ACIT, Tiruppur V. M/s. Gowtham Processors, Tiruppur

ITA 559/CHNY/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4512 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 26-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS P N KAMALA DEVI
• Assessee Lawyers: T BANUSEKHAR
• Keywords: Depreciation; Additional depreciation
• Section: 32(1)(iia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBE AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NO.559/MDS/2010 ASSESSMENT YEAR : 2006-07 THE ASST. COMMISSIONER OF INCOME- TAX, CIRCLE-I, SIXTY FEET ROAD, TIRUPUR-641602. (APPELLANT) V. M/S. GOWTHAM PROCESSORS, G.S. NO. 272, KUPPANDAMPALAYAM, TIRUPUR-641 605. PAN : AACFG0523E (RESPONDENT) APPELLANT BY : MRS. P.N. KAMALA DEVI RESPONDENT BY : T. BANUSEKHAR O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A)-II, COIMBATORE IN APPEAL NO. 318C/08-09 DATE D 29-01-2010 FOR THE ASSESSMENT YEAR 2006-07. 2. MRS. P.N. KAMALA DEVI, DEPARETMENTAL REPRESENTAT IVE REPRESENTED ON BEHALF OF THE REVENUE AND SHRI T. BANUSEKAR, CHARTE RED ACCOUNTANT REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LEARNED DEPARTMENTAL RE PRESENTATIVE THAT THE ASSESSEE WAS IN THE BUSINESS OF PURCHASING YARN (GR EY FABRIC) AND DOING THE BUSINESS OF BLEACHING, DYEING AND COMPACTING. IT WAS THE SUBMISSION THAT THE END PRODUCT WAS NOT TRANSFORMED INTO ANY OTHER DIFF ERENT OR DISTINCT COMMERCIAL ITA NO.559/MDS/2010 2 ARTICLE OR PRODUCT AND CONSEQUENTLY THE ASSESSING O FFICER HAD DENIED THE ASSESSEE THE BENEFIT OF ADDITIONAL DEPRECIATION CLA IMED U/S 32(1)(IIA) OF THE INCOME-TAX ACT, 1961. IT WAS THE SUBMISSION THAT T HE LEARNED CIT(A) HAD DIRECTED THE ASSESSING OFFICER TO GRANT THE ASSESSE E THE BENEFIT OF ADDITIONAL DEPRECIATION BY HOLDING THAT THE PROCESS CARRIED ON BY THE ASSESSEE RESULTED IN THE PRODUCTION OF GOODS/ARTICLES. SHE RELIED UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. VEENA TEXTI LES PVT. LTD. REPORTED IN 155 ITR794 WHEREIN IT HAD BEEN HELD THAT THE ASSESSEE W AS NOT ENTITLED TO THE HIGHER RATE OF DEVELOPMENT REBATE AS THE ASSESSEE WAS PURC HASING TEXTILES WHICH WAS ALREADY MANUFACTURED BY ANOTHER AND DYEING OR PRINT ING OR OTHERWISE PROCESSING IT DID NOT BRING IT WITHIN THE EXPRESSION MANUFACT URE OR PRODUCTION OF TEXTILES. THE LEARNED D.R. FURTHER RELIED UPON THE DECISION O F THE HONBLE MADRAS HIGH COURT IN THE CASE OF PREMIER MILLS LTD. V. CIT REPO RTED IN 152 ITR 457 WHEREIN IT HAD BEEN HELD THAT THE HIGHER RATE OF DEVELOPMENT R EBATE WAS NOT AVAILABLE TO AN ASSESSEE WHO INSTALLED THE MACHINERY FOR MANUFAC TURE OF STAPLE FIBRE YARN. IT WAS THE SUBMISSION THAT AS BLEACHING, DYEING AND CO MPACTING PROCESS DONE BY THE ASSESSEE DID NOT RESULT IN THE PRODUCTION OF AN Y NEW OF DISTINCT ARTICLE OR PRODUCE, THE ASSESSEE WAS NOT ENTITLED TO ADDITION AL DEPRECIATION. 