Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: MS. SUCHITRA R. KAMBLE & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 23.08.2021 passed by learned Commissioner of Income-Tax (Appeal)-3, Bhopal [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 16.02.2021 passed by learned ACIT-(Central)-1, Bhopal [“Ld. AO”] u/s 143(3) of the Income Tax Act, 1961 [“the Act”] concerning Assessment-Year [“AY”] 2018-19, the assessee has filed this appeal on following solitary ground:
“On the facts and circumstances of the case and in law Ld. Commissioner of Income Tax (Appeals) erred in confirming the action of the Ld. AO in making disallowance of Rs. 88,76,01,662/- on account of claim of addition depreciation u/s
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 32(1)(iia) of the Income Tax Act 1961 as per the grounds stated in the order or otherwise.” 2. Heard the Ld. Representative of both sides at length and case-records perused.
The only grievance in the present appeal by assessee is to the effect that the revenue-authorities have wrongly disallowed the claim of additional depreciation of Rs. 88,76,01,662/- claimed by assessee u/s 32(1)(iia) of the Income Tax Act, 1961.
Briefly stated the facts are such that the assessee-company filed return of relevant AY 2018-19 on 24.09.2018. The case was subjected to scrutiny-proceedings and statutory notices u/s 143(2) /142(1) of the Act were issued from time to time which the assessee complied with. Finally, the Ld. AO completed assessment vide order dated 16.02.2021 u/s 143(3) after making certain disallowances, one of which was the claim of additional depreciation amounting to Rs. 88,76,01,662/- u/s 32(1)(iia) of the Act. Being aggrieved by action of Ld. AO, the assessee went in appeal before Ld. CIT(A) but could not succeed.
Still being aggrieved by the order of Ld. CIT(A), the assessee has now come in appeal before us.
Ld. AR appearing on behalf of assessee drew our attention to assessment-order, particularly the concluding paragraph 5.5 on Page No. 15, and demonstrated that the only reason assigned by Ld. AO for disallowing assessee’s claim of additional depreciation is that the assessee is engaged in the business of construction of road and not into the business of manufacture or production, therefore does not fulfill the primary eligibility- condition prescribed in section 32(1)(iia).
Then, Ld. AR straightaway pointed out that the present controversy is not a new controversy in assessee’s case. In fact, an exactly identical issue had already cropped up in assessee’s own case in earlier AY 2014-15, 2015-
Page 2 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 16 & 2016-17, where upon the matter travelled up to I.T.A.T., Indore Bench in a consolidated-order in ITA No. 782/Ind/2018, ITA No. 819 & 820/Ind/2019 and ITA No.197/Ind/2020 dated 27.01.2022, wherein the Hon’ble Co-ordinate Bench of I.T.A.T., Indore has already decided in favour of assessee and accepted the claim of additional depreciation. Ld. AR submitted that ostensibly the assessee’s activity is construction of road, etc. but the assessee is in fact also manufacturing / producing Ready Mix Concrete (RMC) as a first step for captive consumption and the plant and machinery is also utilized for that purpose. Then, Ld. AR admitted without any hesitation that the activity of assessee is exactly same as existed in those earlier assessment years and the law is also same. With these submission, Ld. AR prayed that the present-appeal of assessee be also allowed on the same line of reasoning.
During hearing, Ld. AR also drew our attention to the relevant paragraphs of the aforesaid order dated 27.01.2022 of ITAT, a copy of which is also placed on record. We reproduce all those paragraphs, though lengthy but they elaborately crystallize the activities of assessee; the legal provisions of Income-tax Act,1961; judicial rulings; and the eligibility of assessee for additional depreciation:
“23. Ground No. 1 & 2 relates to deduction of additional depreciation claimed u/s 32(1)(iia) and investment allowance claimed u/s 32AC. During the year under consideration, the appellant has claimed additional depreciation u/s 32(1)(iia) of the Act on the various vehicles such as dumpers and tippers which are used in the activity of road construction activity amounting to Rs. 22,57,23,569/-. Further, the appellant has also claimed investment allowance u/s 32AC on the investment made in the various vehicles used in the activity of road construction activity amounting to Rs. 24,90,01,000/-. In the assessment order, Ld. A.O. disallowed the above claim made by the appellant stating that the activity of the appellant cannot be termed as manufacture or production as required by the provisions of section 32(1)(iia) and 32AC of the Income Tax Act, 1961 by relying heavily upon the judgment of Hon'ble Supreme Court in the case of NC Budhraja reported in [1980] 204 ITR 412. In the appellate proceedings, CIT (A) confirmed the findings of the AO and held that though the assessee satisfies the remaining conditions of the provisions of the Act, it doesn’t qualify as manufacturing or producing any article or thing since it is constructing roads. Ld. CIT (A) has also Page 3 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 relied upon the judgment of Hon'ble Supreme Court in the case of N.C. Bhudhraja & Co.(supra) and various other decisions to show that the assessee cannot be termed as manufacturer. Aggrieved assessee is now in appeal before this Tribunal. 23.1. Ld. counsel for the assessee in support of its contention that the assessee is a manufacturer and is eligible to claim deduction of additional depreciation u/s 32(1)(iia) of the Act and investment allowance u/s 32AC of the Act, firstly referring to the relevant provisions indicated towards pre-requisite conditions which need to be fulfilled for claiming the said deduction. Referring to the judgment of Hon'ble Supreme court in the case of N.C. Budharaja & CO. (supra) it was stated that this judgment relates to assessment year 1974-75 and 1975-76. The definition of the word ‘manufacturer’ was not defined at that point of time. Through finance (No.2) Act of 2009 section 2(29BA) of the act was inserted to define the word ‘manufacturer’. Referring to this definition it was submitted that in the judgment of N.C. Bhudharaja & Co. (supra) the discsuion was restricted to the word article or thing. However, with the insertion of section 2(29BA) of the Act the word object has been included which is much wider than article or thing. 23.2. To support the contention that the definition of manufacturer as provided in section 2(29BA) of the Act should be strictly followed for examining the activity being in the nature of manufacturer, reliance was placed on following decisions: 1. Bhaskar Narayan Hardikar and Anr. Vs. S.G. Daithankar and Ors. Reported in AIR 1971 Bom 188 2. Suresh Lohiya vs. State of Maharashtra and Anr. (SC)dated 23.08.1996 3. PCIT vs. Lakesh Handa reported in [2017] 399 ITR 305 4. Prestige Engineering India Ltd. vs. CCE reported in 1994 SCC (6) 465 5. Smt. Kasturi (Dead) By L.Rs vs Gaon Sabha reported in 1989 SCR (3) 591
