State Bank of Mysore, Bangalore V. JOINT Commissioner of Income tax(LTU), Bangalore

ITA 1063/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0363 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 24-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 13-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR SIBICEN K MATHEW
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Depreciation; Opportunity of being heard
• Section: 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO.1063/BANG/2014 ASSESSMENT YEAR : 2007-08 STATE BANK OF MYSORE, HEAD OFFICE, P.B. NO.9727, K.G. ROAD, BANGALORE 560 009. PAN: AACCS 0155P VS. THE JOINT COMMISSIONER OF INCOME TAX, LARGE TAX PAYERS UNIT (LTU), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI K.R. VASUDEVAN, ADVOCATE RESPONDENT BY : DR. SIBICEN K. MATHEW, CIT(DR) DATE OF HEARING : 24.05.2016 DATE OF PRONOUNCEMENT : 27.05.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(APPEALS), LTU, BANGALORE DATED 28.05.2014 FOR T HE ASSESSMENT YEAR 2007-08 INTER ALIA ON THE FOLLOWING GROUNDS:- 1. DISALLOWANCE OF EXCESS DEPRECIATION ON AUTOMATED TELLER MACHINES (ATM) BY RECLASSIFYING AS PLANT AND MACHINERY ITA NO.1063/BANG/2014 PAGE 2 OF 12 A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] ERRED IN UPHOLDING THE ORDER OF THE LEARNE D ASSESSING OFFICER (AO) RECLASSIFYING ATMS AS PLANT AND MACHINERY AND RESTRICTING THE DEPRECIATION TO 15% U NDER THE INCOME-TAX ACT, 1961 (THE ACT). B) THE LEARNED CIT(A) OUGHT TO HAVE OBSERVED THAT ATM PERFORMS LOGICAL, ARITHMETIC AND MEMORY FUNCTIONS B Y MANIPULATIONS OF ELECTRONIC, MAGNETIC OR OPTICAL IM PULSES GIVING DEBIT OR CREDIT CASH AND THEREAFTER DISPENSE S THE CASH AND GIVES A PRINTED RECEIPT. C) THE LEARNED CIT(A) OUGHT TO HAVE OBSERVED THAT AN A TM IS A COMPUTERIZED DEVICE AUTOMATED WITH THE AID OF COMPU TER, COMPUTER PERIPHERALS, SOFTWARE AND OTHER HARDWARE D EVICES THAT PROVIDES THE CLIENTS OF THE BANKS WITH ACCESS TO FINANCIAL TRANSACTIONS IN A PUBLIC SPACE WITHOUT THE NEED FOR A CASHIER, HUMAN CLERK OR BANK TELLER. D) THE LEARNED CIT(A) ERRED IN STATING THAT COMPUTER I S NOT AN INTEGRAL PART OF THE ATM MACHINE BUT IS ONLY A TELECOMMUNICATION DEVICE FOR THE PURPOSE OF CASH ST ORAGE AND DISPENSATION. E) THE LEARNED CIT(A) OUGHT TO HAVE OBSERVED THAT SINC E THE ATM MACHINE PERFORMS THE FUNCTIONS OF A COMPUTER AL ONG WITH OTHER FUNCTIONS (SUCH AS DISPENDING OF CASH AT THE TIME OF WITHDRAWAL, DEPOSIT OF CASH ETC.,) AND SUCH OTHE R FUNCTIONS ARE WHOLLY DEPENDENT UPON THE FUNCTIONS OF THE COMP UTER, THE ATM MACHINE WOULD QUALIFY TO BE COMPUTER AND BE ENT ITLED TO HIGHER DEPRECIATION @ 60% UNDER THE ACT. F) THE LEARNED CIT(A) ERRED IN HOLDING THAT CPU CONTAI NED IN THE ATM IS MERELY TO CONTROL THE USER INTERFACE AND TRANSACTION DEVICE AND THE PROCESSING/VERIFICATION OF THE INFORMATION IS DONE BY THE SERVER OF THE BANK AND H ENCE, COMPUTER IS NOT AN INTEGRAL PART OF ATM MACHINE. G) THE LEARNED CIT(A) OUGHT TO HAVE OBSERVED THAT IF T HE TRADITIONAL STANDALONE ATMS COULD BE CONSIDERED AS COMPUTERS UNDER THE ACT, EVEN THE PRESENT NETWORKED ATMS WOULD ALSO QUALIFY AS COMPUTERS AS THE ONLY DIFFERE NCE BETWEEN THEM IS THAT THE STANDALONE ATM CONTAINS TH E CUSTOMERS' ACCOUNT DETAILS IN ITS ENTIRETY, WHILE P RESENT ITA NO.1063/BANG/2014 PAGE 3 OF 12 NETWORKED ATMS GET CONNECTED TO THE BANK'S SERVER T HROUGH INTERNET CONNECTION FROM REMOTE LOCATIONS IN ORDER TO COMPLETE THE PROCESSING OF THE TRANSACTION. H) THE LEARNED CIT(A) ERRED IN NOT RELYING UPON THE PR INCIPLES LAID DOWN BY THE JUDICIAL PRECEDENTS INCLUDING THE JURISDICTIONAL TRIBUNAL'S RULING IN THE CASE OF NCR CORPORATION PVT. LTD. [ITA NO.353/BANG/2010] WHEREI N IT WAS HELD THAT ATM MACHINES ARE 'COMPUTERS' AND ARE ENTITLED TO DEPRECIATION AT THE RATE OF 60%. 2. DISALLOWANCE OF EXCESS DEPRECIATION ON UPS BY RECLASSIFYING AS PLANT AND MACHINERY A) THE LEARNED CIT (A) ERRED IN UPHOLDING THE ORDER OF THE LEARNED AO RECLASSIFYING UPS AS PLANT AND MACHINERY AND RESTRICTING THE DEPRECIATION TO 15% UNDER THE ACT. B) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT THE UPS MACHINE IS BEING USED ONLY FOR THE PURPOSE OF ENSUR ING UNINTERRUPTED POWER SUPPLY TO COMPUTER SYSTEMS BY REGULATING THE FLOW OF POWER IN ORDER TO AVOID ANY KIND OF DAMAGE TO THE COMPUTERS AND HENCE TO BE TREATED AS PART OF COMPUTER SYSTEM. C) THE LEARNED CIT(A) ERRED IN NOT RELYING ON THE PRINCIPLES LAID DOWN BY THE JUDICIAL PRECEDENTS WHICH HAVE HELD THA T UPS IS 'COMPUTER PERIPHERAL' AND ENTITLED TO DEPRECIATION AT THE RATE OF 60%. 3. DISALLOWANCE OF DEPRECIATION ON ACCOUNT OF NON- FURNISHING OF INVOICES/BILLS FOR PURCHASE OF FIXED ASSETS A) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT T HE APPELLANT HAS ALREADY FURNISHED 73% OF THE TOTAL IN VOICES/BILLS IN SUPPORT OF THE ADDITIONS TO FIXED ASSETS UNDER T HE BLOCK 'COMPUTERS AND COMPUTER SOFTWARE'. B) THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF THE LEARNED AO DISALLOWING DEPRECIATION ON BALANCE 27% OF THE ADDITIONS TO FIXED ASSETS UNDER THE BLOCK 'COMPUTER S AND ITA NO.1063/BANG/2014 PAGE 4 OF 12 COMPUTER SOFTWARE' FOR WHICH THE APPELLANT COULD NO T FURNISH BILLS/INVOICES. C) THE LEARNED CIT(A) OUGHT TO HAVE OBSERVED THAT THE INVOICES FOR ENTIRE ADDITIONS TO FIXED ASSETS HAVE BEEN DULY VERIFIED AND CONFIRMED BY THE EXTERNAL AUDITORS DURING THE AUDIT OF THE BOOKS OF ACCOUNTS OF THE APPELLANT (INCLUDING I TS BRANCHES SPARED ACROSS THE COUNTRY). D) THE LEARNED CIT(A) OUGHT TO HAVE ACCEPTED THE QUANT UM (73%) OF EVIDENCES FURNISHED HITHERTO IN SUPPORT OF ADDITIONS TO FIXED ASSETS, AS REPRESENTATIVE SAMPLE FOR THE E NTIRE ADDITIONS MADE DURING THE YEAR UNDER THE BLOCK 'COM PUTERS AND COMPUTER SOFTWARE' AND ALLOWED THE DEPRECIATION THEREON. E) NOTWITHSTANDING WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) OUGHT TO HAVE TAKEN THE MANAGEMENT REPRESENT ATION INTO COGNIZANCE TO THE EFFECT THAT ENTIRE ADDITIONS TO FIXED ASSETS ARE GENUINE AND ACCORDINGLY ALLOWED DEPRECIA TION ON THE BALANCE ADDITIONS FOR WHICH INVOICES COULD NOT BE FURNISHED BY THE APPELLANT. 4. DISALLOWANCE OF EXPENDITURE IN THE NATURE OF PENALT Y - RS.L,L5,566 A) THE LEARNED CIT(A) ERRED IN CONSIDERING THE PAY MENTS ARE COMPENSATORY IN NATURE LIKE INTEREST PAYMENT FOR DE LAY IN FILING SERVICE TAX RETURNS, INTEREST ON BELATED PAY MENT OF THE SERVICE TAX, PAYMENT TO WEIGHT MEASUREMENTS DEP ARTMENT, INTEREST ON SHORT REMITTANCE OF SERVICE TAX ETC., A S PAYMENTS IN THE NATURE OF PENALTY UNDER THE ACT. B) THE LEARNED CIT (A) OUGHT TO HAVE OBSERVED THAT THESE EXPENSES ARE NOT PENAL IN NATURE BUT ARE COMPENSATO RY IN NATURE AND HENCE ELIGIBLE FOR DEDUCTION UNDER SECTI ON 37(1) OF THE ACT. C) THE LEARNED CIT(A) ERRED IN DISREGARDING THE CA SE LAWS RELIED ON BY THE APPELLANT AND CONCLUDING THAT THE ABOVE E XPENSES CANNOT BE ALLOWED AS DEDUCTION UNDER SECTION 37 OF THE ACT. ITA NO.1063/BANG/2014 PAGE 5 OF 12 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, OR AMEND ANY OF THE ABOVE GROUND AT THE TIME OF HEARING. 2. WITH REGARD TO GROUND NO1, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THIS GROUND IS SQUARELY COVERED BY T HE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. SARASWAT INFOTECH LTD. IN ITA NO.1243 OF 2012 DATED 15.01.2013 AND THE ORDER OF THE TRIBUNAL IN THE CASE OF NCR CORPORATION PVT. LTD. V. ACIT IN ITA NO.353BANG /2010 DATED 28.02.2011 , IN WHICH IT HAS BEEN HELD THAT AUTOMATED TELLER M ACHINES (ATMS) ARE COMPUTERS AND ASSESSEE IS ENTITLED TO DE PRECIATION @ 60%. RELIANCE WAS ALSO PLACED UPON THE ORDER OF THE TRIB UNAL IN THE CASE OF DCIT V. GLOBAL TRUST BANK LTD. IN ITA NO.474/DEL/20 09 DATED 20.4.2011 . 3. PER CONTRA, THE LD. DR HAS CONTENDED THAT THE HON'BLE JURISDICT IONAL HIGH COURT IN THE CASE OF DIEBOLD SYSTEMS PVT. LTD. V. COMMISSIONER OF COMMERCIAL TAXES REPORTED AT 144 STC 59 KAR HAS HELD THAT AN ATM IS AN ELECTRONIC DEVICE, WHICH ALLOWS BANKS CUSTOMERS TO MAKE CASH WITHDRAWALS, AND CHECK THEIR ACCOUNT BALANCES AT AN Y TIME WITHOUT THE NEED OF HUMAN TELLER, PROBABLY THAT MOST WIDELY USED MEA NS OF ELECTRONIC FUNDS TRANSFER. THEREFORE, ATM IS NOT A COMPUTER BY ITS ELF AND IT IS CONNECTED TO A COMPUTER THAT PERFORMS THE TASKS REQUESTED BY THE PERSON USING ATMS. SINCE THE HON'BLE JURISDICTIONAL HIGH COURT HAS GIV EN A SPECIFIC FINDING WITH REGARD TO THE NATURE OF ATMS, IT CANNOT BE TREATED AS PART OF A COMPUTER IN LIGHT OF THE JUDGMENT REFERRED TO BY THE ASSESSEE. ITA NO.1063/BANG/2014 PAGE 6 OF 12 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDERS OF AUTHORITIES BELOW AND THE JUDGMENTS REFER RED TO BY THE PARTIES. WE FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF SARASWAT INFOTECH LTD. (SUPRA) UPHELD THE FINDING OF THE TRIBUNAL THAT ATMS CANNO T FUNCTION WITHOUT THE HELP OF COMPUTER AND THEREFORE WOULD BE A PART OF THE COMPUTER USED IN THE BANKING INDUSTRY, RELYING UPO N THE JUDGMENT OF THE HONBLE DELHI HIGH COURT DATED 20.1.2011 IN THE CAS E OF CIT V. ORIENT CERAMICS AND INDUSTRIES LTD. THE TRIBUNAL IN THE CASE OF NCR CORPORATION LTD. V. ACIT IN ITA NO.353(BANG)/2010 DATED 28.02.2 011 HAS ALSO TAKEN A SIMILAR VIEW THAT ATMS ARE COMPUTERS AND ASSESSEE I S ENTITLED TO DEPRECIATION @ 60%. SIMILAR VIEW WAS ALSO FOLLOWED BY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT V. GLOBAL TRUST BANK LTD. (SUPRA) . 5. NOW WE HAVE BEEN CARRIED THROUGH A JUDGMENT OF T HE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIEBOLD SYSTEMS PVT. LTD. V. COMMISSIONER OF COMMERCIAL TAXES, 144 STC 4 KAR, IN WHICH THE HONBLE HIGH COURT HAS EXAMINED THE NATURE OF ATMS AND HAS GIVEN A CATEGORICAL FINDING THAT ATM IS AN ELECTRONIC DEVICE WHICH ALLO WS BANKS CUSTOMERS TO MAKE CASH WITHDRAWALS, AND CHECK THEIR ACCOUNT BALA NCES AT ANY TIME WITHOUT THE NEED OF HUMAN TELLER. THE ATM IS NOT A COMPUTER BY ITSELF, BUT IT IS CONNECTED TO A COMPUTER THAT PERFORMS THE TAS KS REQUESTED BY THE PERSON USING ATMS. THE RELEVANT OBSERVATIONS OF TH E HONBLE HIGH COURT ARE EXTRACTED HEREUNDER IN THIS REGARD:- ITA NO.1063/BANG/2014 PAGE 7 OF 12 38. THE SUPREME COURT IN SEVERAL OF ITS JUDGMENT HAS LAID DOWN THE RULE OF INTERPRETATION FOR ARTICLES OF DAI LY USE AND COMMONLY TRADED ITEMS, WHICH ARE MENTIONED IN THE T AXING STATUTES. THE RULE IS THAT IF THERE IS NO DEFINITIO N IN THE STATUTE, WE SHOULD FOLLOW FOR TAX PURPOSES THE DEFINITION NO T OF THE DICTIONARIES OR OF TECHNICAL BOOKS BUT OF COMMERCIA L PARLANCE I.E. THE POPULAR MEANING. THE INTENTION OF LEGISLATURE I S, THAT IN TAXING STATUTES, WHEN TERMS ARE USED OF COMMON USAG E, IT IS THE COMMON MAN'S UNDERSTANDING OF THE ARTICLES WHICH PR EVAILS OVER THE TECHNICAL MAN'S CONCEPT. THE PLACE OF SCIENTIFI C DEFINITION BASED ON TECHNICAL BOOKS, TECHNICAL LITERATURE, DIC TIONARIES, ETC., IS RELEVANT. WHEN THE GOODS ARE TECHNICAL, THERE IS NO MARKET AND SO, NO MARKET PARLANCE. AT THE SAME TIME, IF THE GOODS ARE NOT TECHNICAL, THE DEFINITION IN THE MARKET PARLANCE WO ULD APPLY. IT ONLY MEANS, THAT IF THE GOODS ARE TECHNICAL, COMMON PARLANCE OR COMMERCIAL PARLANCE WOULD NOT APPLY. THEREFORE, IN OUR OPINION, THE REVISIONAL AUTHORITY IS FIRSTLY JUSTIFIED IN OB SERVING THAT THOUGH TECHNICALLY GOODS IN QUESTION MAY FALL WITHIN THE M EANING OF THE EXPRESSION 'COMPUTER TERMINALS', BUT IN COMMON PARL ANCE THEORY, THEY ARE NOT UNDERSTOOD SO. 39. AN AUTOMATIC TELLER MACHINE, IN OUR VIEW, IS A N ELECTRONIC DEVICE, WHICH ALLOWS A BANK'S CUSTOMER T O MAKE CASH WITHDRAWALS, AND CHECK THEIR ACCOUNT BALANCES AT AN Y TIME WITHOUT THE NEED OF HUMAN TELLER, PROBABLY THAT MOS T WIDELY USED MEANS OF 'ELECTRONIC FUNDS TRANSFER'. FROM THE LITE RATURE AND THE BOOKS ON COMPUTERS PRODUCED BEFORE US, WE ARE OF TH E VIEW, THAT ATM IS NOT A COMPUTER BY ITSELF AND IT IS CONNECTED TO A COMPUTER THAT PERFORMS THE TASKS REQUESTED BY THE PERSON USI NG ATM'S. THE COMPUTER IS CONNECTED ELECTRONICALLY TO MANY ATM'S THAT MAY BE LOCATED FROM SOME DISTANCE FROM THE COMPUTER. IN CO MMON PARLANCE, IT IS UNDERSTOOD AS ELECTRONIC DEVICE AND THEREFORE, THE REVISIONAL AUTHORITY IS JUSTIFIED IN HOLDING THAT A TM'S ARE ELECTRONIC GOODS AND THE LEVY OF TAX AND THE SALE O F ATM'S REQUIRES TO BE MADE UNDER ENTIY 4 OF PART 'E' OF SE COND SCHEDULE TO THE ACT. 6. FROM A CAREFUL READING OF THE AFORESAID JUDGMENT , WE ARE OF THE VIEW THAT ATM ITSELF HAS ITS OWN IDENTITY AND CAN B E USED INDEPENDENTLY, ITA NO.1063/BANG/2014 PAGE 8 OF 12 BUT ONCE IT IS CONNECTED WITH THE COMPUTER, FURTHER INFORMATION SOUGHT BY THE CUSTOMERS CAN ALSO BE PROCESSED. THEREFORE, I T CANNOT BE SAID TO BE PART OF A COMPUTER OR COMPUTER. THEREFORE, ATM IS NOT ELIGIBLE FOR HIGHER RATE OF DEPRECIATION WHICH IS TO BE ALLOWED TO A CO MPUTER. ONLY THOSE DEVICES WHICH DO NOT HAVE ITS OWN IDENTITY OR CANNO T BE USED INDEPENDENTLY WITHOUT CONNECTING TO THE COMPUTER CAN ONLY BE CALL ED AS PART OF THE COMPUTER FOR CLAIMING HIGHER RATE OF DEPRECIATION. MOREOVER, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIEBOLD SYSTEMS PVT. LTD. V. COMMISSIONER OF COMMERCIAL TAXES (SUPRA) HAS CATEGORICALLY HELD THAT ATM IS AN ELECTRONIC DEVICE, WHICH ALLOWS BANKS CU STOMERS TO MAKE CASH WITHDRAWALS, AND CHECK THEIR ACCOUNT BALANCES AT AN Y TIME WITHOUT THE NEED OF HUMAN TELLER AND ONCE IT IS CONNECTED TO A COMPU TER, THAT PERFORMS THE TASKS REQUESTED BY THE PERSON USING ATMS. THEREFOR E, WE ARE OF THE CONSIDERED VIEW THAT THAT ATM IS NEITHER A COMPUTER NOR A PART OF THE COMPUTER AND HENCE HIGHER RATE OF DEPRECIATION CANN OT BE ALLOWED TO IT. WE THEREFORE FIND NO INFIRMITY IN THE ORDER OF CIT( APPEALS) IN THIS REGARD AND WE CONFIRM THE SAME. 7. WITH REGARD TO GROUND NO.2, IT HAS BEEN URGED ON BEHALF OF THE ASSESSEE THAT THIS GROUND IS COVERED IN THEIR FAVOU R BY VARIOUS ORDERS OF THE TRIBUNAL. IN THE CASE OF CIT V. ORIENT CERAMICS & INDUSTRIES LTD., [2011] 11 TAXMAN.COM 417 (DELHI) THE HONBLE DELHI HIGH COURT FOLLOWING ITS OWN JUDGMENT IN THE CASE OF CIT V. BSES YAMUNA POWERS LTD. [IT APPEAL NO.1267 DATED 31.8.2010] HAS HELD THAT DEPRECIATION ON UPS WAS TO BE ITA NO.1063/BANG/2014 PAGE 9 OF 12 ALLOWED @ 60%. FOLLOWING THIS JUDGMENT OF THE HON BLE DELHI HIGH COURT, THE TRIBUNAL HAS ALSO TAKEN A SIMILAR VIEW IN THE C ASE OF SUNDARAM ASSET MANAGEMENT CO. LTD. V. DCIT, 37 TAXMANN.COM 278 (CH ENNAI TRIB.) . COPY OF JUDGMENTS ARE PLACED ON RECORD. 8. THE LD. DR SIMPLY PLACED RELIANCE UPON THE ORDER OF THE CIT(APPEALS) AND NO CONTRARY JUDGMENT WAS FILED. 9. SINCE THE ISSUE IS SQUARELY COVERED BY THE JUDGM ENT OF THE HONBLE DELHI HIGH COURT IN FAVOUR OF THE ASSESSEE AND NO C ONTRARY JUDGMENT IS PLACED BEFORE US BY THE LD. DR, WE SET ASIDE THE OR DER OF CIT(APPEALS) IN THIS REGARD AND DIRECT THE AO TO ALLOW HIGHER RATE OF DEPRECIATION AT 60% ON UPS. 10. WITH REGARD TO GROUND NO.3, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT AO HAS DISALLOWED THE DEPRECIATION O N ACCOUNT OF NON- FURNISHING OF INVOICES/BILLS FOR PURCHASE OF FIXED ASSETS. HE HAS CONTENDED THAT MOST OF THE B ILLS ARE PLACED BEFORE THE AO, B UT ON ACCOUNT OF NON- FURNISHING OF SOME BILLS, HE HAD DISALLOWED DEPRECI ATION IN RESPECT OF THOSE ASSETS. IN SUPPORT OF HIS CONTENTION THAT EVEN IN THE ABSENCE OF SOME OF BILLS OF CERTAIN ASSETS, DISALLOWANCE OF DEPRECIATI ON ON TOTAL ASSETS CANNOT BE MADE, HE PLACED RELIANCE UPON THE DECISION IN TH E CASE OF ACIT V. JAY ENGINEERING WORKS, 113 ITR 389 AND PNC CONSTRUCTION CO. LTD. V. DCIT, 144 ITD 577. ITA NO.1063/BANG/2014 PAGE 10 OF 12 11. THE LD. DR, ON THE OTHER HAND, HAS CONTENDED TH AT WHEN THE ASSESSEE CLAIMS DEPRECIATION OVER THE FIXED ASSETS, THE ONUS IS UPON HIM TO PRODUCE THE RELEVANT INVOICES WITH REGARD TO HIS PU RCHASE AND IF HE FAILS TO DO SO, THE AO CAN DISALLOW DEPRECIATION THEREON, BE CAUSE DEPRECIATION CAN ONLY BE ALLOWED IF THE ASSESSEE OWNS A PARTICULAR A SSET. THUS, THE AO HAS RIGHTLY DISALLOWED DEPRECIATION ON ONLY THOSE ASSET S OF WHICH OWNERSHIP WAS NOT PROVED. 12. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A C AREFUL PERUSAL OF THE RECORD AND RELEVANT JUDGMENTS, WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAS ASKED THE ASSESS EE TO PRODUCE THE BILLS/INVOICES WITH REGARD TO PURCHASE OF FIXED ASS ETS ON WHICH DEPRECIATION WAS CLAIMED. WHATEVER BILLS WERE PRODUCED BEFORE T HE AO, THE AO HAS EXAMINED THE SAME AND ALLOWED DEPRECIATION THEREON, BUT ON CERTAIN ASSETS ASSESSEE COULD NOT PRODUCE THE INVOICES/BILL S TO PROVE THE OWNERSHIP THEREOF. IT IS SETTLED POSITION OF LAW T HAT IF ANYONE MAKES ANY CLAIM, THE ONUS IS UPON HIM TO PLACE RELEVANT EVIDE NCE IN SUPPORT OF HIS CLAIM, AND IF HE FAILS TO DO SO, ADVERSE VIEW CAN B E TAKEN AGAINST HIM. IN LIGHT OF THIS PROPOSITION OF LAW, WE ARE OF THE VIE W THAT THE AO HAS RIGHTLY DISALLOWED DEPRECIATION WITH RESPECT TO THOSE ASSET S FOR WHICH INVOICES OF PURCHASES WERE NOT FILED TO PROVE THE OWNERSHIP. A CCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(APPEALS) AND WE C ONFIRM THE SAME. ITA NO.1063/BANG/2014 PAGE 11 OF 12 13. SO FAR AS GROUND NO.4 IS CONCERNED, THE LD. COU NSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AO HAS DISALLOWED CERTAIN PA YMENTS AFTER TREATING IT TO BE PENALTY ON ACCOUNT OF INFRACTION OF LAW. 14. DURING THE COURSE OF HEARING, DETAILS OF DISALL OWANCE WERE SHOWN TO US. FROM ITS PERUSAL, WE FIND THAT AGAINST CERTAIN DISALLOWANCES, THE NOMENCLATURES WAS SHOWN TO BE THE PENALTIES, BUT IT IS NOT CLEAR WHETHER PENALTIES WERE PAID ON ACCOUNT OF INFRACTION OF LAW . WE ARE THEREFORE OF THE VIEW THAT THE ISSUE REQUIRES PROPER ADJUDICATION BY THE AO. WE ACCORDINGLY SET ASIDE THE ORDER OF CIT(APPEALS) IN THIS REGARD AND RESTORE THE MATTER TO THE FILE OF AO WITH A DIRECTION TO READJUDICATE THE ISSUE AFRESH, AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. IF THE AO FINDS THAT PAYMENTS ARE COMPENSATORY IN NATURE AND NOT ON ACCO UNT OF INFRACTION OF LAW, NO DISALLOWANCE CAN BE MADE. BUT IF IT IS THE PENALTY FOR INFRACTION OF LAW, DISALLOWANCE IS POSSIBLE. ACCORDINGLY THIS GR OUND IS DISPOSED OF. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF MAY, 2016. SD/- SD/- ( ABRAHAM P. GEORGE ) (SUNIL KUMAR YA DAV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE, DATED, THE 27 TH MAY, 2016. /D S/ ITA NO.1063/BANG/2014 PAGE 12 OF 12 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.