ITO, Kota V. VAIDANGI TECHMO MANGEMENT CONSULTANTS P. LTD, Kota

ITA 1078/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2002 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L CHANDELADDL
• Assessee Lawyers: MAHENDRA GARGIEYA DHK
• Keywords: Depreciation; Bonafide belief; Wrong claim; Difference of opinion
• Section: 143(3); 32

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 1078/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. THE INCOME TAX OFFICER, WARD-1(2), KOTA. CUKE VS. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS P. LTD., 1-B-29, TALWANDI, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABSFS 7272 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI S.L. CHANDEL(ADDL. CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADVOCATE) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04.07.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 11/07/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THE APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF LD. CIT (APPEALS), KOTA, DATED 26.09.2016 PERTAINING TO ASSESSMENT YEA R 2012-13. THE ONLY EFFECTIVE GROUND HAS RAISED IN THIS APPEAL , WHICH READS AS UNDER:- 1. DELETING PENALTY OF RS. 17,12,639/- IMPOSED /S 271(1)(C) OF THE ACT. 2. BRIEFLY, STATED THE FACTS ARE THAT, WHILE FRAMIN G THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT). THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR CONCEALING THE INCOME. AS PER THE ASSESSING OFFICER, THE ASSESSEE HAD CLAIMED EXCESSIVE DEPRECIATION ON UID KIT CLAIMING TO BE PART OF THE COMPUTER. SUBSEQUEN TLY, THE PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED VIDE ORDER DATED 29/09/2015. A GAINST THIS, THE ASSESSEE 2 ITA NO. 1078/JP/2016. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS LTD. PREFERRED AN APPEAL BEFORE LD. CIT(A), WHO AFTER CO NSIDERING THE SUBMISSIONS DELETED THE PENALTY. 3. NOW, THE REVENUE IS IN APPEAL. 4. THE LD. DEPARTMENTAL REPRESENTATIVES VEHEMENTLY ARGUED THAT LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY. HE SUBMI TTED THAT EX FACIE, THE ASSESSEE CLAIMED HIGHER DEPRECIATIONS WHICH WERE NOT AVAILAB LE TO THE UID KITS. THEREFORE, THE AO WAS JUSTIFIED IN IMPOSING THE PENALTY WHICH WAS A CLEAR CASE OF CONCEALING THE PARTICULARS OF INCOMES. 5. ON THE CONTRARY, THE LD. COUNSEL OF THE ASSESSEE FILED WRITTEN SUBMISSIONS AND REITERATED THE SUBMISSIONS AS MADE IN THE WRITT EN SUBMISSIONS. THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED AS UNDER :- SUBMISSIONS- 1. FIRSTLY , WE STRONGLY RELY UPON THE WRITTEN SUBMISSIONS FIL ED BEFORE THE CIT (A) IN PENALTY APPEAL [AT REPRODUCED AT PG. 2-5 OF THE ORDER OF CIT (A)]. 