE NORMAL DEPRECIATION . A.O WAS OF THE VIEW THAT ASSESSEE WA S ENGAGED IN THE JOB WORK ACTIVITY OF EMBROIDERY WORK ON THE SAREES. ACC ORDING TO THE A.O THE EMBROIDERY JOB WORK DONE ON SAREE WAS MERELY VA LUE ADDITION WORK WHICH ADDS TO THE VALUE OF SAREE AND IT CANNOT BE R EGARDED AS MANUFACTURING OR PRODUCTION. A.O WAS OF THE VIE W THAT THE ESSENTIAL CONDITION TO CLAIM ADDITIONAL DEPRECIATION WAS THAT THERE MUST BE COMPLETE TRANSFORMATION OF THE ITEM AND ENTIRELY NE W AND DIFFERENT ARTICLE MUST EMERGE HAVING DISTINCTIVE NAME, CHARACTER AND USE. IN THE CASE OF THE ASSESSEE EVEN AFTER THE EMBROIDERY WORK ON SARE E THE BASIC FEATURE OF THE ITEM DOES NOT CHANGE AND THEREFORE IT CANNOT BE SAID THAT ASSESSEE WAS ENGAGED IN MANUFACTURING ACTIVITY AND THEREFORE ASSESSEE WAS NOT ITA NO 2086/ AHD/2011 . A.Y. 2008- 09 3 ELIGIBLE FOR ADDITIONAL DEPRECIATION. HE ACCORDINGL Y DISALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION AMOUNTING TO RS. 12,25,3 00/-. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFOR E CIT(A). CIT(A) UPHELD THE ORDER OF A.O BY HOLDING AS UNDER:- 5. THE ARGUMENTS OF THE A.O AS WELL AS SUBMISSIONS OF THE APPELLANT HAS BEEN CONSIDERED. THE ASSESSING OFFICER HAS GIVEN SOUND REASONS IN SUPPOR T OF HIS ACTION OF HOLDING THAT EMBROIDERY WORK IS NOT MANUFACTURING ACTIVITY. AT BEST IT IS VALUE AD DITION ONLY. APPELLANT HAS NOT LED ANY EVIDENCE WH ICH WOULD CALL FOR INTERFERENCE IN A.OS ORDER. IN VIEW OF THE ABOVE, THE ASSESSING OFFICERS ORDER IS CONFIRMED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS N OW IN APPEAL BEFORE US . BEFORE US, AT THE OUTSET, THE LD. A.R SUBMITTE D THAT THE ISSUE IN THE PRESENT CASE IS ALLOWABILITY OF ADDITIONAL DEPRECIA TION OF EMBROIDERY MACHINES. HE SUBMITTED THAT THE ISSUE OF ADDITIONA L DEPRECIATION OF EMBROIDERY MACHINES HAS BEEN SETTLED IN ASSESSEES FAVOUR BY THE VARIOUS DECISIONS OF HONBLE AHMEDABAD TRIBUNAL IN ASSESSEES FAVOUR. HE PLACED ON RECORD THE COPIES OF THE DECISION IN T HE CASE OF ITO VS. ASWANI INDUSTRIES ( ITA NO. 140/AHD/2013 ORDER DATE D 31.05.2013) AND THE DECISION IN THE CASE OF K.K. CREATION VS. ITO ( ITA NO. 1965/AHD/2011 ORDER DATED 30.04.2012). HE THEREFOR E SUBMITTED THAT SINCE THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE VARIOUS DECISIONS, THE ASSESSEES CLAIM OF ADDITIONAL DEPRECIATION BE DECIDED IN ASSESSEES FAVOUR. LD. D.R. ON THE OTHER HAND RELIED ON THE O RDER OF A.O. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT ASSESSEE IS ENGAGED I N THE BUSINESS OF EMBROIDERY WORK AND HAS ACQUIRED MACHINERY ON WHICH IT HAS CLAIMED ITA NO 2086/ AHD/2011 . A.Y. 2008- 09 4 ADDITIONAL DEPRECIATION. A.O DISALLOWED THE CLAIM O F ADDITIONAL DEPRECIATION FOR THE REASON THAT EMBROIDERY WORK DO ES NOT CONSTITUTE MANUFACTURING OR PRODUCTION SO AS TO BE ELIGIBL E OF ADDITIONAL DEPRECIATION. WE FIND THAT IN THE CASE OF ITO VS. ASWANI INDUSTRIES (SUPRA) ISSUE OF ADDITIONAL DEPRECIATION WAS BEFORE THE HONBLE TRIBUNAL AND THE HONBLE CO-ORDINATE BENCH OF THE TRIBUNAL D ECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER:- 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENG AGED IN THE BUSINESS OF EMBROIDERY WORK ON CLOTHES. DURING THE YEAR UNDER CONSIDERATION ASSESSEE CLAIME D 20 % OF ADDITIONAL DEPRECIATION OF RS. 35,45,700/- U/S 32(L)(IIA) OF THE ACT ON THE MACHIN ERY INSTALLED BY HIM CLAIMING HIMSELF INVOLVED IN T HE BUSINESS OF MANUFACTURER OR PRODUCTION OF ARTICLE O R THING. ACCORDING TO A.O. THE ACTIVITIES OF THE ASSESSEE ARE BASICALLY OF JOB WORK OF EMBROIDERY ON FINISHED CLOTHES OBTAINED FROM HIS CLIENTS WHICH ARE NEITHER MANUFACTURED NOR PROCESSED BY HIM THERE FORE ASSESSEE CANNOT BE CONSIDERED AS MANUFACTURER OR PRODUCER. CONSEQUENTLY, THE ADDITIO NAL DEPRECIATION OF RS. 35,45,7007- CLAIMED BY THE ASSESSEE WAS DISALLOWED BY HIM. LD. C1T(A) HAS GIVEN RELIEF TO THE ASSESSEE BY PLACING RELIANCE ON THE DECISION OF ITAT IN ASSESSEE'S OWN CASE FOR A.Y . 2007-08. THE ONLY ISSUE TO BE DECIDED BY US IS WHETHER EMBROIDERY WORK EARNED ON EMBROIDERY MACHIN ES IS MANUFACTURING ACTIVITY OR NOT AND CONSEQUENTLY WHETHER ADDITIONAL DEPRECIATION U/S 32 (L)(IIA) IS ALLOWABLE ON THESE MACHINES OR NOT. SINCE THE ISSUE HAS BEEN DECIDED BY HON'BLE ITAT AH MEDABAD BENCH IN SEVERAL CASES IN FAVOUR OF THE ASSESSEE INCLUDING THE DECISION IN THE CASE OF ASSE SSEE HIMSELF FOR A.Y. 2007-08 WE ARE NOT INCLINED T O INTERFERE WITH THE ORDER PASSED BY HIM AND THE SAME IS HEREBY UPHELD. 7. WE ALSO FIND THAT ON IDENTICAL FACTS IN THE CASE OF K.K. CREATION (SUPRA), THE CO-ORDINATE BENCH OF TRIBUNAL RELYING ON THE DE CISION IN THE CASE OF ITO VS. HARIPRIYA PROCESSORS PVT. LTD. ITA NO. 1569 /AHD/2010 ORDER DATED 08.09.2009 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. BEFORE US, REVENUE HAS NOT BROUGHT ANY CONTRARY BINDING DECISI ON IN ITS SUPPORT IN VIEW OF THE AFORESAID FACTS AND RELYING ON THE DECI SION OF THE CO-ORDINATE BENCH, WE ARE OF THE VIEW THAT ASSESSEE IS ELIGIBLE FOR ADDITIONAL ITA NO 2086/ AHD/2011 . A.Y. 2008- 09 5 DEPRECIATION. WE THEREFORE DIRECT THE A.O TO ALLOW THE CLAIM OF ASSESSEE OF ADDITIONAL DEPRECIATION. THUS THIS GROUND OF ASS ESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN OPEN COURT ON 06-06 - 2014. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,A HMEDABAD