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TMI Blog2010 (7) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... y issue involved in this appeal is that Ld. C.I.T.(A) has not allowed the benefit of higher depreciation at 50% to the assessee on its Plant and machinery used in texturising and twisting of yarn. The assessee is engaged in the business of manufacturing and trading of texturised and twisted yarn which is purchasing partially oriented yarn called POY which is converted to texturised and twisted yarn through mechanical process It claimed depreciation at higher rate on its plant and machinery engaged in such texturising and twisting. The higher rate of depreciation is 50% whereas normal rate of depreciation is 25%. When asked to explain why higher rate of depreciation be refused, the assessee submitted following explanation:- As regards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Machinery of the assessee comes under the purview of TUFS and thus is eligible for depreciation at the rate of 50%. The eligibility crieteria of TUFS includes Texturising, Crimping and Twisting of Synthetics Filament Yarn under the head of Textile Industry, as per Point I(b)(iii) of the ministry of Textile Resolution Nio.28-01-1999 CTI dated 31-03-1999.Further, the loan was sanctioned by the Bank of Baroda,. Mandarwaja Branch, evidencing the fact that the machinery was purchased under the Technology Upgradation Fund Scheme. 3. The A.O. declined the higher rate of depreciation on the ground that such higher rate of depreciation is provided on Plant and Machinery used in weaving processing and garments of Textile Industry which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isting of yarn is definitely not covered under this provision. The Ministry of Textiles and Banks may be giving funds and help in the form of easy loans under TUFS but the Income-tax Rules is clearly not giving the higher depreciation to yarn manufacturer. Texturising and twisting is also a process on yarn making it suitable for weaving. In the present case, the provisions of Block III(6) are very clear that production and processing of yarn are not covered but the benefits starts from weaving and after weaving all processes of garment sector and textile industry. If the parliament intended to give the benefit to yarn manufacturer or to yarn processing units the rule would have clearly provided so. The word weaving would not have been use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plant used in weaving, processing and garment sector of textile industry, which is purchased under TUFs on or after 1st day of April,2001, but before the lst day of April,2004 and is put to use before the 1stday of April,2004 is eligible for depreciation of higher rate ( @ 50%) as against normally allowed depreciation @ 25%. Ongoing through the decision of Hon ble ITAT, Ahmedabad relied upon by the Appellant (No.2 to 5), the nature of business activity of the appellant is listed as under : Sr.No. Name of Appellant. Nature of Business. 1. Mavin Texturisers Pvt. Ltd. Manufacturing of Yarn Cloth. 2. Nagalia Synthetics Pvt. Ltd. -do- 3. Bipinchandra Mohanla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to only those assessees in whose cases Machinery and Plant was purchased under TUF Scheme and used for weaving, processing and garment sector of textile. The Legislatures intent is further evidence from the fact that it has restricted the benefit of higher rate of depreciation to weaving, processing and garment sector of textile only. Implied in it is that there are other sectors in textile industry, in whose case this benefit was not allowed. It is also submitted that as could be seen elsewhere in the I.T. Act that wherever and whenever certain special benefits in the form of deductions, exemptions, allowances etc., are conferred to any class or classes of appellants, the Act is categorical in classs or classes of appellants who are el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this appeal is similar to that of the case of Bipinchandra Mohanlal Gajjar (supra), we hold that since admittedly, the twisting machine was used by weaving sector of textile industry, depreciation on the said machinery @ 50% should be allowed. We accordingly, allow the ground of appeal. 8. The Ld. D.R. has sought to distinguish the authorities referred to by the Ld. A.R. on the ground that there was a nexus of backward and forward linkages of the activities. There was composite activities in these cases. Whereas in the case of the present assessee it is only manufacturing of yarn and no weaving carried out. However, distinction sought to be made by the Ld. D.R. is artificial and does not confirm to the language used in the Rules. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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