4. IN REPLY THE LEARNED AUTHORIZED REPRESENTATIVE S UBMITTED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. J.K.K. TEXTILE PROCESSING MILLS REPO RTED IN 249 ITR 487 WHEREIN IT ITA NO.559/MDS/2010 3 HAD BEEN HELD THAT THE MANUFACTURE COMPREHENDS THE PROCESSES LIKE BLEACHING, DYEING, CALENDERING AND PRINTING. HE FURTHER PLAC ED RELIANCE ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. S.S.M. PROCESSING MILLS REPORTED IN 258 ITR 256 WHICH WAS ON SIMILAR LINES. IT WAS THE SUBMISSION THAT THE DECISION OF THE HONBLE MADRAS HIGH COURT IN TH E CASE OF CIT V. VEENA TEXTILES P. LTD. AND PREMIER MILLS LTD., REFERRED T O ABOVE, WERE DISTINGUISHABLE INSOFAR AS THE QUESTION THERE WAS WHETHER THE PRODU CTS MANUFACTURED FELL WITHIN THE V SCHEDULE TO THE INCOME-TAX ACT. IT WAS THE S UBMISSION THAT IT WAS IN THAT CONNECTION THAT THE HONBLE MADRAS HIGH COURT HAD H ELD THAT THE ASSESSEE HAD NOT MANUFACTURED ANY TEXTILE WHICH FELL WITHIN THE V SCHEDULE OF THE INCOME-TAX ACT AND THE HIGHER RATE OF DEVELOPMENT REBATE WAS D ENIED. IT WAS THE SUBMISSION THAT DYEING, BLEACHING AND COMPACTING CL EARLY FELL WITHIN THE TERM MANUFACTURING AND PRODUCTION AND CONSEQUENTLY THE ORDER OF THE LEARNED CIT(A) WAS LIABLE TO BE UPHELD. HE VEHEMENTLY SUPP ORTED THE ORDER OF THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. J.K.K. TEXTILE PROCESSING MILLS, CITED SUPRA, CLEARLY SHOWS THAT THE HONBLE MADRAS HIGH COURT HAS HELD THAT MANUFACTURE COMPREHENDS WITHIN ITSELF PROCESSES LIK E BLEACHING, DYEING, CALENDERING AND PRINTING WHICH ARE EXACTLY THE PROC ESSES CONDUCTED BY THE ASSESSEE. THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF PREMIER ITA NO.559/MDS/2010 4 MILLS V. CIT AND CIT V. VEENA TEXTILES P. LTD., AS REFERRED TO BY THE REVENUE ARE DISTINGUISHABLE INSOFAR AS IN THE SAID DECISIONS TH E HONBLE HIGH COURT WAS SEIZED OF THE ISSUE AS TO WHETHER THE ASSESSEE WAS MANUFAC TURING TEXTILES AS PER THE V SCHEDULE OF THE INCOME-TAX ACT. THE DECISION OF TH E HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. S.S.M. PROCESSING MILLS, SUPR A, WHEREIN THEY HAVE FOLLOWED THEIR EARLIER DECISION IN THE CASE OF J.K.K. TEXTIL E PROCESSING MILLS, SQUARELY COVER THE ISSUE IN THE APPEAL BEFORE US AND THE FINDING O F THE LEARNED CIT(A) IN HOLDING THAT BLEACHING, DYEING AND COMPACTING OF THE UNBLEA CHED CLOTH DOES AMOUNT TO MANUFACTURE IS UPHELD. IN THE CIRCUMSTANCES THE AP PEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . 7. THE ORDER WAS PRONOUNCED IN THE COURT ON 09-07-2 010. SD/- SD/- ( ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 9 TH JULY, 2010. H. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-II, COIMBATORE (4) CIT-III, COIMBATORE (5) D.R. (6) GUARD FILE