M/S SG SNACKS INDIA PVT LTD,MADURAI vs. ITO CORP WARD 3, MADURAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -1, Madurai, dated 12.12.2017 and pertains to assessment year 2014-15.

Shri K. Rama Mohan, the Ld. representative for the assessee, submitted that the assessee claimed additional depreciation of ₹ 84,16,727/- by filing revised return. According to the Ld. representative, in the original return, the assessee claimed depreciation of ₹67,58,435/-.

On the contrary, Ms. S. Vijayaprabha, the Ld. Departmental Representative, submitted that the assessee is not doing any manufacturing activity of its own. The assessee is doing job work. Even though the agreement provides for manufacturing of potato chips in its brand, according to the Ld. D.R., the assessee is not manufacturing any potato chips of its own brand. The assessee continued to manufacture potato chips for and on behalf of M/s Parle Biscuits Pvt. Ltd. The potato and other raw material and packing material were supplied by M/s Parle Biscuits Pvt. Ltd. Therefore, according to the Ld. D.R., the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer.

We have considered the rival submissions on either side and perused the relevant material available on record. The assessee is admittedly engaged in the business of manufacturing potato chips. The assessee claimed depreciation of ₹67,58,435/- in the original return. By way of revised return, the assessee also claimed additional depreciation of ₹84,16,727/-. The Assessing Officer disallowed the claim of the assessee on the ground that the activity of the assessee is manufacturing potato chips by using the raw material supplied by M/s Parle Biscuits Pvt. Ltd. It does not amount to manufacturing activity. This Tribunal is of the considered opinion that even though the raw material was supplied by M/s Parle Biscuits Pvt. Ltd., the activity of the assessee in preparing the potato chips from raw potato and packing the same by packing material supplied by M/s Parle Biscuits Pvt. Ltd. amounts to manufacturing activity. However, the details of machineries installed by the assessee are not available on record. Therefore, the Assessing Officer shall re- examine the matter and bring on record the details of machineries installed for manufacturing potato chips. Accordingly, orders of both the authorities below are set aside and the entire issue raised by the assessee is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter and after verifying the details of machineries said to be installed by the assessee, shall decide the issue afresh in the light of the observation made by this Tribunal in this order.

With the above observation, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the court on 12th September, 2018 at Chennai.