Ushodaya Enterprises, Hyderabad V. ACIT, Hyderabad

ITA 1429/HYD/2008

• Counselvise Citation: 142922514 RSA 2008
• Duration Of Justice: 6 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 06-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 09-09-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Depreciation; Bad and doubtful debts; Unabsorbed depreciation; Revenue expenditure; Capital expenditure
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1429/HYD/2008 ASSESSMENT YEAR : 2004-05 USHODAYA ENTERPRISES LTD., HYDERABAD. PAN AAACU2690P ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 16(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI V. SIVA KUMAR REVENUE BY SHRI D. SUDHAKAR RAO DATE OF HEARING 22-09-2014 DATE OF PRONOUNCEMENT 22-10-2014 O R D E R PER SAKTIJIT DEY, J.M.: THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER DA TED 30/06/08 OF THE CIT(A)-V, HYDERABAD FOR THE ASSESSMENT YEAR 2004-05. 2. ASSESSEE HAS RAISED FIVE GROUNDS. GROUND NOS. 1 & 5 BEING GENERAL IN NATURE, NOT REQUIRED TO BE ADJUDICATED. 3. GROUND NO. 2 WITH ITS SUB-GROUNDS RELATES TO DI SALLOWANCE OF ADVANCES WRITTEN OFF OF RS. 5,49,500. 4. BRIEFLY THE FACTS ARE, ASSESSEE A COMPANY IS ENG AGED IN THE BUSINESS OF PRINTING NEWS PAPERS, PUBLICATIONS, TEL ECASTING AND MANUFACTURE AND SALE OF FOOD PRODUCTS. FOR THE ASSE SSMENT YEAR UNDER DISPUTE, ASSESSEE FILED ITS RETURN OF INCOME ON 31/03/04 2 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. DECLARING INCOME AT NIL AFTER SETTING OFF OF UNAB SORBED DEPRECIATION UNDER THE NORMAL PROVISIONS OF THE ACT. AS THERE WA S BOOK LOSS OF RS. 89.63 LAKHS, ASSESSEE ALSO DID NOT COMPUTE BOOK PRO FIT U/S 115JB OF THE ACT. SUBSEQUENTLY, ASSESSEE FILED A REVISED RE TURN ON 26/04/05 DECLARING TOTAL INCOME AT NIL AFTER SETTING BY SETT ING OFF OF UNABSORBED DEPRECIATION FOR AY 2001-02 AMOUNTING TO RS. 86,41, 971 IN PLACE OF RS. 2,61,53,834 AS SHOWN IN THE ORIGINAL RETURN OF INCOME. DURING THE ASSESSMENT PROCEEDING, AO WHILE EXAMINING THE P&L A /C NOTICED THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS. 15,11,541 TOW ARDS BAD DEBTS AND ADVANCES WRITTEN OFF. WHEN AO CALLED UPON ASSES SEE TO FURNISH DETAILS OF BAD DEBTS AND ADVANCES WRITTEN OFF AND T O SHOW CAUSE AS TO WHY THE CLAIM MADE SHOULD NOT BE DISALLOWED, ASSES SEE SUBMITTED ITS REPLY STATING THEREIN THAT AN AMOUNT OF RS. 5 LAKHS WAS GIVEN TO ANAND FOODS, WHO ARE THE SUPPLIERS OF PACKING MATER IALS AND POUCHES FOR PICKLES AND CONFECTIONARY MANUFACTURE D BY ASSESSEE. IT WAS SUBMITTED THAT AN AMOUNT OF RS. 5 LAKH WAS PAID FOR PURCHASE OF MACHINERY FOR MAKING POUCHES FOR FOOD DIVISION AS PER ASSESSEES DESIGN. LATER WHEN ASSESSEE CHANGED THE DESIGN OF THE POUCHES, MACHINERY/DYES PURCHASED BY THE SAID PARTY WAS FOUN D TO BE NOT SUITABLE FOR MANUFACTURING THE CHANGED DESIGN OF PO UCHES. HENCE, THE PARTY CONCERNED REFUSED TO REPAY THE AMOUNT .FOR TH IS REASON, THE AMOUNT OF RS. 5 LAKHS WAS WRITTEN OFF. ASSESSEE SUB MITTED THAT IT HAD PAID AN AMOUNT OF RS. 49,500 TO THREE DIFFERENT PER SONS TOWARDS RENT DEPOSITS. THE RENTED BUILDINGS WERE VACATED BY ASSE SSEE DURING THE YEAR 1997-98. HOWEVER, LANDLORDS REFUSED TO RETURN THE DEPOSIT DUE TO POOR MAINTENANCE OF THE BUILDING. HENCE, THE AMOUNT S OF RS. 49,500 WAS WRITTEN OFF AS BAD DEBT. SIMILARLY, ASSESSEE EX PLAINED THAT AN AMOUNT OF RS. 54,690 WAS PAID TO EMPLOYEES WHO LEFT THE ORGANIZATION, RS. 13,512 PAID TO VARIOUS PERSONS TO WARDS LABOUR ADVANCE AND AN AMOUNT OF RS. 49,416 COMPRISED OF BA D DEBTS BELOW RS. 5,000. AO AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, DISALLOWED AN AMOUNT OF RS. 6,67,123. BEING AGGRIEV ED OF SUCH DISALLOWANCE, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). CIT(A) 3 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. GRANTED PARTIAL RELIEF TO ASSESSEE BY SUSTAINING AD DITION TO THE EXTENT OF RS. 5,49,000. 5. LEARNED AR SUBMITTED BEFORE US THAT AN AMOUNT OF RS. 5 LAKHS PAID TO M/S ANAND FOODS WAS TOWARDS PURCHASE OF SUI TABLE MACHINERY FOR SUPPLY OF POUCHES WITH PARTICULAR DESIGN. WHEN ASSESSEE CHANGED THE DESIGN OF THE POUCHES AND REQUESTED THE SUPPLIE R TO SUPPLY THE POUCHES WITH CHANGED DESIGN SINCE MACHINERY PURCHAS ED BY THE PARTY COULD NOT BE USED FOR MANUFACTURING POUCHES WITH CH ANGED DESIGN, THE SAID PARTY NOT ONLY REFUSED TO SUPPLY THE POUCH ES BUT ALSO REFUSED TO REFUND THE ADVANCE GIVEN BY ASSESSEE. AS THE AMO UNT WAS NOT RECOVERABLE, ASSESSEE WROTE OFF THE SAID ADVANCE IN ITS BOOKS. SO FAR AS THE AMOUNT OF RS. 49,500 TOWARDS RENT DEPOSITS, IT WAS SUBMITTED THAT SUCH RENT DEPOSITS WERE TOWARDS PREMISES TAKEN ON RENT FOR BUSINESS PURPOSE, BUT, WHEN ASSESSEE VACATED THE PR EMISES DURING THE YEAR 1997-98, LANDLORDS REFUSED TO REPAY THE DE POSITS DUE TO POOR MAINTENANCE OF THE BUILDING BY ASSESSEE. AS THE AMO UNTS WERE NOT RECOVERABLE, ASSESSEE HAS WRITTEN OFF THE ADVANCE I N THE BOOKS OF ACCOUNT. THE LEARNED AR SUBMITTED THAT AS THE LOSS IN RESPECT OF WRITTEN OFF ADVANCE WAS DURING THE COURSE OF BUSIN ESS, ASSESSEE IS ELIGIBLE TO DEDUCTION U/S 36(1)(VII). IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE DECISION OF THE HONBLE HIGH COURT OF JHARKHAND IN CASE OF CIT VS. TATA ROBINS FRASER LTD., [2012] 26 TAXMANN.COM 15 (JHAR.) 6. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A). 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE RELEVANT MATERIAL ON RECORD AS WELL AS THE ORDE RS OF REVENUE AUTHORITIES. AS CAN BE SEEN, WHILE AO HAS DISALLOWE D THE AMOUNT FOR THE REASON THAT THEY ARE NOT IN THE NATURE OF ADVAN CE, CIT(A) HAS SUSTAINED THE ASSESSEES CLAIM WITH THE OBSERVATIO N THAT NO EVIDENCE HAS BEEN PRODUCED BY ASSESSEE TO SUBSTANTIATE THAT PARTY HAS 4 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. REFUSED TO REPAY ADVANCE GIVEN BY ASSESSEE AND