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TMI Blog2023 (11) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... to extend the benefit. As following the decision of Rittal India (P) Ltd. [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT] and also considering the amendment brought in by way of proviso to section 32(1) wherein it has been specifically stated that 50% of additional depreciation which was not allowed in the preceding assessment year shall be allowed in the subsequent assessment year, concluded that the assessee is entitled for additional 50% depreciation in the assessment year which follows the assessment year in which the machinery had been bought and put to use for less than 180 days. Decided in favour of assessee. Additional depreciation - processing of Milk and the milk products - whether assessee only engaged in the processing of Milk and not manufacturing of any item ? - HELD THAT:- The assessee is a Milk Purchaser Co.Op. Society and milk is procured from various farmers and villagers. Thereafter the said milk processed under various machines and manufactured into various milk products. Thus the activity carried out by the assessee is not only processing of milk but involved detailed technical machineries and manufacturing different kind of milk products. It is in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee as against the appellate order dated 09-03-2021 passed by the Commissioner of Income Tax (Appeals)-13, Ahmedabad, arising out of the assessment order passed under section 143(3) r.w.s. 92CA(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to the Assessment Year (A.Y) 2015-16. 2. The brief facts of the case is that the assessee is a Society engaged in the processing and manufacturing of milk and milk products. For the Assessment Year 2015-16, the assessee filed its Return of Income on 26.11.2015 declaring total income of Nil. 2.1. Due to specified domestic transaction, the case was referred to TPO on 31.07.2017 wherein the TPO-1, Ahmedabad made no adverse inference in respect of arm s length price of the specified domestic transaction vide his order dated 29.03.2018. During the regular course of assessment proceedings, the Assessing Officer found that the claim of additional depreciation of Rs. 32,65,56,918/- in respect of purchase of plant and machinery in the immediate preceding year wherein 50% of the additional depreciation was only claimed, since the plant and machinery were purchased and used less than 180 days, which was allowed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee further submitted that it is not only manufacturing milk but also several and different items like buttermilk, lassi, butter, ghee, milk power, ice cream, sweets/malai and several other consumable items which are undoubtedly manufactured and produced by the assessee society. The assessee brought to the attention of the Ld. CIT(A) in assessee s own case for the Assessment Year 2007-08 in ITA No. 2047/Ahd/2010 dated 09.11.2012, wherein the assessee claim of deduction u/s. 80IB has been upheld. Thus the assessee contended that the word manufacturing is common both in Section 80IB and 32(1)(iia) of the Act. Therefore the claim of additional depreciation was clearly justified. The above explanation of the assessee was not accepted by Ld. CIT(A) and held that the additional depreciation of Rs. 32,65,56,916/- is not allowable since the assessee is not engaged in the business of manufacture and production of any article or thing. Thus the assessment was enhanced to this extent. 3.2. Similarly the Ld. CIT(A) confirmed the disallowance on the electrical items namely Substations, DG set and Transformers as not part of the plant and machinery which is eligible for additional depre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing milk and milk products and, therefore, is entitled to claim the additional depreciation. It is submitted that the enhancement and disallowance of additional depreciation of Rs. 32,65,56,916/- be deleted. 5. The Ld. CIT(A) has erred in confirming the disallowance of depreciation of Rs. 2,58,50,676/- being depreciation and additional depreciation claimed on certain items forming part of the block of plant and machinery on the incorrect finding that they are electric items and not plant and machinery. It is submitted that appellant has correctly claimed depreciation and additional depreciation on various such items of additions which were forming part of the block of plant and machinery as all these items were attached to the main plant and machinery. It is submitted that disallowance of depreciation as available on the block of plant and machinery and additional depreciation thereon be allowed now. 6. Without prejudice to the above it is submitted that Ld. CIT(A) has erred in ignoring submissions and evidence filed that various items like DG set, Exhaust and Pedestal fans, Streat lighting, electrical equipment, transformers etc. were attached and forming part of plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e denied the balance 50% of the additional depreciation amount during the present Assessment Year 2015-16. 6. Per contra, the Ld. CIT- D.R. Shri Kamlesh Makwana appearing for the Revenue supported the order passed by the Lower Authorities and pleaded to sustain the disallowance. 7. We have given our thoughtful consideration and perused the materials available on record. It is seen from Page No. 89 of the Paper Book, the assessee has placed on record, the assessment order dated 30.12.2017 passed by DCIT in assessee s own case for the previous Assessment Year 2014-15, wherein the Assessing Officer satisfied with the claim of additional depreciation, wherein the plant and machinery were used less than 180 days. Now the remaining 50% of the additional depreciation is claimed during this present Assessment Year 2015-16. This identical issue was considered by this Tribunal after considering the Co-ordinate Bench of Delhi in the case of Cosmo Films Ltd. and held as follows: This restriction is only on the basis of period of usc. There is no restriction, that balance of one time incentive in the form of additional sum of depreciation shall not be available in the subsequent ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... succeeding assessment year. B 10.2. As a matter of fact, with effect from 01.04.2016, the ambiguity, if any, in this regard, in the mind of the Assessing Officer, stands removed by virtue of the Legislature, incorporating in the Statute, the necessary clarificatory amendment. 