Accelerated freeze Drying Co. Ltd, Cherthala V. DCIT, Alappuzha

ITA 31/COCH/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4964 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-10-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 29-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Keywords: Depreciation; Additional depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJAR I, AM & SHRI GEORGE GEORGE K, JM ITA NO. 31 /COCH/201 8 : ASST.YEAR 201 2 - 201 3 M/S. ACCELERATED FREEZE DRYING COMPANY LIMITED C/O.M/S.RANGAMANI & CO CHARTERED ACCOUNTANTS CARD BANK BUILDING IIND FLOOR, V.C.S.B.ROAD ALLEPPEY 688 001. PAN : AABCA9632J . VS. THE ASST.COMMISSIONER OF INCOME - TAX, ALAPPUZHA . (APPELLANT) (RESPONDENT) APPELLANT BY : SRI.R.SREENIVASAN RESPONDENT BY : SMT.A.S.BINDHU, SR.DR DATE OF HEARING : 23.10.2018 DATE OF PRONOUNCEMENT : 24 .10.2018 O R D E R PER GEORGE GEORGE K., JM THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST CIT(A)S ORDER DATED 27.12.2017. THE RELEVANT ASSESSMENT YEAR IS 201 2 - 201 3 . 2. THE GROUNDS RAISED READ AS FOLLOWS: - 1. THE OFFICERS BELOW WERE NOT JUSTIFIED IN NARROWLY INTERPRETING THE PHRASE MANUFACTURE OR PRODUCTION AND THEREBY DENYING THE CLAIM OF ADDITIONAL DEPRECIATION. 2. THE OFFICERS BELOW SHOULD HAVE FOLLOWED THE RATIO OF THE DECISION OF KERALA HIGH COURT IN MARWELL SEA FOODS RENDERED UNDER THE INCOME - TAX ACT, IN PREFERENCE TO THE DECISION OF APEX COURT IN STERLING FOODS, RENDERED UNDER THE SALES - TAX ACT. ITA NO. 31 / COCH /201 8 . M/S. ACCELERATED FREEZE DRYING CO.LTD . 2 3. AS LONG AS MANUFACTURES OR PRODUCTION HAS NOT BEEN DEFINED UNDER THE INCOME - TAX ACT, THE ACTIVITIES OF THE APPELLANT, BEING ONE, WHICH INVOLVES A SERIES OF PROCESSING AND WHICH BRINGS FORTH A DIFFERENT END PRODUCT SHOULD HAVE BEEN LIBERALLY CONSTRUED. 4. THE APPEL LANT HAD BEEN CONSISTENTLY ALLOWED DEDUCTIO N U/S. 80 HH & 80 I IN THE EARLIER YEARS WHEN THEY WERE IN FORCE. WHEREIN THE PRIMARY CONDITION OF MANUFACTURE OR PRODUCTION WAS THERE. 5. ADDITIONAL DEPRECIATION BEING AN INCENTIVE GRANTED BY THE LEGISLATURE SHOU LD HAVE BEEN LIBERALLY CONSTRUED. 3 . BRIEF FACTS OF THE CASE ARE AS FOLLOWS: - THE ASSESSEE IS A COMPANY ENGAGED IN EXPORT OF SEAFOOD. FOR THE ASSESSMENT YEAR 2012 - 2013, RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME OF RS.1,37,56,260 . THE ASSESSMENT U/S 143(3) OF THE I.T.ACT WAS COMPLETED VIDE ORDER DATED 24.12.2014, WHEREIN THE ADDITIONAL DEPRECIATION CLAIMED AMOUNTING TO RS.17,90,322 WAS DISALLOWED. THE REASONING FOR THE DISALLOWANCE OF ADDITIONAL DEPRECIATION WAS THAT THE ASSESSEE WAS NOT ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ARTICLE OF THING. 4. AGGRIEVED BY THE DISALLOWANCE OF ADDITIONAL DEPRECIATION IN THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) FOLLOWING THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT V. RELISH FOODS [(1999) 237 ITR 59 (SC)] , DISMISSED THE APPEAL OF THE ASSESSEE. ITA NO. 31 / COCH /201 8 . M/S. ACCELERATED FREEZE DRYING CO.LTD . 