FURT HER THE SAID PARTY HAS REFUSED TO SUPPLY THE POUCHES FOR THEIR C HANGED DESIGN. SO FAR AS THE RENT DEPOSITS ARE CONCERNED, CIT(A) SUST AINED THE DISALLOWANCE BY SIMPLY OBSERVING THAT ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE THAT LANDLORDS HAVE REFUSED TO REPAY T HE DEPOSITS. IN OUR VIEW, THE CONCLUSION DRAWN BY AO AS WELL AS CIT(A) ARE NOT CORRECT AS IT IS NOT IN ACCORDANCE WITH THE STATUTORY PROVISI ON. AS PER SECTION 36(1)(VII) IF THE DEBT BECOMES BAD AND HAD ACTUALLY BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT, THEN, IT IS TO BE ALLOWED AS A DEDUCTION. IN THE PRESENT CASE, THERE IS NO DISPUTE TO THE FACT THAT THE AMOUNT IN QUESTION HAS BEEN WRITTEN OFF IN THE BOOKS OF ACCOU NT OF ASSESSEE. THEREFORE, DEDUCTION CLAIMED CANNOT BE DISALLOWED O NLY ON THE REASON THAT ASSESSEE HAS NOT PROVED THAT THE PERSONS CONCE RNED HAVE REFUSED TO MAKE PAYMENT TO ASSESSEE. IN THE AFORESA ID FACTS AND CIRCUMSTANCES, WE DELETE THE ADDITION MADE BY AO. 8. THE NEXT ISSUE AS RAISED IN GROUND NO. 3 ALONG W ITH ITS SUB- GROUNDS IS IN RESPECT OF DISALLOWANCE OF DEDUCTION CLAIMED TOWARDS PAYMENT OF PREEMPTION CHARGES OF RS. 4,27,00,000 PA ID TO VSNL FOR SURRENDER OF TRANSPONDERS. 9. BRIEFLY THE FACTS RELATING TO THE ISSUE IN DISPU TE ARE, DURING THE ASSESSMENT PROCEEDING, AO NOTICED THAT ASSESSEE HAS DEBITED PRIOR PERIOD EXPENSES OF RS. 504.70 LAKHS IN THE P&L A/C. ON FURTHER EXAMINATION OF DETAILS OF PRIOR PERIOD EXPENSES, AO NOTICED THAT THE AMOUNT INCLUDES PREEMPTION COST OF RS. 4,70,00,000 PAID TO VSNL ON SURRENDER OF LEASE RIGHT OF TRANSPONDER. AO WAS OF THE VIEW THAT AS THE EXPENDITURE DOES NOT RELATE TO THE ASSESSMENT Y EAR UNDER CONSIDERATION, THE SAME IS NOT ALLOWABLE. ACCORDING LY, HE ASKED ASSESSEE TO EXPLAIN. IN RESPONSE TO THE QUERY RAISE D BY AO, ASSESSEE SUBMITTED THAT IT HAS STARTED ETV TELUGU TELECAST I N SEPTEMBER, 1995 AND THE CHANNEL WAS TRANSMITTED ON ANALOGUE MODE, W HICH REQUIRES A DEDICATED TRANSPONDER FOR EACH CHANNEL, FOR WHICH P URPOSE ASSESSEE 5 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. ENTERED INTO LEASE AGREEMENT WITH M/S VSNL, MUMBAI TO UTILIZE ONE OF THE TRANSPONDER. SUBSEQUENTLY, AS ASSESSEE PLANNED TO LAUNCH OTHER REGIONAL CHANNELS, IT HAD TAKEN ON LEASE ADDITIONA L TRANSPONDERS FROM VSNL. HOWEVER, SUBSEQUENTLY, DIGITAL MODE TECHNOLOG Y HAS BEEN DEVELOPED, UNDER WHICH, NUMBER OF CHANNELS CAN BE T RANSMITTED FROM A SINGLE TRANSPONDER, WHICH IS VERY COST EFFECTIVE. IT WAS SUBMITTED THAT IN THE CHANGED TECHNOLOGY, ASSESSEE TRANSMITTE D EIGHT CHANNELS THROUGH A SINGLE TRANSPONDER. THEREFORE, IT DECIDED TO SHIFT THE CHANNELS TO DIGITAL MODE AND DECIDED TO SURRENDER T WO TRANSPONDERS. ACCORDINGLY, REQUEST WAS MADE TO VSNL FOR SURRENDER OF THE TRANSPONDERS AND AFTER PROLONGED NEGOTIATIONS, VSNL AGREED FOR SURRENDER OF ONE TRANSPONDER WITH EFFECT FROM 01/01 /2003 AND ANOTHER TRANSPONDER WITH