23.3. Further Ld. counsel for the assessee mentioned about steps used in the manufacturing process for making various sizes of bolder, manufacturing process of making bituminous concrete (Bituminous mix), manufacturing process of making concrete mix. Ld. Counsel for the assessee also distinguished the facts of the case with that all facts examined by the Hon'ble Supreme Court in the case of N.C. Bhudharaja & Co. (Supra) and further added that subsequent to these judgments several changes have under gone in the Income Tax Act. As per 5th Schedule of the Act list of article or thing also includes “Boilers and steam generating plants”, in 13th Schedule of the list of article or thing also includes thermal power plant and therefore the activities of the assessee includes manufacturing of roads. It was also submitted that the assesse manufacturer Ready Mix Concrete (RMC) in the process of construction of reads and in view of the judgment of Hon'ble Bombay High Court in the case of CIT vs. Emirates Commercial Bank Ltd. (2003) 262 ITR 55. Judgment of Hon'ble Kerala High Court in the Page 4 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 case of Cherian Varkey Construction CO. (P.) Ltd. vs. UOI (2018) 406 ITR 262, it was submitted that the procedure of making of RMC by the assessee comes under the purview of manufacturing. Further it was stated that as held in the case of Texas Instruments (India) P. Ltd. vs. ACIT (2020) 115 taxmann.com 154. If the assessee is engaged in the business of manufacturing, it is not necessary that the plant and machinery should be used for the purpose of manufacturing and additional depreciation would be allowed even to those plant and machinery which are not used for manufacturing process. Further in view of the finding of Ld. CIT(A) as para 8.14 of the appellate order that the assessee has withdrawn its claim of additional depreciation in its petition for A.Y. 2013-14 before Income Tax Settlement Commission, it is submitted that the proceedings before ITSC are in the nature of arbitration and it cannot laid down precedents. Therefore, the contentions of the Ld. CIT(A) is misplaced. Moreover no finding on the merits of the issue has been given by the Settlement Commission.
23.4. Per contra ld. DR apart from placing reliance on the finding of the Ld. AO as well as detailed finding of Ld. CIT(A) further placed reliance on the judgment of Hon'ble Supreme Court in the case of N.C. Bhudharaja & Co. (supra) and submitted that the assessee is work contractor engaged in construction of roads and this activity cannot be regarded as manufacturing activity and therefore assessee’s claim for additional depreciation and investment allowance should be denied.
We have heard rival contentions and perused the records placed before us. Through ground no.1 & 2 of the assessee’s appeal for A.Y. 2014-15 assessee has challenged the finding of Ld. CIT(A) confirming the action of the Ld. AO denying the claim of additional depreciation u/s 32(1)(iia) and for investment allowance u/s 32AC of the Act at Rs. 22,57,23,569/- & Rs. 24,90,01,000/- respectively. Similar issue has also been raised by the assessee for A.Y. 2015-16 to 2017-18. From perusal of the impugned order of ld. CIT(A) we notice that Ld. CIT(A) has confirmed the finding of Ld. AO that in view of the judgment of Hon'ble Supreme Court in the case of N.C. Bhudhraja & Co. (supra) the activities of constructing road cannot be treated as a manufacturing activity and since the assessee is not a manufacturer which is a precondition for claiming deduction u/s 32(1)(iia) of the Act and 32AC of the Act, it cannot claim deduction for additional depreciation and investment allowance. Now the issue which needs to be adjudicated is that “whether activity carried out by the assessee are in the nature of manufacturing activities in other words whether assessee is a manufacturer”.
24.1 Before coming to the merits of the case, it is necessary to consider the relevant provisions of section 32(1)(iia) and 32AC as per the Act which are as under:- “32(1)(iia) in the case of any new machinery or plant (other than ships and aircrafts) which has been acquired and installed Page 5 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 after the 31st March 2005 by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to 20% of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii).”
Provided that no deduction shall be allowed in respect of – (a) any machinery or plant which, before its installation by the assessee, was used either with or outside India by any other person; or (b) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; or (c) any office appliances or road transport vehicles; or (d) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head “Profit and gains of business or profession” of any one previous year.” 32AC (1) “Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset after the 31st day of March, 2013 but before the 1st day of April, 2015 and the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees, then, there shall be allowed a deduction,— (a) for the assessment year commencing on the 1st day of April, 2014, of a sum equal to fifteen per cent of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2014, if the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees; and (b) for the assessment year commencing on the 1st day of April, 2015, of a sum equal to fifteen per cent of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2015, as reduced by the amount of deduction allowed, if any, under clause (a).” 24.2. Thus, the pre-requisites for claiming additional depreciation under Sec.32(1)(iia) of the Act are the following: (i) A new machinery or plant (other than ships and aircrafts) must be acquired and installed after 31st March 2005; (ii) The assessee who has acquired such new machinery or plant must be engaged in the business of manufacture or production of any article or thing or in the business generation or generation and distribution of power;
Page 6 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 (iii) Such new machinery or plant should not be disqualified under the proviso to Section 32(i)(iia) of the Act. 24.3. Further, the pre-requisites for claiming additional depreciation under Sec.32AC of the Act are the following: (i) A new machinery or plant must be acquired and installed during FY 2013-14 (ii) The assessee who has acquired such new machinery or plant must be engaged in the business of manufacture or production of any article or thing or in the business generation or generation and distribution of power; (iii) Such investment in new machinery or plant should be in excess of Rs.100 Crs. 24.4. Accordingly, as per both the provisions of section 32(1)(iia) and 32AC, the appellant should acquire a new plant or machinery and appellant should be engaged in the activity of manufacture or production. As already discussed, the other conditions of the provisions have been fulfilled by the assessee which has not been disputed by Ld. AO or Ld. CIT(A) except being eligible as manufacturer.
