Case Law Details
ACIT Vs Indraprastha Gas Ltd. (ITAT Delhi)
Conclusion: When a commodity acquired a distinct name, use and commercial identity, it would acquire the trait of ‘manufacture’. Therefore, the activity of conversion of natural gas to compressed natural gas was entitled to avail additional depreciation under section 32(1)(iia).
Held: Assessee–IGL was a City Gas Distribution Company (CGD) which was engaged in the business of selling and distribution of Natural Gas to be used as industrial and household fuel in Commercial and Domestic sector respectively. Further IGL was also engaged in the manufacturing and selling of Compressed Natural Gas (CNG) which was used as a fuel to be used for running Automobiles. AO held that the process of delivery of CNG to automobiles at the CNG filling centres did not amount to manufacture or production or an article or thing which was mandatory requirement for claiming additional depredation u/s 32 (1)(iia). Therefore, the AO held that the assessee company was not entitled for additional depreciation as claimed in the return of income and accordingly an amount of Rs. 8,23,15,761/- was added back to the total income of assessee. It was held that after undergoing the process of compression, natural gas acquired a new form by the name of compressed natural gas. It had a distinct use as automobile fuel and a distinct commercial name and when a commodity acquired a distinct name, use and commercial identity, it would acquire the trait of manufacture . Therefore, additional depreciation under section 32(1)(iia) was allowable to assessee.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeals have been filed by the revenue against the orders of the ld. CIT(A)-35, New Delhi dated 28.08.2018.
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