EFFECT FROM 01/01/2004 SUBJECT TO PAYMENT OF PREEMPTION CHARGES. IT WAS SUBMITTED THAT AS PER TH E LEASE AGREEMENT WITH VSNL IN RESPECT OF TRANSPONDER 86/186 LEASE WA S AVAILABLE UP TO 31/07/06 FOR WHICH LEASE CHARGES OF US $ 15,84,000 WAS PAYABLE. AS PER THE MOU WITH VSNL, FOR SURRENDERING THIS TRANSP ONDER THE PREEMPTION CHARGES PAYABLE WAS WORKED OUT AT US $ 1 0,33,000 EQUIVALENT TO RS. 4,70,27,466. IT WAS SUBMITTED THA T IN TERMS WITH AS- 26 ISSUED BY ICAI, THE TOTAL PREEMPTION CHARGES OF RS. 4,70,27,466 WAS WRITTEN OFF AS PRIOR PERIOD EXPENSES IN THE BOO KS OF ACCOUNT AS THE LIABILITY TO PAY PREEMPTION CHARGES AROSE DURIN G FY 2003-04 RELEVANT TO AY UNDER DISPUTE. AO, HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF ASSESSEE AND ACCORDINGLY DISALLOWED THE EXPENDITURE CLAIMED. BEING AGGRIEVED OF SUCH DISALLOWANCE ASSES SEE PREFERRED APPEAL BEFORE THE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE IN THE CONTEXT OF THE FACTS AND MATERIALS ON RECORD NOTED THAT PREEMPTION CHARGES WAS PAID TO VSNL FOR PREMAT URE TERMINATION OF THE LEASE AGREEMENT IN RESPECT OF TWO TRANSPONDE RS. CIT(A) FOLLOWING THE DECISION OF SPECIAL BENCH OF ITAT, BA NGALORE IN CASE OF AZTEC SOFTWARE AND TECHNOLOGY SERVICES LTD. VS. ACI T 294 ITR (AT) 32 HELD THAT AS PAYMENT MADE BY ASSESSEE TO VSNL IS IN THE NATURE 6 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. OF A CAPITAL EXPENDITURE, THE SAME CANNOT BE ALLOWE D AS DEDUCTION. ACCORDINGLY, HE SUSTAINED THE DISALLOWANCE MADE BY AO. 10. LEARNED AR APART FROM MAKING SUBMISSIONS BEFORE US AT THE TIME OF HEARING HAS ALSO FILED WRITTEN SUBMISSIONS MORE OR LESS REITERATING THE CONTENTIONS RAISED BEFORE THE DEPARTMENTAL AUTH ORITIES. LEARNED AR SUBMITTED BEFORE US THAT AS PER THE LEASE AGREEM ENT WITH VSNL, ASSESSEE HAS TO PAY LEASE CHARGES OF US $ 15,84,000 PER ANNUM WHICH WORKED TO A TOTAL OF US $ OF RS. 40,92,000 FO R THE BALANCE LEASE PERIOD FROM 01/01/04 TO 31/07/2006. HOWEVER, AS PER THE MOU ENTERED WITH VSNL ON 18/12/03 TERMINATING LEASE FOR TWO TRANSPONDERS, PREEMPTION CHARGES PAYABLE WERE ONLY US $ 10,33,000 AS A RESULT OF WHICH ASSESSEE COULD SAVE SUBSTANTIA L EXPENDITURE ON ACCOUNT OF LEASE CHARGES PAYABLE TO VSNL. THUS, IT WAS SUBMITTED THAT AS THE EXPENDITURE WAS INCURRED ON ACCOUNT OF A PRUDENT BUSINESS DECISION FOR THE PURPOSE OF BUSINESS IT IS ALLOWABLE AS A REVENUE EXPENDITURE. IN SUPPORT OF SUCH CONTENTION , LEARNED AR RELIED UPON THE FOLLOWING DECISIONS: 1. CIT VS. ANJANI KUMAR CO. LTD., 259 ITR 114 (RAJ .) 2. MOHAN MEAKIN LTD. VS. CIT, 348 ITR 109 (DEL.) 3. CIT VS. EKL APPLIANCES LTD., 20 TAXMAN 509 DEL 4. CIT VS. VARDHMAN SPINNING & GENERAL MILLS, 176 T AXMAN 157 (P&H) 5. CIT VS. ROSE SERVICES APARTMENT INDIA (P) LTD., 326 ITR 100 (DEL.) 6. MINDA (HUF) LTD. VS. JCIT, 101 ITD 191/285 ITR ( AT) 88 (DEL.) 11. THE LEARNED DR, ON THE OTHER HAND, SUPPORTING THE VIEW TAKEN BY THE DEPARTMENTAL AUTHORITIES SUBMITTED THAT THE EXP ENDITURE INCURRED BEING CAPITAL IN NATURE HAS RIGHTLY BEE DISALLOWED. 