24.5. We notice that assessee is in the business of constructing concrete roads or bituminous roads. The Ld. AO as well as Ld. CIT (A) have heavily relied upon the decision of Supreme Court in the case of NC Budhraja & Co. (supra). The said case was related to assessment year 1974-75 and 1975-76. However, it is relevant to note that at the time when the above decision was pronounced by the Hon’ble Supreme Court, the expression “manufacture” was not defined in the Act. Subsequently, Finance (No.2) Act of 2009 defined the expression “manufacture” in the following words in Sec.2(29BA) of the Act. “(29BA) “manufacture” with its grammatical variations, means a change in a non-living physical object or article or thing – (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use, or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure.”
24.6 The Memorandum explaining the provisions in Finance (No.2) Bill, 2009 which is placed at page nos.104 of the legal paper book, explain the background to this amendment in the following words: “Definition of the term ‘manufacture’ –
Page 7 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 A number of tax concessions under the Income-tax Act are provided for encouraging manufacture of articles or things. However, the term ‘manufacture’ has not been defined in the statute. Therefore, it has been the subject-matter of dispute and resultant judicial review in a number of cases. In order to remove any kind of ambiguity which may still persist in this regard, it is proposed to insert a new clause (29BA) in section 2 so as to provide that ‘manufacture’, with all its grammatical variations, shall mean a change in a non-living physical object or article or thing, - (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or (b) bringing into existence of a new object or article or thing with a different chemical composition or integral structure. This amendment will take retrospective effect from the 1st day of April, 2009 and will, accordingly, apply in relation to assessment year 2009-10 and subsequent years.” 24.7. It is abundantly clear from the Memorandum explaining the background to the insertion of the definition that the legislature recognized that a number of tax concessions under the Act, were provided for encouraging “manufacture”. However, in a number of cases the expression “manufacture” has been the subject matter of dispute and judicial review and that with a view to removing any kind of ambiguity, the legislature has thought it fit to insert a definition to the said expression.
24.8 On perusal of the definition as per section 2(29BA), the legislature has inserted ‘object’ which was not there in the various provisions of the Act considered by the Supreme Court in NC Budhraja & CO. (supra) since they were restricted to ‘article or thing’. It is submitted that ‘object’ is much wider than an article or thing. Accordingly, it is submitted that post the insertion of the above definition, the case of the assessee falls under the sub clause (b) of section 2(29BA).
24.9. It is also important to note that the legislature has intentionally excluded the items which do not fall under the definition of the term manufacture. This is clear from the fact that it has specifically excluded ‘living object’ from the above definition. However, no such exclusion has been made in respect of immovable objects. Therefore, it is clear that manufacturing of an object includes movable as well as immovable objects which are non-living in nature.
24.10. Therefore, now the question arises as to whether we should go by the definition as provided under the Act or as per normal logic as held by Supreme Court in the case of NC Budhraja & Co. (supra) since there was no definition of manufacture earlier in the Act. In this regard, reliance is placed on the decision of Bombay High Court in the case of Bhaskar Narayan Hardikar and Anr. Vs. S.G. Daithankar and Page 8 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 Ors. Reported in AIR 1971 Bom 188 which is placed at page nos. 27-37 of the paperbook. The relevant portion of the order is reproduced hereunder:-
“12. The term "total number of Councillors" has been used in the Act at several place and would be found in Sections 81(2), 81 (9) (a) (i) and (ii) 81 (15), 19(2), 63 (1) 65(2) and proviso to Section 167 of the Act. As against this, there are other terms used in the different other sections, for example, in Section 81 (11) proviso, the decisions are to be taken by a majority of votes of the Councillors present and voting and at other places the word "Councillors" has been used: for example, in Section 56 (2) and 81(14) of the Act. When the Act defines a particular term it is that definition which has to be taken for that term wherever it occurs in the Act and it would not be permissible to construe the said term in any other manner. …………..
………….. In the absence of such a definition, it would have been possible to give the meaning suggested by the respondents, wherever the phrase "total number of Councillors" has been used, but we have here a separate and distinct definition of composite phrase "total number of Councillors" and it is that definition of that composite term as a whole that has to be taken into consideration wherever that phrase has been used in the Act and it would not be permissible to substitute in this phrase the definition of the word "Councillor' given in Section 2 (7) of the Act for the word "Councillor" in Section 2 (49) or at other places in that Act where the phrase "total number of Councillors" has been used. To do so, would amount to ignoring the definition of the phrase "total number of Councillors" given in Section 2 (49) altogether. Likewise, if the meaning as contended on behalf of the respondents was to be given then it would have been necessary at all to define the phrase "in relation to a Council" and secondly, to state further to mean "the total number of the elected, co-opted and nominated Councillors" be cause the word "Councillor" has already been given that meaning in Section 2 (7) of the Act. (Emphasis provided by us)
24.11. Further, we find that Hon'ble Supreme Court in the case of Suresh Lohiya vs. State of Maharashtra and Anr. dated 23.08.1996 which is placed at page nos. 38-41 of the paper book had held as follows:-
“7. The legislature having defined "forest-produce", it is not permissible to us to read in the definition something which is not there. We are conscious of the fact that forest wealth is required to be preserved; but, it is not open to us to legislate, as what a court can do in a matter like at hand is to iron out cresses; it cannot weave a new texture. If there be any lacuna in the definition it is really for the legislature to take care of the same. Page 9 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19
……………May it be stated that where a word or an expression is defined by the legislature, courts have to look to that definition; the general understanding of it can not be determinative. So, what has been stated in Strouds' Judicial Dictionary regarding a "produce" can not be decisive. Therefore, where a product from bamboo is commercially different from it and in common parlance taken as a distinct product, the same would not be encompassed within the expression "forest- produce" as defined in section 2 (4) of the Act, despite it being inclusive in nature. that bamboo mat is taken as a product distinct from bamboo in the commercial world, has not been disputed before us and rightly.” (Emphasis provided by us)
24.12. Now, it is important to consider the decision of Jammu & Kashmir High Court in the case of PCIT vs. Lakesh Handa reported in [2017] 399 ITR 305 wherein Hon'ble Court has observed that the definition of manufacturing has been inserted by the legislature which was not there earlier and therefore, earlier decision cannot be relied. (The copy of the decision is placed at page nos. 42-47 of the paper book). The relevant portion of the order is reproduced hereunder:- “10. Mr Kawoosa had cited the decision of the Supreme Court in CIT v. Gem India Manufacturing Co. [2001] 249 ITR 307/117 Taxman 368, which was a case where cutting and polishing of diamonds was held as not amounting to manufacture for the purposes of deduction under Section 80-I of the Income Tax Act, 1961. However, the facts of that case are different from the facts of the present case and from the processes employed in the present case. Moreover the definition of manufacture, as appearing in the Act at present, was not there at that time. The Supreme Court held that polished diamond, as compared to the uncut or raw diamond, was not a new article or thing. That case is distinguishable as it was not a case where raw diamonds were being processed to result in diamond jewel.” (Emphasis provided by us) 24.13. We find that the above decision has considered the definition of manufacture as per the IT Act and therefore, the same has direct bearing on the present case of the assessee.
