Case Law Details
Trimex Sands Pvt. Vs PCIT (ITAT Chennai)
Introduction: The Income Tax Appellate Tribunal (ITAT) in Chennai recently delivered a landmark ruling in the case of Trimex Sands Pvt. Ltd. Vs Principal Commissioner of Income Tax (PCIT). The crux of the judgment hinges on the classification of “extraction of minerals from beach sand” as a manufacturing process under section 2(29BA) of the Income Tax Act. The tribunal has thereby permitted income tax deductions for the said activity. This article offers a comprehensive analysis of this significant legal development.
Controversy Surrounding Jurisdiction Under Section 263: Trimex Sands Pvt. Ltd. contended that the PCIT failed to assume valid jurisdiction under section 263 of the Income Tax Act. They argued that various judicial decisions have held the same and also questioned the lack of detailed reasoning from PCIT’s side.
The Debate on “Manufacturing” and “Production”: The core issue revolved around whether the extraction of minerals from beach sand should be considered a “manufacturing” process. The PCIT contended that Trimex Sands Pvt. Ltd. did not engage in manufacturing, as defined by section 2(29BA). However, the assessee argued that the term “production” is wider and that their activities did indeed result in a new and distinct product, fulfilling the criteria for a manufacturing process.
Additional Depreciation Under Section 32(1)(ii): Both the parties had a conflicting interpretation of additional depreciation under Section 32(1)(ii). The PCIT insisted that additional depreciation could only be applicable from AY 2016-17, an interpretation disputed by the assessee.
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