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TMI Blog2013 (10) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... filed against order dated 23.4.2012 (Annexure A-3) passed by Income Tax Appellate Tribunal, Amritsar in ITA No.358(Asr)/2010 for the assessment year 2006-07, on the following questions of law:- Questions of law: "(i) Whether on the facts and in the circumstances of the case and in law, the learned ITAT was right in not appreciating the non inclusion of the word 'Embroidery' by the legislature consciously while making Rules for higher Depreciation as referred to in new Appendix-I? (ii) Whether on the facts and in the circumstances of the case and in law, the learned ITAT was right in not appreciating that if Government provides subsidy in purchase of machinery used in textiles under TUFS, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the machines purchased by the assessee under TUFS, as claimed. In second appeal preferred by the revenue, Income Tax Appellate Tribunal, Amritsar confirmed the findings of Commissioner of Income Tax (Appeals) and dismissed the appeal of the revenue vide order dated 23.4.2012 (Annexure A-3). Rival claims of the parties: 4. Contention of counsel for the appellant are two-fold. It is averred that to claim higher rate of depreciation @ 50% on machinery and plant purchased under TUFS on or after the 1st day of April, 2001 but before the 1st day of April 2004, compliance with Appendix-I to Income Tax Rules, 1962, requires use of such machinery in weaving, processing and in garment sector of textiles industry before 1.4.2004. It is canvasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it is asserted that since the machinery purchased by the assessee was being used only for embroidery work on the cloth not manufactured by it, such higher rate of depreciation is not available to it. Other circumstances supporting eligibility for higher depreciation (on the machinery deployed for embroidery on cloth in textile sector) by the assessee, are as under:- (1) Machinery purchased under TUFS is also eligible for grant of subsidy. The revenue has not disputed that the assessee got interest subsidy of Rs.11,33,072/- in its Term Loan account with its Bankers; (2) Assertion of the assessee is that as per Ministry of Textiles, Govt. of India, in its book "Technology Upgradation Fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Even Section 32 of the 1961 Act, to claim depreciation, nowhere restricts user inter-alia of the machinery in 'manufacture' or 'production'. Similarly, conditions of TUFS also do not hedge user of the machinery to activities of manufacture or production only. In nutshell, use of words "processing" and "garment sector" are vibrant enough to include in their fold user of the machinery for any activity in textile industry so as to be eligible to claim higher depreciation. Even when item 32 of the V Schedule referred to by the revenue is gone through, it does not help the revenue. Item 32 of the V Schedule is reproduced as under:- "Textiles (including those dyed, printed or otherwise processed) made wholly or mainl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er angle, these words depict that the entire process starting from the weaving stage culminating upto the stage of manufacturing of garments is covered in these words. Embroidery is a sort of process on the clothes so as to turn those clothes into different textile products. In short embroidery is one of several processes which are carried out on cloth to make such cloth different products. In CIT v. Sovrin Knit Works 199 ITR 679, it was held that business of bleaching, dyeing, finishing and embroidery of grey cloth which is not manufactured by the assessee itself but is purchased by it constitutes business of manufacture of producing textiles. Confirming the order dated 28.5.2010 (Annexure A-2) of Commissioner of Income Tax (Appeals), Amr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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