2. ASSESSMENT AND PENALTY - SEPARATE PROCEEDINGS : IT IS PERTINENT TO NOTE THAT THE AO HAS LEVIED THE PENALTY ONLY & ONLY ON T HE BASIS OF FINDINGS RECORDED BY THE AO IN THE ASSESSMENT ORDER. IT IS SETTLED THAT ASSESSMENT AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM EACH OTH ER. KINDLY REFER DURGA KAMAL RICE MILLS V/S CIT (2004) 265 ITR (CAL.), CIT & ANR . V/S ANWAR ALI (1970) 76 ITR 696 (SC), CIT V/S ISHTIAQ HUSSAIN (1998) 232 ITR 673 (ALL). THE ENTIRE LAW HAS AGAIN BEEN SUMMARIZED IN DETAIL IN T HE CASE OF MANJUNATHA 359 ITR 0565 (KAR). 3. ON MERITS : IN MANY CASE, THE ASSESSEE CAN AGAIN SUBMIT ON ME RIT IN THE PENALTY PROCEEDINGS WHICH REQUIRE A CONSIDERATION A FRESH, KEEPING IN MIND THAT SUCH EXPLANATION IS BEING TENDERED IN THE PENALTY PROCEE DINGS AND NOT IN THE ASSESSMENT PROCEEDINGS. 3 ITA NO. 1078/JP/2016. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS LTD. 3.1 IT IS SUBMITTED THAT THE TERM 'COMPUTER ' HAS NOT WHERE BEEN DEFINED IN THE ACT. HOWEVER, AS PER SECTION 2(1)(I) OF THE INFORM ATION TECHNOLOGY ACT, 2000, COMPUTER HAS BEEN DEFINED TO MEAN 'COMPUTER' MEANS ELECTRONIC, MAGNETIC, OPTICAL OR OTHER HIGH- SPEED DATA PROCESSING DEVICE OR SYSTEM WHICH PERFORMS LOGICAL, ARITHMETIC AND MEMORY FUNCTIONS BY MANIPULATIONS OF ELECTRONIC, MAGNETIC OR OPTICAL IMPULSES, AND INCLUDES ALL INPUT, OUTPUT, PROCESSING, STORAGE, CO MPUTER SOFTWARE OR COMMUNICATIONS FACILITATES WHICH ARE CONNECTED OR R ELATES TO THE COMPUTER IN A COMPUTER SYSTEM OR COMPUTER NETWORK. 3.2 A CAREFUL PERUSAL AND APPLICATION OF THE SAID DEFI NITION ON THE SUBJECT ACCESSORIES AND PERIPHERALS OF COMPUTER BEINGS IRIS SCANNER, FINGERPRINT SCANNER, WEB CAM AND PRINTERS ETC CERTAINLY PROVIDE INPUT, P ROCESSING, STORAGE AND VARIOUS OUTPUT DEVICES. THE VARIOUS OUTPUT DEVICES BEING T HE PRINTER, SCANNER ARE COMPUTER PERIPHERALS WHICH ARE CRUCIAL PART OF A COMPUTER SYSTEM . IN THE CONTEXT OF PREPARATION OF AADHAR CARD, WITHOUT THE HELP OF THE SE PERIPHERALS BEINGS IRIS SCANNER, FINGERPRINT SCANNER ETC THERE WAS NO USE OF THE LAPTOP ALONE . IN FACT, IN TECHNICAL SENSE, THE ENTIRE GAMUT OF ALL THESE I TEMS HAS TO HELD AS A 'COMPUTER' ONLY. 3.3.1 THE LAW IS WELL SETTLED THAT IN THE CONTEXT OF S.32 CLAIMING DEPRECIATION, ONE HAS TO FIND AS A MATTER OF FACT THAT ALL THE SUBJEC TED ASSETS TAKEN TOGETHER HAS BEEN DESIGNED IN SUCH A MANNER SO AS TO SERVE THE TECHNI CAL REQUIREMENT OF THE ASSESSEE. ON THIS ASPECT, KINDLY REFER THE HON'BLE ALLAHABAD HIGH COURT IN CIT V/S KANODIA WAREHOIUSING CORPN. (1980) 121 ITR 996 (ALL) WHICH HAS LAID DOWN TEST AS TO WHETHER THE SUBJECT-MATTER INVOLVED IS A PLANT OR N OT, P. 1001 READS AS UNDER: 'IT WOULD BE SEEN THAT THE TEST IS WHETHER THE SUBJ ECT-MATTER INVOLVED, THAT