DCIT 17(2), MUMBAI V. FASHIOIN FORECAST (INDIA)`, MUMBAI

ITA 6130/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56148 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 10-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Depreciation; Additional depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F , MUMBAI BEFORE SHIRI R. S. PADVEKAR, J.M. AND SHRI RAJENDRA SINGH, A.M. ITA NO. : 6130/MUM/2010 ASSESSMENT YEAR : 2007-08 DY. CIT, 17(1) 1 ST FLOOR, PIRAMAL CHAMBERS, MUMBAI-12 VS. M/S. FASHION FORECAST (INDIA) 124, BHARAT INDUSTRIAL ESTATE, T. J. ROAD, SEWREE (W), MUMBAI-400 015. PAN NO: AAAFF 5173 F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHANTAM BOSE RESPONDENT BY : SHRI SANJAY R. PARIKH DATE OF HEARING : 0 8 .1 2 .2011 DATE OF PRONOUNCEMENT : 23.12.2011 ORDER PER RAJENDRA SINGH (AM) : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 14.05.2010 OF THE LD. CIT(A)-29, MUMBAI FOR THE ASS ESSMENT YEAR 2007-08. THE REVENUE IN THIS APPEAL HAS RAISED DISP UTES ON TWO DIFFERENT GROUNDS. 2. THE FIRST GROUND IS REGARDING DENIAL OF CLAIM OF DEDUCTION U/S.80IB OF THE I.T. ACT. THE AO NOTED THAT THE ASS ESSEE WAS ENGAGED IN THE BUSINESS OF EMBROIDERY AND EXPORT OF READY M ADE GARMENTS. THE ASSESSEE WAS RECEIVING GREY CLOTH FROM VARIOUS PART IES FOR THE PURPOSE OF GETTING THE EMBROIDERY WORK DONE IN ASSESSEES F ACTORY AT DAMAN ITA NO : 6130/MUM/2010 M/S. FASHION FORECAST (INDIA) 2 AND WAS EARNING JOB WORK CHARGES FROM THE PARTIES. THERE WAS THUS NO MANUFACTURING ACTIVITY. SIMILAR CLAIM MADE BY THE A SSESSEE HAD BEEN DISALLOWED IN THE EARLIER ASSESSMENT YEARS. THOUGH, THE CIT(A) HAD ALLOWED THE CLAIM, THE DEPARTMENT HAD FILED APPEAL BEFORE THE TRIBUNAL. THE AO, THEREFORE, FOLLOWING THE DECISION IN EARLIE R YEARS, DISALLOWED THE CLAIM OF DEDUCTION U/S.80IB. 2.1 IN APPEAL, CIT(A) HOWEVER NOTED THAT THE TRIBU NAL HAD ALLOWED THE CLAIM OF THE ASSESSEE IN THE ASSESSMENT YEARS 2 004-05 AND 2005- 06 IN ITA NOS.6984 & 6988/MUM/2008, IN WHICH IT WAS HELD THAT THE ASSESSEE WAS ENGAGED IN THE MANUFACTURING ACTIVITY. CIT(A), THEREFORE, ALLOWED THE CLAIM OF THE ASSESSEE AGGRIEVED BY WHIC H THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 2.2 WE HAVE HEARD BOTH THE PARTIES, PERUSED THE REC ORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REG ARDING THE ALLOWABILITY OF DEDUCTION IN CASE OF THE ASSESSEE U /S.80IB OF THE I.T. ACT. THE AO HAD DISALLOWED THE CLAIM ON THE GROUND THAT THE ASSESSEE WAS NOT A MANUFACTURING CONCERN. HOWEVER, THE SAME ISSUE HAD ARISEN IN THE ASSESSMENT YEARS 2004-05 AND 2005-06, IN WHI CH THE TRIBUNAL IN THE ITA NOS. 6984 & 6988/MUM/2008 NOTED THAT THE INPUT USED BY THE ASSESSEE IN ITS MANUFACTURING PROCESS WAS GREY CLOTH AND AFTER CARRYING OUT VARIOUS ACTIVITIES SUCH AS WASHING, CO LOURING, EMBROIDERY AND PRESSING, A FINAL PRODUCT EMERGED IN THE FORM O F DRESS MATERIAL WHICH WAS DIFFERENT FROM THE INPUT. THEREFORE, THE ACTIVITY BEING CARRIED OUT BY THE ASSESSEE WAS OF THE NATURE OF MA NUFACTURING ACTIVITY. THE TRIBUNAL, THEREFORE, ALLOWED THE CLAI M OF THE ASSESSEE U/S.80IB. FACTS THIS YEAR ARE IDENTICAL AND, THEREF ORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSES SMENT YEARS 2004-05 ITA NO : 6130/MUM/2010 M/S. FASHION FORECAST (INDIA) 3 AND 2005-06 (SUPRA) WE CONFIRM THE ORDER OF THE CIT (A) ALLOWING THE CLAIM OF THE ASSESSEE. 3. THE SECOND DISPUTE IS REGARDING THE CLAIM OF ADD ITIONAL DEPRECIATION IN RESPECT OF PLANT AND MACHINERY INST ALLED AFTER 31.03.2005. THE ASSESSEE HAD CLAIMED ADDITIONAL DEP RECIATION OF `. 18,87,730/- @ 20%, WHICH WAS DISALLOWED BY THE AO, ON THE GROUND THAT THE ASSESSEE WAS NOT CARRYING OUT ANY MANUFACT URING ACTIVITY. IN APPEAL, CIT(A) HELD THAT THE ASSESSEE WAS A MANUFAC TURING CONCERN AND, THEREFORE, ALLOWED THE CLAIM OF ADDITIONAL DEP RECIATION AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL BEFORE THE TRIBUN AL. 3.1 WE HAVE HEARD BOTH THE PARTIES, PERUSED THE REC ORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REG ARDING THE ALLOWABILITY OF ADDITIONAL DEPRECIATION @ 20% IN RE SPECT OF PLANT AND MACHINERY INSTALLED AFTER 31.03.2005. THE AO DISALL OWED THE CLAIM, ON THE GROUND THAT THE ASSESSEE WAS NOT A MANUFACTURIN G CONCERN. HOWEVER, THE TRIBUNAL IN THE ASSESSMENT YEARS 2004- 05 AND 2005-06 IN ITA NOS.6984 & 6988/MUM/2008 HELD THAT THE ASSES SEE WAS A MANUFACTURING CONCERN AND, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL (SUPRA), THE CLAIM OF THE ASSESSEE OF ADDITIONAL DEPRECIATION HAS TO BE ALLOWED. WE, THEREFORE, SEE NO INFIRMITY IN THE ORDER OF THE CIT(A) IN ALLOWING THE CLAIM OF THE AS SESSEE AND THE SAME IS, THEREFORE, UPHELD. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON THIS 23 RD DAY OF DECEMBER, 2011. S D/ - S D/ - ( R. S. PADVEKAR ) ( RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 23/12/2011 ITA NO : 6130/MUM/2010 M/S. FASHION FORECAST (INDIA) 4 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, F - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI