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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 ..... es is not without significance - 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 - 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. The 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 texti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, the same is not automatically entitled for higher depreciation as per Income Tax Rules?" Notwithstanding formulation of so-called 'substantial questions of law' in paragraph 13 of this appeal by the revenue, which are neither happily worded nor reflect the real controversy, following substantial question of law is formulated for determination: "Whether the machinery purchased under the Textiles Upgradation Fund Scheme (TUFS) and used for embroidery on unembroidered cloth used in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 canvassed that since the assessee was using its machinery only for embroidery work on grey cloth, it was entitled to only normal depreciation @ 15% and not enhanced rate of 50%. Plea of the assessee, on the other hand, is that the words "processing" and "garment sector" are wide in amplitude in addition to being dynamic in content and thus, include in their ambit utilization of machinery in any activity in textile industry and thus make the machinery eligible for higher depreciation. In short, it is urged tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt with its Bankers; (2) Assertion of the assessee is that as per Ministry of Textiles, Govt. of India, in its book "Technology Upgradation Fund Scheme for Textiles Jute Industry, fabric embroidery machinery are covered under "machinery eligible for loomshed (weaving) at Serial No.14, Part B and multi-head computerized embroidery machinery are covered in list of eligible machines for garments/made ups manufacturing in Annexure E at Serial No.42. These contents of the cited book have not been disputed by the revenue; and (3) When the textiles were subjected to excise duty, in the assessment year 2005-2006, the assessee had paid a sum of Rs.15,52,195/- as excise duty establishing that process of embroidering of unembroidered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is reproduced as under: "Textiles (including those dyed, printed or otherwise processed) made wholly or mainly of cotton, including cotton yarn, hosiery and rope." The words "otherwise processed" in relation to textiles definitely, would include embroidery done interalia on any textile cloth. Application of 'Embroidery' on grey cloth is 'processing' of such cloth which makes the embroidered cloth distinct and set apart as compared to unembroidered cloth. Application of some operation on any commodity which brings about change or alteration in it is "processing" irrespective of the nature, content or sweep of such change. Thus when unembroidered cloth is embroidered, it amounts to processing of textiles. Plea of the revenue that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of producing textiles. Confirming the order dated 28.5.2010 (Annexure A-2) of Commissioner of Income Tax (Appeals), Amritsar, the Income Tax Appellate Tribunal, Amritsar citing decision of its coordinate bench at ITAT, Ahmedabad in ITA No.2892/Ahd./2009 dated 8.7.2011 in which, on an identical issue, appeal of the revenue against allowing of higher depreciation was dismissed, had dismissed appeal of the revenue in the present case as well. 7. Finding no infirmity in the impugned orders of Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal, as a sequel to the discussion made earlier, the substantial question of law, as framed earlier, is answered in favour of the assessee and against the revenue. Sequelly, the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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