IS, A BUILDING OR A STRUCTURE OR A PART THEREOF, CO NSTITUTES AN APPARATUS OR A TOOL OF THE TRADE OF THE TAXPAYER OR IT IS MERELY A SPACE WHERE THE TAXPAYER CARRIES ON HIS BUSINESS. FOR THIS PURPOSE THE USE WHICH IS MADE OF THE SUBJECT-MATTER UNDER CONSIDERATION IS TO BE KEPT IN VIEW. IF, AS NOTED ABOVE, THE BUILDING, STRUCTURE OR A PART THEREOF IS SOMETH ING BY MEANS OF WHICH THE 4 ITA NO. 1078/JP/2016. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS LTD. BUSINESS ACTIVITIES ARE CARRIED ON, IT WOULD AMOUNT TO PLANT BUT WHERE THE STRUCTURE PLAYS NO PART IN THE CARRYING ON OF THESE ACTIVITIES BUT MERELY CONSTITUTES A PLACE WITHIN WHICH THEY ARE CARRIED O N, IT CANNOT BE REGARDED AS A PLANT.' 3.3.2 A FULL BENCH OF THE HON'BLE SUPREME COURT IN THE CA SE OF CIT V/S KARNATKA POWER CORPORATION (2000) 162 CTR (SC) 249 : (2001) 247 ITR 268 (SC) HELD AT P. 268 (SHORT NOTES) THAT; 'THE QUESTION WHETHER A BUILDING CAN BE TREATED AS PLANT, BASICALLY, IS A QUESTION OF FACT AND WHERE IT IS FOUND AS A FACT TH AT A BUILDING HAS BEEN SO PLANNED AND CONSTRUCTED AS TO SERVE AN ASSESSEE'S S PECIAL TECHNICAL REQUIREMENTS, IT WILL QUALIFY TO BE TREATED AS PLAN T......' 3.3.3 IN ACIT V/S CONTAINER CORPORATION OF INDIA LTD. (IT AT DELHI 'B' BENCH) & DCIT V/S DATACRAFT INDIA LTD. (INFRA) (KINDLY REFER PARA 5.2 REPRODUCED IN PAGE 2 & 3 OF THE IMPUGNED PENALTY ORDER). 4. THE AO HOWEVER, REJECTED THE DECISION OF CONTAINE R CORPORATION (SUPRA) OBSERVING THAT THE DEPARTMENT HAD CHALLENGED THE DE CISION AND ON THE CONTRARY FOLLOWED THE DECISION IN THE CASE OF FEDERAL BANK L TD. V/S ACIT (2011) 332 ITR 0319 (KER.) HOLDING THAT EPBABX AND MOBILE PHONES ARE NO T COMPUTERS AND THUS ARE NOT ELIGIBLE FOR DEPRECIATION AT 60 %. THE SAID DECISIONS ARE NOT AT ALL APPLICABLE ON THE FACTS OF THE PRESENT CASE EVEN REMOTELY IN AS MUCH AS THEY WERE RENDERED IN A DIFFERENT FACTUAL AND LEGAL CONTEXT AND COULD NOT HAVE BEEN APPLIED BY THE AO B LINDLY. 5.1 THERE MAY BE A POSSIBILITIES OF THERE BEING A CONT RARY VIEW TAKEN IN FAVOUR OF THE REVENUE, YET HOWEVER IT IS, AT LEAST, EVIDENT T HAT THE ISSUE IN HAND IS SETTLED IN FAVOUR OF THE ASSESSEE OR AT THE WORST WAS A DEBATA BLE ISSUE. 5.2 THE ASSESSEE, ACTED BONAFIDELY WHILE MAKING HIGHER CLAIM OF DEPRECIATION RELYING UPON CERTAIN DECISIONS. HOWEVER, WHEN IT F OUND THAT THE AO HAS TAKEN A CONTRARY VIEW THEREFORE, WITHOUT BURNING ITSELF IN THE FIRE OF THE LITIGATION AND TO BRING PEACE AND TO AVOID LITIGATION THOUGHT IT PROPER NOT TO FILE THE FIRST APPEAL. THUS, IT 5 ITA NO. 1078/JP/2016. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS LTD. WAS A CASE OF DIFFERENCE OF OPINION AND THERE WAS N EITHER ANY FURNISHING OF INACCURATE PARTICULARS OF INCOME NOR IT WAS A CASE OF CONCEALMENT OF INCOME. NONE OF THE DETAILS FURNISHED IN ROI, WAS FOUND INCORREC T. 6.1 FOR THIS PROPOSITION, KINDLY REFER - WHEN THE ISSU E IS DEBATABLE, THEN PENALTY IS NOT REQUIRED AS PER THE RATION LAID DOWN IN THE CASE OF CIT V/S HARSHVARDHAN CHEMICALS 186 CTR 552 (RAJ.) (DPB 1-3): 'PENALTY UNDER S. 271(1) (C) --CONCEALMENT--DEBATAB LE CLAIMS- WRONG DEDUCTIONS CLAIMED BY ASSESSEE UNDER SS. 80HH AND 8 0-I--ADDITIONS MADE ON THAT ACCOUNT-WHEN THE ASSESSEE HAS CLAIMED SOME DED UCTIONS WHICH ARE DEBATABLE, IT CANNOT BE SAID THAT IT HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME FOR EVASION OF TAX --TRIBUNAL JUSTIFIED IN CANCELLING THE PENALTY UNDER S. 271(1) (C)' 6.2 IN THE CASE OF ITO V/S M/S REGISTHAN WOOLEN CARPET FACTORY, ITA NO. 292/JP/2001, THE PENALTY WAS CANCELLED BY CIT (A). IT WAS OBSERVED BY HON'BLE ITAT JAIPUR BENCH THAT: 'IT MAY BE MENTIONED THAT QUANTUM PROCEEDINGS ARE N OT BINDING IN THE PENALTY PROCEEDINGS AS BOTH ARE THE INDEPENDENT PRO CEEDINGS AS PER THE RATIO LAID DOWN IN THE CASE OF DURGA KAMAL RICE MILLS VS. CIT. 265 ITR 25 (CAL). WHEN THE ISSUE IS DEBATABLE, THEN PENALTY IS NOT RE QUIRED AS PER THE RATIO LAID DOWN IN THE CASE OF CIT V. HARSHVARDHAN CHEMICALS 1 86 CTR 552 (RAJ.). BY KEEPING IN MIND THE RATIO LAID DOWN IN THE CASE OF CIT VS. P NATARAJAN, 266 ITR 219 (MAD.), WE ARE OF THE VIEW THAT IN THE INST ANT CASE PENALTY IS NOT REQUIRED. THEREFORE, WE DECLINE TO IN INTERFERE WI TH THE ORDER OF CIT (A) WHICH IS HEREBY UPHELD ALONGWITH THE REASONS MENTIO NED THEREIN.' 7. SUPPORTING CASE LAWS : 7.1 ITO V/S SAMIRAN MAJUMDAR (2006) 101 TTJ 0501 (C AL.) (DPB 4-7) WHEREIN, IT WAS HELD DEPRECIATION-RATE-PRINTER AND SCANNER USABLE WITH C OMPUTER SYSTEM-PRINTER AND SCANNER ARE INTEGRAL PART OF COM PUTER SYSTEM- THEY CANNOT BE USED WITHOUT THE COMPUTER-THEREFORE, THEY ARE TO 6 ITA NO. 1078/JP/2016. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS LTD. BE TREATED AS COMPUTER FOR THE PURPOSE OF ALLOWING HIGHER RATE OFF DEPRECIATION I.E., 60 PER CENT - CIT VS. KARNATAKA POWER CORPORATION (2000) 162 CTR (SC) 249 : (2001) 247 ITR 268 (SC) A ND CIT VS. KANODIA WAREHOUSING CORPN. (1980) 121 ITR 996 (ALL) APPLIED . '6. WE FURTHER FIND THAT INSPECTOR AFTER VERIFYING THE FUNCTION OF THE PRINTER AND SCANNER REPORTED THAT IT RUNS WITH THE HELP OF COMPUTER AND THE SAID MACHINE IS EXTERNAL DEVICE ATTACHED TO THE COMPUTER WITH THE HELP OF CABLES. THE AO ON THE BASIS OF THE SAI D REPORT OF THE INSPECTOR WAS OF THE VIEW THAT THE MACHINE IN QUEST ION IS NOT A COMPUTER VIDE HIS REMAND REPORT DATED 23RD DECEMBE R, 2004 APPEARING AT P.11 OF THE ASSESSEE'S PAPER BOOK. HO WEVER, FROM THE FAIR READING OF THE IT INSPECTOR'S REPORT, WE FIND THAT THE PRINTER AND SCANNER CANNOT BE USED WITHOUT THE COMPUTER, I.E., THEY ARE PART OF THE COMPUTER SYSTEM. WE FURTHER FIND THAT THE HON' BLE ALLAHABAD HIGH COURT IN CIT VS. KANODIA WAREHOUSING CORPN (19 80) 121 ITR 996 (ALL) HAS LAID DOWN TEST AS TO WHETHER THE SUBJECT- MATTER INVOLVED IS A PLANT OR NOT WHICH READS AT P. 1001 AS UNDER: 'IT WOULD BE SEEN THAT THE TEST IS WHETHER THE SUBJ ECT-MATTER INVOLVED, THAT IS, A BUILDING OR A STRUCTURE OR A PART THEREO F, CONSTITUTES AN APPARATUS OR A TOOL OF THE TRADE OF THE TAXPAYER OR IT IS MERELY A SPACE WHERE THE TAXPAYER CARRIES ON HIS BUSINESS. FOR TH IS PURPOSE THE USE WHICH IS MADE OFF THE SUBJECT-MATTER UNDER CONSIDER ATION IS TO BE KEPT IN VIEW. IF, AS NOTED ABOVE, THE BUILDING STRUCTUR E OR A PART OF THEREOF IS SOMETHING BY MEANS OF WHICH THE BUSINESS ACTIVIT IES ARE CARRIED ON, IT WOULD AMOUNT TO A PLANT BUT WHERE THE STRUCTURE PLAYS NO PART IN THE CARRYING ON OF THOSE ACTIVITIES BUT MERELY CONS TITUTES A PLACE WITHIN WHICH THEY ARE CARRIED ON, IT CANNOT BE REGA RDED AS A PLANT.' A FULL BENCH OF THE HON'BLE SUPREME COURT IN THE CA SE OF CIT VS. KAMATAKA POWER CORPORATION (2000) 162 CTR (SC) 249 : (2001) 247 ITR 268 (SC) HELD AT P. 268 (SHORT NOTES) THAT : 7 ITA NO. 1078/JP/2016. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS LTD. 'THE QUESTION WHETHER A BUILDING CAN BE TREATED AS PLANT, BASICALLY, IS A QUESTION OF FACT AND WHERE IT IS FOUND AS A FACT THAT A BUILDING HAS BEEN SO PLANNED AND CONSTRUCTED AS TO SERVE AN ASSE SSEE'S SPECIAL TECHNICAL REQUIREMENTS, IT WILL QUALIFY TO BE TREAT ED AS A PLANT......' 7. IN VIEW OF THE ABOVE FACTS AND FOLLOWING THE RATIO OF THE DECISIONS INCLUDING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF KARNATAKA POWER CORPORATION (SUPRA), WE ARE OF THE VIEW THAT THE PRINTER AND SCANNER ARE INTEGRAL PART OF THE COMPUT ER SYSTEM, THEREFORE, THEY ARE TO BE TREATED AS COMPUTER FOR T HE PURPOSES OF ALLOWING HIGHER RATE OF DEPRECIATION, I.E., 60 PER CENT AND ACCORDINGLY, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LEARNED CIT (A) ON THIS ACCOUNT. THE GROUNDS TAKEN BY THE REVENUE ARE , THEREFORE, REJECTED.' 7.2 DCIT V/S DATACRAFT INDIA LTD. (2010) 45 DTR 121 (MU M. TRIB) (SB) WHEREIN, IT WAS HELD THAT THE ROUTERS AND SWITCHES IN THE CIRCUMSTANCES OF T HE CASE, ARE TO BE INCLUDED IN THE BLOCK OF 'COMPUTER' ENTITLED TO DEP RECIATION @ 60 PER CENT.' IN THE SAID CASE, THE HON'BLE SPECIAL BENCH FIRST D ISAGREED WITH THE DEFINITION GIVEN OF COMPUTER SYSTEM U/S 36 (1) (XI) AND THEREAFTER, IT WAS HELD THAT 'AS PER THE GENERAL CLAUSES ACT, 1897, IF A PARTICU LAR WORD IS NOT DEFINED IN THE CENTRAL STATUTE