3 5. THE ASSESSEE BEING AGGRIEVED BY THE O RDER OF THE CIT(A), HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. THE LEARNED AR RELIED ON THE JUDGMENT S OF THE HONBLE KERALA HIGH COURT IN THE CASE S OF CIT V. MARWELL SEA F OODS [(1987) 166 ITR 624 (KER.)] AND CIT V. BHARAATH SEA FOODS [(1999) 237 ITR 46 (KER.)] . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLITARY ISSUE FOR OUR CONSIDERATION IS WHETHER THE ASSESSEE IS ENTITLED TO ADDITIONAL DEPRECIATION ON NEW PLANT AND MACHINERY. AS PER THE PROVISIONS OF SECTION 32( 1)(IIA) OF THE I.T.ACT, ADDITIONAL DEPRECIATION CAN BE GRANTED ONLY TO AN ASSESSEE, WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THE LEARNED AR HAD RELIED ON THE JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF MARWELL SEA FOODS (SUPRA) FOR CLAIMING THE BENEFIT OF DEDUCTION OF ADDITIONAL DEPRECIATION. THE HONBLE HIGH COURT IN THE SAID CASE, WHILE CONSIDERING THE ALLOWABILIT Y OF DEDUCTION U/S 80HH OF THE I.T.ACT , AFTER TAKING NOTE OF VARIOUS STEPS UNDERTAKEN BY THE ASSESSEE IN THAT CASE, HELD THAT THE ACTIVITIES ENGAGED ARE IN THE NATURE OF PROCESS AND THE ASSESSEE IN THAT CASE WAS ENTITLED TO DEDUCTION U/S 80HH OF THE I.T.AC T. THE HONBE APEX COURT IN THE CASE OF RELISH FOODS (SUPRA) , AFTER CONSIDERING THE JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF MARWELL SEA FOODS (SUPRA) , HELD THAT PEELING , CLEANING AND FREEZING OF SEA FOOD , MAKING IT FIT FOR HUMAN CONSUMPTIO N WOULD NOT AMOUNT TO ITA NO. 31 / COCH /201 8 . M/S. ACCELERATED FREEZE DRYING CO.LTD . 4 MANUFACTURE OR PRODUCTION. THE JUDGMENT OF THE HONBLE APEX COURT WAS FOLLOWED BY THE FOLLOWING JUDICIAL PRONOUNCEMENTS, WHICH HAD CATEGORICALLY HELD THAT PROCESSING OF RAW SHRIMPS, FISH ETC. WOULD NOT TANTAMOUNT TO MANUFACTURE OR PRO DUCTION: - ( I ) CIT V. POYILAKADA FISHERIES P. LTD. [(1999) 240 ITR 445 (KER.)] ( II ) CIT V. KALA CARTOONS PVT. LTD. [(2001) 252 ITR 658 (SC)] ( III ) CIT V. POYILAKADA FISHERIES P. LTD. [(2001) 252 ITR 661 (KER.)] 7. IN THE INSTANT CASE, THE ASSESSEE HAS NOT BROUGHT ON RECORD, THE PROCESS UNDERTAKEN BY IT IS SIMILAR TO THE PROCESS UNDERTAKEN BY THE ASSESSEE IN CASE OF MARWELL SEA FOODS CASE CONSIDERED BY THE HONBLE KERALA HIGH COURT. THEREFORE. I N VIEW OF THE ABOVE MENTIONED JUDICIAL PRONOUNCEMENTS, WE ARE OF THE VIEW THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION OF ADDITIONAL DEPRECIATION. IT IS ORDERED ACCORDINGLY. 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF OCTOBER, 2018 . SD/ - SD/ - ( CHANDRA POOJARI ) ( GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN ; DATED : 24 TH OCTOBER, 2018 . DEVDAS* ITA NO. 31 / COCH /201 8 . M/S. ACCELERATED FREEZE DRYING CO.LTD . 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, COCHIN 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), KOTTAYAM . 4. THE PR.CIT, KOTTAYAM . 5. DR, ITAT, COCHIN 6 . GUARD FILE.