24.14 Further, similar issue has been dealt by Hon'ble Supreme Court in the case of Prestige Engineering India Ltd. vs. CCE reported in 1994 SCC (6) 465 (placed at page nos. 48-63 of the paper book). The relevant portion of the order is reproduced hereunder:-
“16. In our opinion, while the Calcutta and Gujarat High Courts have by and large understood the notification correctly, their reasoning is vitiated by their omission to understand the Page 10 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 expression 'manufacture' in the sense it is defined in the Act. Both the High Courts have understood the expression, manufacture' in its ordinary/normal sense (as pointed out by this Court in Delhi Cloth and General Mills Ltd.5). Indeed, they have not even referred to the definition in Section 2(f) of the Act. Once an expression is defined in the Act, that expression wherever it occurs in the Act, rules or notifications issued thereunder, should be understood in the same sense. Indubitably, the definition of 'manufacture' in Section 2(f) endows a wider content to the expression; several processes which would not ordinarily be understood as amounting to manufacturing are specifically included within its ambit. Clauses (i) and (ii) of the definition make this aspect clear beyond any doubt. In this connection, it must be remembered that even the un-amended definition of 'manufacture' included within the ambit of the definition several processes and activities which would not otherwise have amounted to manufacture. The un-amended definition contained as many as eight Sub-clauses. Sub- clause (iv), for example, stated that in relation to goods comprised in Item No. 18-A of the First Schedule, the expression ,manufacture' includes sizing, beaming, warping, wrapping, winding and reeling or any one or more or these processes or the conversion of any form of the said goods into another form of such goods. (Item 18-A of the First Schedule pertained to "cotton yarn - all sorts".)” (Emphasis provided by us) 24.15. Further, similar issue has also been dealt by Hon'ble Supreme Court in the case of Smt. Kasturi (Dead) By L.Rs vs Gaon Sabha reported in 1989 SCR (3) 591 ( placed at page nos. 64-69 of the paper book). The relevant portion of the order is reproduced hereunder:- "page 5…………The Court also referred to the definition of land in Punjab Alienation of Land Act, 1900. In the presence of a definition in the Act under consideration, we find no justification to refer to definitions in different statutes for finding out whether the disputed property was land. Appellant's counsel also placed reliance on the decision of a Full Bench of the same High Court in the case of Rajinder Prasad & Anr. v. The Punjab State & Ors., AIR 1966 (53) Punjab 185. Here again the question for consideration was whether gair mumkin land was land within the Punjab Security of Land Tenures Act. For the reason indicated above, we do not think that the appellant is entitled to any support from the Full Bench Judgment. Lastly, reliance was placed on the decision of this Court in Munshi Ram & Ors. v. Financial Commissioner, Haryana & Ors., [1979] 1 SCC 471. The Court was considering the true meaning of 'permissible area' under the Punjab Security of Land Tenures Act and for that purpose the meaning of land was being examined; whether banjar Jadid should be excluded Page 11 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 with reference to the meaning of land under the East Punjab Displaced Persons (Land Settlement) Act and the Punjab Tenancy Act was being debated before the Court. We do not think in view of the statutory definition any digration is necessary. It is impermissible to rely on definitions containing meanings different from the definition under the Act for a proper resolution of the dispute. The High Court, in our opinion, came to the correct conclusion when it held that the disput- ed property constituted land under the Act and became liable to vest in the Gaon Sabha under the Act. The judgment of the High Court, therefore, is upheld and the appeal is dis- missed. In the peculiar facts of this case, the parties are directed to bear their respective costs in this Court. (Emphasis provided by us) 24.16. Accordingly, on perusal of the above judicial precedents, it is clear that the definition provided in the Act should be strictly followed. Thus, the case of the assessee should be decided based on the definition of manufacturing as provided in section 2(29BA) inserted w.e.f. 2009.
24.17. Now, it is pertinent to consider the construction process of the assessee and how it falls under the definition of manufacturing. The definition of manufacturing as provided u/s 2(29BA) of the Act is as under:- “(29BA) “manufacture” with its grammatical variations, means a change in a non-living physical object or article or thing – (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use, or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure.”
