ACIT, CHENNAI V. M/s. TVS Finance & Services Limited, CHENNAI

ITA 1094/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57904 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 31-01-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 13-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JUNIOR
• Keywords: Depreciation
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 1094/MDS/2011 (ASSESSMENT YEAR : 2004-05) THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE III(2), CHENNAI - 600 034. (APPELLANT) V. M/S TVS FINANCE & SERVICES LIMITED, JAYALAKSHMI ESTATES, 29 (OLD NO.8), HADDOWS ROAD, CHENNAI - 600 006. PAN : AAACH6041B (RESPONDENT) APPELLANT BY : SHRI K.E.B. RENGARAJAN, JUNIOR STANDING COUNSEL RESPONDENT BY : SHRI SAROJ KUMAR PARID A, ADVOCATE DATE OF HEARING : 31.01.2012 DATE OF PRONOUNCEMENT : 31.01.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE AGAINST THE O RDER DATED 18.3.2011 OF COMMISSIONER OF INCOME TAX (APPEALS)-I II, CHENNAI, IT HAS RAISED FOUR GROUNDS IN TOTAL. GROUNDS NO.1 AND NO.4 ARE GENERAL IN NATURE, NEEDING NO ADJUDICATION. I.T.A. NO. 1094/MDS/11 2 2. VIDE ITS GROUND NO.2, GRIEVANCE RAISED BY THE RE VENUE IS THAT LD. CIT(APPEALS) DIRECTED ALLOWANCE OF DEPRECIATION ON SOFTWARE AT THE RATE OF 60%. AS PER THE REVENUE, FOR PRECEDING ASS ESSMENT YEAR 2003-04, THE CIT(APPEALS) HAD, ON THE ISSUE OF DEPR ECIATION ON SOFTWARE DEVELOPMENT , DIRECTED ALLOWANCE OF 25% AN D THEREFORE, THE ORDER FOR THE IMPUGNED ASSESSMENT YEAR WENT AGAINS T SUCH DIRECTION. 3. WHEN THE MATTER CAME UP BEFORE US, LEARNED A.R. SUBMITTED THAT DEPRECIATION ALLOWABLE TO SOFTWARE WAS AT 60% AS PER THE RULES AND INCOME-TAX ACT, 1961. THERE WAS NO ERROR IN T HE ORDER OF LD. CIT(APPEALS) IN DIRECTING THAT THE CLAIM OF ASSESS EE BE ALLOWED. 4. PER CONTRA, LEARNED D.R. SUBMITTED THAT FOR THE PRECEDING ASSESSMENT YEAR, LD. CIT(APPEALS) HAD DIRECTED ALL OWANCE AT THE RATE OF 25% ONLY. 5. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE THAT THE QUESTION WAS REGARDING RATE OF DEPRECIATION ALLOWABLE ON SOFTWARE. FOR THE IMPUGN ED ASSESSMENT YEAR, AS PER APPENDIX I OF INCOME-TAX RULES, 1962, THE RATE OF DEPRECIATION MENTIONED AT III(5) IS 60% FOR COMPUTE RS INCLUDING COMPUTER SOFTWARE. NOTES TO THE SAID APPENDIX AT S L.NO.7 STATES THAT THE COMPUTER SOFTWARE MEANS ANY COMPUTER PROGRAM RECORDED ON I.T.A. NO. 1094/MDS/11 3 ANY DISC, TAPE, PERFORATED MEDIA OR OTHER INFORMATI ON STORAGE DEVICE. THERE IS NO CASE FOR THE REVENUE THAT THE SOFTWARE IN QUESTION DID NOT FALL UNDER THE SAID APPENDIX. THIS BEING SO, THE R ATE OF DEPRECIATION ALLOWABLE WAS DEFINITELY 60% IRRESPECTIVE OF WHAT W AS DECIDED BY THE CIT(APPEALS) IN THE PRECEDING ASSESSMENT YEAR. THE REFORE, WE ARE OF THE OPINION THAT LD. CIT(APPEALS) WAS JUSTIFIED IN DIRECTING THE A.O. TO ALLOW DEPRECIATION AT 60%. 6. GROUND NO.2 STANDS DISMISSED. 7. VIDE ITS GROUND NO.3, GRIEVANCE OF THE REVENUE IS THAT LD. CIT(APPEALS) DELETED THE DISALLOWANCE OF LEASE EQU ALIZATION CHARGES MADE BY THE A.O. WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 8. WHEN THE ISSUE CAME UP BEFORE US, LEARNED A.R. P OINTED OUT THAT LD. CIT(APPEALS) FOLLOWED THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE ASSESSEES OWN CASE REPORTED IN 3 18 ITR 435 AND DECIDED THAT LEASE EQUALIZATION CHARGE DEBITED WAS NOT A RESERVE AND COULD NOT BE ADDED BACK TO PROFITS OF COMPANY UNDER SECTION 115JA OF THE ACT. I.T.A. NO. 1094/MDS/11 4 9. LEARNED D.R. FAIRLY ADMITTED THAT THE ISSUE STO OD COVERED IN FAVOUR OF ASSESSEE BY THE ABOVE DECISION OF HONBLE JURISDICTIONAL HIGH COURT. 10. WE DO NOT FIND ANY DECISION OF HONBLE APEX COU RT WHICH GOES AGAINST THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE ASSESSEES CASE MENTIONED SUPRA, WHERE IT WAS HELD THAT LEASE EQUALIZATION CHARGES COULD NOT BE CONSIDERED AS RES ERVE AND ADDED BACK TO THE PROFITS FOR WORKING OUT THE BOOK PROFIT . WE DO NOT FIND ANY ERROR IN THE ORDER OF LD. CIT(APPEALS) . 11. GROUND NO.3 STANDS DISMISSED. 12. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 31 ST JANUARY, 2012. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 31 ST JANUARY, 2012. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-III, CHENNAI/ CIT-I, CHENNAI/D.R./GUARD FILE