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TMI Blog2016 (6) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... ng must manufacture a commercially new product. It was further held that, in any case, this activity shall amount to "production". As per section 32, an undertaking, engaged in "manufacturing" or "production" shall be eligible to claim additional depreciation. Thus, in view of this, the controversy becomes narrower. Therefore, the assessee is eligible for the benefit of depreciation, as it is undisputedly engaged in activity of "production". - Decided in favour of assessee - I. T. A. No. 5024/Mum/2011 - - - Dated:- 4-12-2015 - Saktijit Dey (Judicial Member) And Ashwani Taneja (Accountant Member) For the Petitioner : Hitesh P. Shah For the Respondent : Vachaspati Tripathi ORDER Ashwani Taneja (Accountant Member) 1. This is an appeal filed by the assessee and it is directed against the order of the learned Commissioner of Income-tax (Appeals)-12, Mumbai, dated January 3, 2011, for the assessment year 2006-07. 2. In the first ground, the assessee has challenged the action of the learned Commissioner of Income-tax (Appeals) in confirming the addition of ₹ 17,60,000 being the amount of unsecured loans, as unexplained cash credit under section 68 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors did not have any sources of income. The Assessing Officer also observed that before giving loan to the assessee, some of the creditors had deposited cash in their respective account. The Assessing Officer also observed that there is no balance-sheet and capital account in respect of some of the creditors. The Assessing Officer also observed that there is no return of income and some of the returns are generated for this purposes only and some are identical to that of another. Therefore, the Assessing Officer was of the opinion that these documents are manufactured evidences for accepting the loans as genuine. Since the Assessing Officer observed these discrepancies about 16 creditors, the Assessing Officer invoked the provisions of section 68 of the Act for these creditors. 5. In reply to the remand report, the assessee has raised the following objections : (a) The Assessing Officer did not communicate with the assessee that the details filed were not considered sufficient ; (b) The assessee does not have access to the personal details of all the lenders and has to rely on whatever they submit ; (c) As in the case of 2 loan creditors, i.e., Mr. M. P. Khanduri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hia 1 lakh 4 Maneklal N Parekh 1.5 lakhs 5 Sameer S Kamat 1.10 lakhs 6 Popatlal Nanji Visaria 1 lakh 7 Vandana Atul Gala 1 lakh 8 Vishanji Lakhamshi Gala 1 lakh 9 M P Khanduri 4 lakhs 8. With respect to all the parties, the learned counsel submitted that the complete documentary evidences were submitted to show that these parties are assessed to Income-tax and the amount was received through account payee cheques. Various evidences in the form of confirmation, bank statement, copy of Income-tax return, copy of bank pass book, copy of balance-sheet, etc., were given to the lower authorities. But without properly appreciating the facts, the addition has been made by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals). Learned counsel has taken us through various pages of paper book to show that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fair and reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes. 12. In the second ground, the assessee is challenging the action of the learned Commissioner of Income-tax (Appeals) in confirming the disallowance of additional depreciation on plant and machinery. 13. The brief facts of the issue are that the assessee has claimed an amount of ₹ 26,30,112 as additional depreciation. The Assessing Officer issued show-cause notice to the assessee as to why the depreciation claimed by him should not be disallowed as the assessee did not carry any manufacturing activity. In response, the assessee submitted that the activities right from the designing of the magazines, procurement of raw material such as paper, ink, chemicals, etc, the printing, binding and packing of magazines are akin to a manufacturing process and as such they are entitled for additional depreciation. The assessee also relied upon some judicial pronouncements but the Assessing Officer rejected the claim of the assessee and added the same to the total income of the assessee. 14. Being aggrieved by the abovesaid decision of the Assessing Officer, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. On the other hand, the learned Departmental representative relied upon the orders of the learned Commissioner of Income-tax (Appeals) and case law mentioned therein. 18. We have heard both the parties and perused the record. We notice that the Assessing Officer has himself mentioned in the assessment order that the assessee was involved in the business of manufacturing of greetings, magazines, envelopes, etc, and, therefore, the Assessing Officer could not have taken a contrary view while dealing with the issue of allowability of depreciation. It is further noted by us that the hon'ble Delhi High Court in the case of Delhi Press Patra Prakashan Ltd. (supra), has dealt with this issue at length for holding that the aforesaid activity amount to manufacturing. It has been held that printing of greetings cards on paper amount to manufacturing a new and marketable article, as a distinct product comes into existence. It was further held that it is not necessary that an industrial undertaking must manufacture a commercially new product. It was further held that, in any case, this activity shall amount to production . As per section 32, an undertaking, engaged in manufacturi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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