The main portion of the above definition contains “a change in a non-living physical object” which only implies that what is excluded from the definition is any change in a living object. The sub clause (a) of the definition requires that such a change in a non-living physical object should result “in transformation of the object” “into a new and distinct object having a different name, character and use. The sub clause (b) of the definition requires that such change would bring into existence a ‘new and distinct object’ with a ‘different chemical composition or integral structure’. The word “non-living” evidently excludes “living” elements. The word “physical” is defined in the Oxford English Dictionary as “of matter, material”. The Oxford English Dictionary also defines the term “Object” as “thing placed before eyes or presented to sense, material thing, thing observed with optical instrument or represented in picture.” Page 12 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19
25.1. A harmonious reading of the above expressions indicate that a change in any non-living material(s) resulting in its transformation into a new and distinct material, having a different name, character and use would fall within the definition of “manufacture” under Section 2(29BA) of the Act. Similarly, a change in any non-living material resulting into brining a new distinct object with a different chemical composition or integral structure will fall under the definition of manufacture. In the case of the assessee, big boulders (non-living material) are crushed into small stones and chips of various forms and sizes. This activity itself amounts to “manufacture” as the boulders, by the process of crushing, are changed into small stones and chips, which results into bringing into existence a new and distinct product having a different integral structure. These small stones and chips are, thereafter, mixed with other material, such as, cement and laid on a stretch of land. The land is thereafter covered with bitumen or concrete mix and is known as a road. The step wise details is provided as under:-
Step-1 Manufacturing Process for Making Various Sizes of Bolder a. Bolders obtain from mines transport to the crusher with the help of Tippers. b. Boulder get dumped in feeding bunker from the mining site then it goes to Jaw Crusher or Primary crusher and after that materials get convey towards cone crusher which is also called secondary crusher. c. The material from Crusher get deposited to the screener of variable size screens as per requirement and from there oversized materials again come back towards cone crusher through conveyor belt. d. The name of the various sizes of bolder for making the Bituminous Concrete/Concrete Mix is Granular Sub Base (GSB), Wet Mix Macadam (WMM), Aggregate. e. Apart from the above sizes, crushed sand/crusher dust is also produced by the crusher
The above final product is used for making bitumen road or concrete road which is described as under:-
Step-2 Manufacturing Process of Making Bituminous Concrete (Bituminous Mix)
a. Aggregate and Crusher sand Feeding to Conveyor Belt b. Pass through Heating Zone c. Mixing with Bitumin in Hot Drum Mixer d. Dispatch through Tipper to laying Site e. Lay by Electronic Sensor Paver f. Compaction to be done by rollers
Step-2 Manufacturing Process of Making Concrete Mix
Page 13 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 a. Aggregate, Crusher Sand, Cement, Admixture and Water Feeding to Mixer Plant b. All material mix in mixer plant as per requirement resulting into Concrete Mix/Ready Mix Concrete(RMC). c. Concrete Mix/Ready Mix Concrete(RMC) dispatched to site through transit mixture/tippers d. Lay by Slip Form Paver e. Compaction to be done by Rollers
25.2. Thus, the “non-living physical object” comprising of boulders is changed into small stones and chips with the help of plant and machinery and ultimately result in bringing into existence “a new and distinct object” commonly known as ‘road’ which has “a different integral structure”. Thus prima facie the construction of road falls under the definition of manufacturing as per the Act.
25.3. In any case, Hon’ble Supreme Court, in CIT vs. N.C. Budharaja & Co., was concerned with two groups of appeals that involved interpretation of:-
(a) the expression “manufacture or produce articles” appearing in Section 80HH and Sec.84 of the Act; and (b) the words “construction, manufacture or production of any article or thing” appearing in Section 32A of the Act.
25.4. In the first group of appeals, the Hon’ble Supreme Court was concerned with the interpretation of the expression “manufacture or produce articles” appearing both in Sections 80HH and 84 of the Act as below:-
“This section applies to any industrial undertaking which fulfils all the following conditions, viz. ‘It has begun or begins to manufacture or produce articles........’ In the above definition, only ‘article’ were included.
25.5. In the second group of appeals, the Hon’ble Supreme Court was concerned with the words “construction, manufacture or production of any article or thing” appearing in Section 32A of the Act. In the above definition, only ‘article or thing’ were included. Hon'ble Supreme Court considered the various schedules of the Income Tax Act as referred to in the above provisions and observed that all the items listed in the schedule are movable items and no immovable items were present in the schedule. On the basis of such observation, Hon'ble Court held that construction of a dam, a bridge, a building, a road, etc. cannot be treated as manufacture. The above were immovable in nature and Hon'ble Supreme Court arrived at a conclusion by relying on the various schedules present in the Income Tax Act at that point of time, even though the definition of a ‘thing’ as per dictionary included immovable thing. The relevant portion of the order is reproduced hereunder:-
Page 14 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 18. Mr. Murthy, the learned counsel for the revenue, disputes the correctness of the assessee's submission. According to him, sub- section (2) of section 32A must be interpreted and understood in the following manner: Clause (a) speaks of acquisition of a new ship or aircraft while clause (b) speaks of new machinery or plant installed (i) for the purposes of business of generation or distribution of electricity or any other form of power, (ii) in a small-scale industrial undertaking for the purposes of business of manufacture or production of any article or thing, and (iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing; if an assessee installs any new machinery or plant for the construction of ships, it can claim investment allowance only under clause (b) (iii); it cannot claim it under clause (a) for the reason that sub-clause (i) is confined only to an assessee who acquires, i.e., who purchases a new ship or a new aircraft after the specified date and the investment allowance is granted on the actual cost of ship or aircraft; the meaning of the word 'construction' as well as the word 'thing' must be determined having regard to the context in which the said words occur, viz., machinery or plant installed in an industrial undertaking for production of any article or thing; the word 'construction' in the sub-clause is, thus, akin to manufacture or production; similarly the expression 'thing' is used as Interchangeable with the expression 'article'; a perusal of the list in the Eleventh Schedule reinforces this submission inasmuch as the articles and things mentioned in the Eleventh Schedule are all movables; it would not be correct to associate the word 'construction' with the word 'thing'; the appropriate way to read them is in the order in which they occur in the sub- clause - says the learned counsel.
Though at first sight, the use of the words 'construction' and 'thing' appear to lend some substance to the contention of the learned counsel for the assessee, a deeper scrutiny - and in particular the legislative history of the relevant provisions militates against the acceptance of his submission. Sub-clauses (ii) and ( iii) of clause (b) of sub-section (2) of section 32A were substituted by the Finance (No. 2) Act, 1977 with effect from 1-4- 1978. Prior to the said amendment, the sub-clauses read as follows:
"(ii) for the purposes of business of construction, manufacture or production of any one or more of the articles or things specified in the list in the Ninth Schedule; or
(iii) in a small-scale industrial undertaking for the purposes of business of manufacture or production of any other articles or things."
The unamended sub-clause (ii), which corresponds to present sub-clause (iii), was, thus, confined to the 'articles and things' in Page 15 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 the Ninth Schedule. The Ninth Schedule, since omitted, contained as many as 33 items. Item 15 therein related to 'ships'. All the items referred only to movables; none of them refers to an immovable object like a building, factory or bridge. Since the appropriate word in the case of ships is 'construction'- in common parlance one speaks of construction of ships and not manufacture of ships - the Legislature used the expression 'construction' in unamended sub-clause (ii). The said sub-clause also referred to 'articles or things', which is the heading of the Ninth Schedule. After amendment, sub-clause (ii), which became sub-clause (iii) underwent a certain change. Not only were the words 'in any other industrial undertaking' added at the beginning of the sub-clause, the applicability of the sub-clause was extended to all articles and things except those articles and things mentioned in the Eleventh Schedule. The heading of Eleventh Schedule is again 'List of articles or things', but the list does not include 'ships'. In other words, sub-clause (iii) , after amendment, continues to apply to ships. Ships are among the articles or things to which the present sub-clause (iii) applies. And that is precisely the reason the word 'construction' is retained in amended sub-clause (iii), the sub-clause corresponding to un-amended sub-clause (ii). So far as the use of the word 'thing' is concerned, it has no special significance inasmuch as both the Ninth Schedule and the Eleventh Schedule contain a list of articles or things. Both the Ninth Schedule, to- which alone the un-amended sub-clause(ii) applied as well as the Eleventh Schedule, the articles and things wherein are excluded from the purview of amended sub-clause (iii), refer only to movable objects - called articles or things. In this background, it is not possible or permissible to read the word 'construction' as referring to construction of dams, bridges, buildings, roads or canals. The association of words in former sub-clause (ii) and the present sub-clause (iii) is also not without significance. The words are: 'construction, manufacture or production of any one or more of the articles and things' and 'construction, manufacture or production of any articles and things' respectively. It is equally evident that in these sub-clauses as well as in the Ninth Schedule and Eleventh Schedule, the words 'articles' and 'things' are used interchangeably. In the scheme and context of the provision, it would not be right to isolate the word 'thing', ascertain its meaning with reference to Law Lexicons and attach to it a meaning which it was never intended to bear. A statute cannot always be construed with the dictionary in one hand and the statute in the other. Regard must also be had to the scheme, context and -as in this case - to the legislative history of the provision. We are, therefore, of the opinion that sub-clause (iii)of clause (b) of sub-section (2) of section 32A does not comprehend within its ambit construction of a dam, a bridge, a building, a road, a canal and other similar constructions.” (Emphasis provided by us) Page 16 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19
25.6. However, post the decision of the Hon'ble Supreme Court, the law has undergone several changes. The schedules which were relied upon by the Hon'ble Court have also undergone changes wherein various immovable items have also been included. As per Fifth Schedule of the Act specifying the list of article or thing on which section 33 applies also includes ‘Boilers and Steam generating plants’ at serial no 5. The relevant portion of the schedule is reproduced hereunder for ready reference:- “[THE FIFTH SCHEDULE [[See section 33(1)(b)(B)(i)]] LIST OF ARTICLES AND THINGS (1) ………. (2) ……….. (3) ………….. (4) ……….. (5) Boilers and steam generating plants………….” 25.7. Similarly, As per the Thirteenth Schedule of the Act specifying the list of article or thing which section 80IB(4) and 80IC(2) applies also includes ‘Thermal Power plant’ at Part B serial no 2. The relevant portion of the schedule is reproduced hereunder for ready reference:- “ [[THE THIRTEENTH SCHEDULE [[See sections 80-IB(4) and 80-IC(2)]] LIST OF ARTICLES OR THINGS Part B For the State of Himachal Pradesh and the State of Uttaranchal
S. No. Activity or article or Excise Sub-class under thing classification National Industrial Classification (NIC), 1998
……… ……….. ……….
Page 17 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19
Thermal Power Plant 40102 or 40103 (coal/oil based)
25.8. It is pertinent to note that the Hon'ble Supreme Court while considering the schedules in the above decision had also considered the ‘list of article or things’ as per the various schedules. Similarly, the above schedules as reproduced above, also defines the ‘list of article or things’. Therefore Hon'ble’ Supreme Court judgment in the case NC Budhraja & Co. (supra) cannot be made applicable to the present case for this reason also, since the very basis of the decision has undergone changes. Thus, we are of the view that a road would be included as an ‘object’ which has a wider meaning than “article or thing” and since the assessee constructs road, it should be considered as a “manufacturer”.
25.9. Further as regards the alternate argument made by Ld. counsel for the assessee being manufacturer of Ready Mix Concrete we find that the assessee manufactures Ready Mix Concrete (RMC) in the process of construction of roads. This product is an intermediary product in the entire construction process of the assessee. It is the contention of the assessee that it is eligible as a manufacturer wherein it makes RMC for its road construction business. Now, it is pertinent to consider the question whether making of an intermediary product can be termed as manufacturing even though the assessee’s broader business is not considered as manufacturing. In this regard, it is necessary to first consider the findings of the Hon'ble Supreme Court in the case of NC Budhraja & Co. (supra) wherein the said question was considered. The relevant portion of the order is reproduced hereunder:-
“7. It may be that the petitioner is himself manufacturing some of the articles like gates, windows and doors which go into the construction of a dam but that makes little difference to the principle. The petitioner is not claiming the deduction provided by section 80HH on the value of the said manufactured articles but on the total value of the dam as such. In such a situation, it is immaterial whether the manufactured articles which go into the construction of a dam are manufactured by him or purchased by him from another person. We need not express any opinion on the question what would be the position, if the petitioner had claimed the benefit of section 80HH on the value of the articles manufactured or produced by him which articles have, gone into/been consumed in the construction of the dam.” (Emphasis provided by us) 25.10. In the decision of Bombay High Court in the case of CIT vs. Emirates Commercial Bank Ltd. reported in (2003) 262 ITR 55 wherein
Page 18 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 similar issue of intermediary product has been considered. The relevant portion is reproduced hereunder:-
"Question III: Whether the Tribunal was right in allowing deduction under section 32A in respect of the computers installed in the office premises?"
Arguments on question No. III:
Mr. R.V. Desai, learned senior counsel appearing on behalf of the Department, submitted that in this case, the assessee had claimed deduction of Rs. 7.50 lakhs on account of investment allowance under section 32A of the Income-tax Act for new computers installed in the office premises. He contended that these computers were like calculating machines and, therefore, they were in the nature of office appliances and that they did not constitute plant or machinery under section 32A(2)(b)( iii). He contended that these computers merely aided in the proper functioning of the office and, therefore, they were in the nature of office appliances and, therefore, the assessee was not entitled to deduction under section 32A(2)(b)( iii). He contended that in order to attract section 32A(2)(b)(iii ), there should be existence of plant or machinery in an industrial undertaking for the purposes of the business of manufacture or production of any article or thing. It was argued that the assessee was in banking business. That, it was not an industrial undertaking as it was not in the business of manufacturing articles or things. ……………..
On the other hand, Mr. Pardiwalla, learned counsel appearing on behalf of the assessee, submitted that the assessee is a non- resident banking company, having its head office at Abu Dhabi. He contended that the branch office of the bank is in Bombay and, during the assessment year in question, the assessee acquired mainstream computers which were utilised in banking business for preparation of accounts, analysis, balance-sheets and bank statements. That, these computers were used to process the customers' data and the output which resulted from these computers consisted of management information reports. He contended that even a bank could constitute an industrial undertaking under section 32A(2)(b)( iii) in the sense that although it is rendering service still, in the course of its business, it produces articles and things. That, inputs were processed by the computers and transformed into different outputs. …………
Findings on question No. III :
We find merit in the arguments advanced on behalf of the assessee on this point. …………………….We do not find any merit in the argument of the Department that these two judgments do not apply because, in those cases, the assessee was in the Page 19 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 business of data processing. The nature of the services rendered by the bank to its customers does involve the work of data processing. It is on the basis of this data processing that the information is provided to its customers by the bank. It is on the basis of this data processing that the balance-sheets are prepared. It is on the basis of this data processing done by the computers that the management information reports come out.
Answer : In the circumstances, we answer the above question No. III in the affirmative, i.e., in favour of the assessee and against the Department.
25.11. Further, Hon'ble Kerala High Court in the case of Cherian Varkey Construction Co. (P.) Ltd. vs. UOI reported in (2018) 406 ITR 262 adjudicating identical issue of production of RMC, held it to be a manufacturing process even though the assessee was engaged in construction business. It is important to note that the above decision has duly considered the judgment of Hon'ble Supreme Court in the case of NC Budhraja & Co.(supra) and has allowed the appeal. Relevant portion is reproduced hereunder:- 4. Though there is a question raised of reassessment being on a mere change of opinion, it was not pressed when the matter was argued. The three questions raised before us, as available in the income-tax appeal are extracted herein below: "(1) Whether on the facts and circumstances of the case, the honourable Tribunal and authorities below erred in holding that there is no 'manufacture in the production of ready mix concrete when the RMC itself is an excisable commodity/goods on which credit is also available for inputs ? (2) Whether on the facts and circumstances of the case, the honourable Tribunal and authorities below erred in holding that the appellant is not entitled for any additional depreciation under section 32(1)(iia) for the machinery used for manufacturing ready mix concrete ?...... 7. The learned standing counsel for the Government of India (Taxes) would however point out that the assessee is principally engaged in the business of construction work and even if the assessee is involved in an additional manufacturing activity, it cannot qualify for exemption under section 32(1)(iia). The decision in N. C. Budharaja and Co. is relied on to contend that construction activity cannot be termed to be a manufacture nor can any incidental manufacture fall within the claim for additional depreciation in so far as the construction activity itself not being an activity of manufacture or production, as has been categorically held by the hon'ble Supreme Court. The learned standing counsel would also rely on the decisions of the Delhi High Court in CIT v. Minocha Brothers P. Ltd. [1986] 60 ITR 134 (Delhi) and Bhagat Construction Co. Pvt. Ltd. v. CIT [1998] 232 ITR 722 (Delhi). Page 20 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 8. At the outset, we are called upon to answer the question of law arising & from the majority decision; whether the making of RMC can be termed to be manufacture and it qualifies as a thing or article. Both the Tribunal Members, who found that the product of RMC does not involve a manufacture, relied on N. C. Budharaja and Co. We have carefully gone through the decision and would specifically refer, initially, to the facts in the case from among the batch, which was decided first and the principle followed in the latter ones. Therein the question was the benefit provided under section 80HH of the Income-tax Act, 1961, which speaks of deduction in respect of profits and gains from newly established industrial undertakings and hotel business in backward areas. The assessee was carrying on the construction of a dam in a backward area. It was claimed that the assessee was carrying on an industrial undertaking and also involved in the manufacture and production of articles. The specific contention raised was that the construction work would also qualify to be termed as a manufacture. 12. Even while respectfully bowing don to the dictum, we are of the opinion that there is a slight distinction in the present case. The assessee herein does not claim that its construction activity leads to a manufacture or production turning out an article or thing. The RMC used in the construction is a manufactured product is the specific contention taken by the assessee. We have to notice that in the case of N. C. Budharaja and Co. also, there was a contention that in the process of construction of dam, there were fixtures like gates, windows and door frames, which were made by the assessee themselves and hence there is a manufacture of an article or a thing. The above contention was answered in the following manner (page 424 of 204 ITR): "It may be that the respondent is himself manufacturing some of the articles like gates, windows and doors which go into the construction of a dam but that makes little difference to the principle. The petitioner is not claiming the deduction provided by section 80HH on the value of the said manufactured articles but on the total value of the dam as such. In such a situation, it is immaterial whether the manufactured articles which go into the construction of a dam are manufactured by him or purchased by him from another person. We need not express any opinion on the question what would be the position if the respondent had claimed the benefit of section 80HH on the value of the articles manufactured or produced by him which articles have gone into/consumed in the construction of the dam." 13. The hon'ble Supreme Court left open the issue, whether a deduction claimed on the value of the articles manufactured would be allowable as a deduction or not. Section 80HH allowed a deduction to the extent of twenty per cent. of the profits and gains derived from an industrial under taking newly established Page 21 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 in a backward area. To avail such exemption, there were conditions prescribed which, inter alia, included that the asses see commenced manufacture or production of articles, after and prior to specified dates. The assessee therein having claimed the deduction on the entire income on the construction of a dam, claiming it to be a manufacture or production, the hon'ble Supreme Court found that it is not allowable since a dam cannot be termed an article. The mere fact that there was a manufacturing activity carried on, allied to the construction activity, would not enable the assessee to claim deduction under section 80HH, since the deduction is of a percentage of the entire profits and gains and not limited to that of the manufacturing activity. In the other cases also the deduction was claimed on the ground of the construction of foundation of structures, dams and canals being covered under sections 84 and 32A, respectively. This is the distinction we deduce in so far as the decision in N. C. Budharaja and Co. 16. We cannot on a reading of the provision find that the additional depreciation permissible to the extent of 20 per cent. of the actual cost of plant and machinery, would be permissible only in the case of an assessee engaged principally in the business of manufacturing or production. We would be doing violence to the provision if we hold so since then we would be introducing the word "principally" to read the provision as "an assessee engaged in the business principally of manufacture or production of any article or thing". The dominant test has no application from the plain meaning of the words employed. Whatever be the business of the assessee, if the assessee is involved in a manufacture or production of articles or thing; then a claim under section 32(1)(iia) would be permissible to the extent allowed as depreciation.” 25.12. In light of the above decision we find that the assessee is engaged in the business of manufacturing of RMC. Now we need to consider as to which plant and machinery would be eligible for additional depreciation and investment allowance. In this regard, it is necessary to consider the recent decision of Bangalore Tribunal in the case of Texas Instruments (India) (P.) Ltd. vs. Addl. CIT reported in [2020] 115 taxmann.com 154 wherein it was held that if the assessee is engaged in the business of manufacturing, it is not necessary that the plant and machinery should be used for the purpose of manufacturing and additional deprecation would be allowed even to those plant and machinery which are not used for manufacturing process. Relevant portion of the decision is reproduced hereunder:-
“19. A bare reading of the aforesaid provisions shows that the new machinery or plant should be used by an assessee engaged in the business of manufacture or production of any article or thing and the new machinery or plant need not be used in manufacture or production of any article or thing. The learned counsel has before us relied on the decision of the Hon'ble
Page 22 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 Madras High Court High Court in the case of CIT v. VTM Ltd. [2010] 187 Taxman 319/[2009] 319 ITR 336 (Mad.) wherein the assessee-company was engaged in the business of manufacture of textile goods. During the relevant assessment year, it had set up a wind mill for generation of power and claimed additional depreciation thereon under section 32(1)(iia). The Assessing Officer disallowed the claim on the ground that the assessee was engaged only in the manufacture of textile goods and the setting up of a wind mill had absolutely no connection with the manufacture of textile goods. However, the Commissioner (Appeals) as well as the Tribunal allowed the assessee's claim of additional depreciation. On appeal to the High Court, the Hon'ble High Court held that for application of section 32(1)(iia ) what is required to be satisfied in order to claim the additional depreciation is that a new machinery or plant, which has been set up, should have been acquired and installed after 31-3-2002 by an assessee, who was already engaged in the business of manufacture or production of any article or thing. The said provision does not state that the setting up of a new machinery or plant, which was acquired and installed after 31-3-2002 should have any operational connectivity to the article or thing that was already being manufactured by the assessee. Therefore, the contention that the setting up of a windmill had nothing to do with the manufacture of textile goods was totally not germane to the specific provision contained in section 32(1)(iia ). In the light of the aforesaid decision, we are of the view that one of the basis on which the revenue authorities disallowed the claim of the Assessee for disallowance of additional depreciation cannot be sustained.”
Thus we find that once the assessee is engaged in manufacturing of an article, thing or object, even for any part of the business, every plant and machinery employed by the assessee whether directly used for the process of manufacturing or not, would be eligible for additional deprecation u/s 32(1)(iia). Identical language has been used in the provision of section 32AC providing investment allowance.
We, therefore, in view of the above discussion placing reliance on various judgments and decisions and in view of the definition of the word manufacturer defined in section 2(29BA) of the Act hold that: i. In view of the process involved in construction of road the activity carried out is a manufacturing activity. In others words assessee is a “manufacturer” ii. As the assessee is a manufacturer it is entitled to claim deduction for additional depreciation u/s 32(1)(iia) of the Act and also entitled for deduction for investment allowance u/s 32AC of the Act. iii. The assessee is also a manufacturer of Ready Mix Concrete which in itself is a manufacturing activity and since it is a part of assessee’s business, in view of the settled judicial precedents the assessee is eligible for claiming additional depreciation for Page 23 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 those plant and machinery which have not been used is manufacturing process. iv. The judgment of Hon'ble Supreme Court in the case of N.C. Bhudharaja & Co. (supra) is not applicable on the fact of the assessee because in this judgment facts for A.Y. 1974-75 and 1975-76 were considered but subsequently many amendments have been made in the Income Tax Act and most importantly through Finance Act 2009 definition of the word manufacturer was inserted by way of inserting new clause (29BA) in section 2 and in this definition the word ‘object’ was also included. 30. We, thus, set aside the finding of Ld. CIT(A) and allow the assessee claim made for additional depreciation u/s 32(1)(iia) of the Act and claim of the investment allowance u/s 32AC of the Act. Ground nos. 1& 2 raised by the assessee for A.Y. 2014-15 are allowed.” 9. Ld. DR could not bring to our notice any change in fact or change in law or any other reason for non-applicability of the aforesaid decision already taken by Hon'ble Coordinate Bench of I.T.A.T., Indore.
In the circumstances, we do not find any reason whatsoever to deviate from the view already taken by Hon'ble Coordinate Bench. Respectfully following the same we are inclined to hold that the assessee is entitled to the claim of additional depreciation and the revenue-authorities were not justified in denying such claim to assessee. Hence, the ground raised by the assessee is allowed.
In the result, appeal of Assessee is allowed.
Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 20/10/2022.
Sd/- Sd/-
(SUCHITRA R. KAMBLE) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore �दनांक /Dated : 20.10.2022 Patel/Sr. PS Page 24 of 25
Dilip Buildcon Ltd. ITA No.163/Ind/2021 Assessment year 2018-19 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY
Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore 1. Date of taking dictation 19.10.22 2. Date of typing & draft order placed before the 19.10.22 Dictating Member 3. Date on which the approved draft comes to the 19.10.22 Sr. P.S./P.S. 4. Date on which the fair order is placed before the Dictating Member for pronouncement 5. Date on which the file goes to the Bench Clerk 6. Date on which the file goes to the Head Clerk 7. Date on which the file goes to the Assistant Registrar for signature on the order 8. Date of dispatch of the Order
Page 25 of 25