THEN MEANING GIVEN TO SUCH EXPR ESSION UNDER GENERAL CLAUSES ACT MAY BE CONSIDERED FOR GUIDANCE AND ADOP TION IN THE FORMER ENACTMENT. HOWEVER, IT IS NOTICED THAT THE WORD 'C OMPUTER' HAS NOT BEEN DEFINED THEREIN. UNDER SUCH CIRCUMSTANCES MEANING OF AN EXPRESSION HAS TO BE UNDERSTOOD BY APPLYING THE PRINCIPLES OF STATUTO RY INTERPRETATION I.E., IN THIS CONTEXT WE HAVE TO BE GIVE A MEANING TO BE EXP RESSION 'COMPUTER' NOT MERELY GOING BY THE DICTIONARY MEANING BUT BY APPLY ING COMMON PARLANCE AND COMMERCIAL PARLANCE TESTS AS WELL AS BY ANALYSI NG THE INTENDMENT OF PROVIDING FOR HIGHER RATE OF DEPRECIATION. WE MAY REFER TO SEVERAL CASE LAW TO ANALYSE AS TO WHICH FORMULA WOULD APTLY SUIT THE SI TUATION IN THE GIVEN CASE.' 8 ITA NO. 1078/JP/2016. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS LTD. AND THEREAFTER, IN PARA 25 AND ONWARDS HELD THAT IN ORDER TO DETERMINE WHETHER A PARTICULAR MACHINE CAN BE CLASSIFIED AS A COMPUTER OR NOT, THE PREDOMINANT FUNCTION, USAGE AND COMMON PARLANCE UNDERSTANDING, WOULD HAVE TO BE TAKEN INTO ACCOUNT. AFTER A LENGTHY DISCUSSION THEREAFTER, THE HON'BLE SPECIAL BENCH HAS HELD THAT EVEN THE ROUTER AND SWITCHES CAN BE CLASSIFIED AS THE CO MPUTER HARDWARE WHEN THEY ARE USED ALONG WITH THE COMPUTER AND WHEN THEIR FUNCTIO NS ARE INTEGRATED WITH THE 'COMPUTER'. IN OTHER WORDS, WHEN A DEVICE IS USED AS PART OF COMPUTER IN ITS FUNCTIONS, THEN IT WILL BE TERMED AS A COMPUTER. APPLYING THE SET TEST ON THE FACTS OF THE PRESENT C ASE ALSO, IT IS NOT DENIED THAT ALL THE PERIPHERALS ARE USEFUL ONLY WHEN THEY ARE CONNECTED WITH THE LAPTOP, THEY CAN BE USED OTHERWISE, THE SCANNER OR THE FINGERPRINT PRIN TER OR THE NORMAL PRINTERS ETC ARE USELESS MACHINE AND CANNOT PROVIDE ANY OUTPUT RESUL T IF USED IN ISOLATION. 7.3 EXPEDITORS INTERNATIONAL (INDIA) (P) LTD. V/S A CCIT (2008) 13 DTR 0435 (DELHI TRIB.) (DPB 7-20) WHEREIN, IT WAS HELD THAT 'PERIPHERALS SUCH AS PRINTERS, SCANNERS, NT SERVER, ETC FORM INTEGRAL PART OF THE COMPUTER AND THE SAME, THEREFORE, ARE ELIGIBLE FOR DEPRECIATION @ 60 PER CENT APPLICABLE TO A COMPUTER.' 8. COVERED ISSUE: 8.1 IT HAS BEEN HELD THAT MERELY ASSESSEE MADE A WRONG CLAIM OF DEPRECIATION, NO PENALTY U/S 271 (1) CAN BE IMPOSED AS HELD IN TH E CASES OF CIT V/S JAWAHAR KALA KENDRA (2014) 369 ITR 0132 (RAJ) (DPB 21-23). 8.2 RECENTLY THE HN'BLE RAJASTHAN HIGH COURT HAS REITE RATED ITS VIEW IN THE CASE OF PR. CIT V/S M/S MODERN DENIM LTD. IN DBITA NO. 3 3/2017 VIDE ORDER DATED 10.05.2017 WHEREIN, IN PARA 3 THE HON'BLE HIGH COUR T HAS APPROVED THE ITAT ORDER IN THE DECISION OF CIT V/S DHARAMSHI B. SHAH 366 IT R 140 (JAIPUR TRIB.) AND THE SAME WAS FOLLOWED AND THE PARA 2.4 & 2.5 WERE QUOTE D, THE RELEVANT EXTRACT OF WHICH IS AS UNDER: 9 ITA NO. 1078/JP/2016. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS LTD. '.......... THE LD. CIT (A) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAD DISCLOSED ALL MATERIAL FACTS PERTAINING TO THE CLAI M OF DEPRECIATION ADMISSIBLE UNDER SECTION 32 OF THE ACT. IT IS THUS A CASE WHE RE THERE IS DIFFERENCE OF OPINION IN TERMS OF RATE OF DEPRECIATION IN RESPECT OF THE SPECIFIED ASSETS. THUS, THE SUBJECT DECISION OF HON'BLE GUJARAT HIGH COURT IS DISTINGUISHABLE ON FACTS AS EVEN ON MERITS, IT CANNOT BE HELD THAT PEN ALTY IS LIVEABLE IN THE INSTANT CASE.' 8.3 AGAIN, IN THE CASE OF ACIT V/S M/S SHIV VILAS RESO RTS PVT. LTD. IN ITA NO. 746/JO/2012 VIDE ORDER DATED 10.04.2015 HAS HELD TH AT '5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH T HE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE WHETHER TH E DEPRECIATION ON CROCKERY AND CUTLERY IS ALLOWED 100% AND 80% IN CASE OF BLAN KET AND LINEN IS DEBATABLE. THIS CLAIM OF THE ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER IN A. Y 2007-08. THE ASSESSEE'S CLAIM IS BONAFIDE DURING THE YEAR UNDER CONSIDERATION BUT IN A. Y 2008-09, THE ASSESSEE REV ISED THE DEPRECIATION CLAIMED DURING THE ASSESSMENT PROCEEDINGS. THE ASS ETS HAD BEEN DISCLOSED BY THE ASSESSEE, THEREFORE, NO INACCURATE PARTICULA RS OF INCOME HAS BEEN FURNISHED. WE, THEREFORE, UPHOLD THE ORDER OF THE LD. CIT (A).' 8.4 IN CIT V/S MANIBHAI & BROS (2007) 209 CTR (GUJ)/46 ITR 501 (GUJ), IT WAS HELD THAT THE CIT (A) AND THE TRIBUNAL HAVING FOUND THAT THE ASSESSEE HAD NOT INTENTION TO CONCEAL FACTS WHEN IT MADE INCORRECT C LAIM OF DEPRECIATION WHICH WAS WITHDRAWN BY THE ASSESSEE, PENALTY U/S 271 (1) (C) WAS NOT LEVIABLE FOR MAKING THE WRONG CLAIM. 8.5 IN CIT V/S RELIANCE PETROPRODUCTS (P) LTD. (2010) 3 22 ITR 158 (SC) WHEREIN, IT WAS HELD THAT 'PENALTY UNDER S. 271(1)(C)--CONCEALMENT--DISALLOWA NCE OF CLAIM FOR DEDUCTION--IN ORDER TO ATTRACT THE PROVISIONS OF S. 271(1)(C), THERE HAS TO BE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF HIS INCOME BY THE ASSESSEE--IN THE INSTANT CASE, ASSESSEE CLAI MED DEDUCTION OF INTEREST ON LOANS TAKEN BY IT FOR PURCHASE OF SHARES--AO DIS ALLOWED SUCH INTEREST-- ADMITTEDLY, NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR 10 ITA NO. 1078/JP/2016. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS LTD. INACCURATE PARTICULARS--MAKING AN INCORRECT CLAIM I N LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS--MERELY BECAUS E THE ASSESSEE CLAIMED DEDUCTION WHICH HAS NOT BEEN ACCEPTED BY THE REVENU E, PENALTY UNDER S. 271(1) (C) IS NOT ATTRACTED--IF CONTENTION OF THE R EVENUE IS ACCEPTED, THE ASSESSEE WOULD BE LIABLE FOR PENALTY UNDER S. 271(1 )(C) IN EVERY CASE WHERE THE CLAIM MADE BY THE ASSESSEE IS NOT ACCEPTED BY T HE AO FOR ANY REASON-- THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATU RE.' 8.6 ALSO KINDLY REFER DCIT V/S M/S BRANDIX INDIA AP PAREL CITY (P) LTD. IN ITA NO. 14(VIZAG (2015 DATED 23.12.2016, CIT V/S MADHUSHREE GUPTA (2013) 84 CCH 89, DEVSONS (P) LTD. V/S CIT (2010) 329 ITR 0483 (DEL.) AND M/S TANUSHREE LOGISTICS (P) LTD. V/S DCIT IN ITA NO. 66/JP/2016 VIDE ORDER DATE D 16.08.2016. 9. THE WORD 'CONCEALMENT' INHERENTLY CARRIED WITH I T THE ELEMENT OF MENS REA. TO IMPOSE A PENALTY U/S 271 (1) (C); IT HAS TO BE P ROVED THAT THE ASSESSEE HAS CONSCIOUSLY MADE THE CONCEALMENT OR FURNISHED INACC URATE PARTICULARS OF HIS INCOME. THE SAID PRINCIPLE HAS BEEN REITERATED IN VIRTUAL S OFT SYSTEMS LTD. V/S CIT (2007) 207 CTR (SC) 7..: (2007) 289 ITR 83 (SC) HELD THAT: '24. SEC. 271 OF THE ACT IS A PENAL PROVISION AND T HERE ARE WELL ESTABLISHED PRINCIPLES FOR THE INTERPRETATION OF SUCH A PENAL P ROVISION. SUCH A PROVISION HAS TO BE CONSTRUED STRICTLY AND NARROWLY AND NOT WIDELY OR WITH THE OBJECT OF ADVANCING THE OBJECT AND INTENTION OF THE LEGISLATURE.' 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH REGARD TO THE POS ITION, THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO DIFFERE NT AND DISTINCT PROCEEDINGS. IF THE ASSESSEE IS HAVING ANY PLAUSIBLE EXPLANATION WI TH REGARD TO THE DEFAULT AND THE ACT OF THE ASSESSEE IS BONAFIDE. IN THAT EVENT THE PENALTY CANNOT BE LEVIED. IT IS THE CONTENTION OF THE ASSESSEE THAT IN THE PRESENT CASE THE ASSESSEE UNDER A BONAFIDE BELIEF THAT UID KIT BEING A PART OF COMPUTER, THERE FORE, IT CLAIMED DEPRECIATION AT 60%. LD. CIT(A) DELETED THE PENALTY FINDING THAT THE CLAIM WAS BONFIDE IN VIEW OF 11 ITA NO. 1078/JP/2016. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS LTD. THE JUDICIAL PRONOUNCEMENTS AS RELIED. IN OUR CONS IDER VIEW, THERE IS NOT INFIRMITY INTO THE ORDER OF THE LD. CIT(A) WHEN IT IS ESTABLI SHED THAT THE CLAIM WAS MADE UNDER THE BONAFIDE BELIEF, HENCE, THERE WAS NO REAS ON TO IMPOSE PENALTY. THIS GROUND THE REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 1078/JP/2016 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY, THE 11 TH DAY OF JULY 2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 11 /07/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- INCOME TAX OFFICER, WARD- 1(2), KOTA. 2. THE RESPONDENT- M/S VAIDANGI TECHNO MANAGEMENT C ONSULTANTS P. LTD.,KOTA. 3. THE CIT, 4. THE CIT (A) 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 1078/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 12 ITA NO. 1078/JP/2016. M/S VAIDANGI TECHNO MANAGEMENT CONSULTANTS LTD.