10.3. The amendment brought in the relevant proviso obtaining in Section 32, reads as follows: .... 32. (1)....... Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than one hundred and eighty days in that previous year, and the deduction under this sub-section in respect of such asset is restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (iia) for that previous year, then, the deduction for the balance fifty per cent of the amount calculated at the percentage prescribed for such asset under clause (iia) shall be allowed under this sub-section in the immediately succeeding previous year in respect of such asset:....... (Emphasis is ours) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka High Court in the case of CIT vs. Rittal India (P) Ltd. (380 ITR 423) and also considering the amendment brought in by way of proviso to section 32(1) wherein it has been specifically stated that 50% of additional depreciation which was not allowed in the preceding assessment year shall be allowed in the subsequent assessment year, concluded that the assessee is entitled for additional 50% depreciation in the assessment year which follows the assessment year in which the machinery had been bought and put to use for less than 180 days. We also found that the Coordinate Bench in the case of Rashtriya Chemicals and Fertilizers Ltd. (supra) has taken similar view following the decision of the the Hon'ble Karnataka High Court in the case of CIT vs. Rittal India (P) Ltd. (380 ITR 423). Respectfully following the said decisions we uphold the order of the learned CIT(A) and reject the grounds raised by the Revenue. 7.1. Respectfully following the above decisions of the Co-ordinate Benches of the Tribunal, we have no hesitation in allowing the balance additional depreciation of Rs. 2,61,70,650/- during this present Assessment Year 2015-16. Thus the Ground Nos. 1 2 raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in the business of manufacturing or production of any article or thing in case of any new machinery or plant acquired or installed after 31-3-2005. The assessee, in the instant case, had installed Mother Dairy plant at Gandhinagar for manufacturing milk powder and had accordingly claimed the additional depreciation under section 32(1)(iia) claimed for such powder plant to the tune of Rs. 4.00.95.506/- and for other plant and machinery and old powder plant respectively the sum of Rs. 53,807/- and of Rs. 1,80,66,227/- had been claimed, totaling to Rs. 5,82,15,539/-. The fact is not disputed that the appellant is engaged in the business of manufacturing of milk products and the assessee respondent had been assessed since many years on regular basis where the Revenue has at no point of time disputed the aspect of its being in the activity of manufacturing and production. 8. The plant here is of making milk powder and process of producing the milk powder is complex and it is a completely different commercial commodity from the main ingredient milk. 9. At this stage, the decision of the Apex Court rendered in the case of Aspinwall CO. Ltd vs. CIT (supra) requires referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spinning disk atomiser or a series of high pressure nozzles. The milk droplets are cooled by evaporation and they never reach the temperature of the air. 11. A distinct commodity is thus arising from the entire complex process and it is a commercially distinct marketable commodity resulting from this process and such transformation is irreversible and thus, the plant and machinery installed by the assessee for the purpose of manufacturing the milk powder has been rightly given the benefit of additional depreciation by the authorities. 12. Supreme Court in the case of Commissioner of Income-tax vs. N.C. Budharaja and Co. and another reported in [1993] 204 ITR 412, has held that for determining whether manufacturing can be said to have taken place is where the commodity which is subject to the process of manufacturing can no longer be regarded as the original commodity but is recognized in a trade as a new and distinct commodity. 13. Reference needs to be made to the decision rendered in the case of Commissioner of Income-tax vs. Prabhudas Kishordas Tabacco Products P. Ltd reported in [2006] 282 ITR 568 (Guj), wherein itwas held:- 9. The tests to ascertain whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hesitation in deleting the enhancement made by the Ld. CIT(A). Thus the Ground Nos. 3 4 raised by the assessee are allowed in favour of the assessee. 13. The next ground nos. 5 6 disallowance of additional depreciation of Rs. 2,58,50,676/- on various electrical items installed by the assessee as forming part of the plant and machinery. 14. Ld. Counsel Shri Sunil Talati submitted that the various items of electrical goods as mentioned by the A.O. are not purely electrical items, but the same are integral part of the plant and machinery. In as much as without such electrical items, the plant just cannot function. Ld. Counsel further argued that the Ld. CIT(A) erred in ignoring the submissions and evidence filed various items like substation, DG set, exhaust pedestal fans, street lighting, additional electrical equipment, transformers where in fact attached with the plant and machinery for which a certificate from Senior General Manager (Project), Engineering Department of the assessee company was filed before Ld. CIT(A). Therefore the assessee is entitled for depreciation as applicable on the plant and machinery and additional depreciation thereon also to be allowed. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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