7 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. 12. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OT HER MATERIALS ON RECORD. WE HAVE ALSO CAREFULLY APPLIED OUR MIND TO THE DECISIONS PLACED BEFORE US. THERE IS NO DISPUTE SO FAR AS THE FACTUAL ASPECT IS CONCERNED. IT IS A FACT THAT ASSESSEE HAS TAKEN ON LEASE FROM VSNL 5 NUMBERS OF TRANSPONDERS FOR TELECASTING ITS PROGRAM MES IN THE CHANNELS. HOWEVER, OUT OF THE FIVE TRANSPONDERS TA KEN ON LEASE FROM VSNL, ASSESSEE REQUESTED FOR SURRENDER OF 2 TRANSPO NDERS AND AFTER PROLONGED NEGOTIATION, VSNL AGREED FOR SURRENDER O F ONE TRANSPONDER WITH EFFECT FROM 01/01/03 AND ANOTHER T RANSPONDER W.E.F. 01/01/04 SUBJECT TO PAYMENT OF PREEMPTION CHARGES O F US $ 10,33,000. THUS, AS CAN BE SEEN, THE PREEMPTION CH ARGES OF RS. 4,70,27,466 EQUIVALENT TO US $ 10,33,000 WAS TOWARD S PREMATURE TERMINATION OF LEASE IN RESPECT OF TWO TRANSPONDERS OF VSNL, WHICH WERE USED BY ASSESSEE AS ASSETS OF ITS BUSINESS. TH EREFORE, THE EXPENDITURE INCURRED BY ASSESSEE BEING CONNECTED WI TH AN ASSET WHICH IS USED AS A TOOL FOR CARRYING ON THE BUSINES S OF ASSESSEE, CERTAINLY, IN THE NATURE OF CAPITAL EXPENDITURE. T HE HONBLE SB OF ITAT, BANGALORE IN CASE OF AZTEC SOFTWARE AND TECHN OLOGY SERVICES LTD. VS. ACIT (SUPRA) WHILE CONSIDERING IDENTICAL N ATURE OF EXPENDITURE RELATING TO PAYMENT ON TERMINATION OF L EASE HELD AS UNDER: WE HAVE GIVEN CAREFUL THOUGHT TO THE SUBMISSIONS OF THE PARTIES ON THIS POINT. WE HAVE ALSO SEEN ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE. THERE IS NO DISPUTE THAT THE AMOUNT IN QUESTION WAS PAID TO M/S PRESTIGE ESTATE PVT. LTD. FROM WHOM PROPERTY WAS TAKEN BY THE ASSESSEE ON LEASE FOR EXP ANDING ITS BUSINESS. SUBSEQUENTLY, THE COMPANY DECIDED NOT TO CARRY THE LEASE AND AGREEMENT WAS TERMINATED PRE-MATURELY. IT IS CLAIMED THAT RS. 1 CRORE WAS PAID TO THE LESSER UNDER A NEG OTIATED SETTLEMENT TOWARDS PRE-MATURE TERMINATION OF LEASE. THE AMOUNT SHOWN AS ADVANCE WAS WRITTEN OFF AND CLAIMED AS A R EVENUE DEDUCTION. THE REASONS GIVEN FOR CLAIMING IT AS A R EVENUE EXPENDITURE WERE NOT ACCEPTED BY THE AO AND THE LEA RNED CIT(A). ACCORDINGLY TO THE REVENUE AUTHORITIES, AMOUNT WAS PAID FOR ACQUIRING A BENEFIT OF ENDURING NATURE AND, THEREFO RE, WAS A CAPITAL EXPENDITURE. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WE AGREE WITH THE VIEW TAKEN BY THE REVENUE AUTHORI TIES THAT 8 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. AMOUNT OF RS. 1 CRORE GIVEN AS ADVANCE AND LOAN WRI TTEN OFF UNDER THE SETTLEMENT, COULD NOT BE TREATED AS EXPEN DITURE OF REVENUE NATURE. IT WAS RIGHTLY TREATED AS EXPENDITU RE OF CAPITAL NATURE. THE EXPENDITURE WAS CLEARLY CONNECTED WITH APPARATUS WITH WHICH THE BUSINESS WAS TO BE CARRIED. THEREFOR E, WE SEE NO REASON TO INTERFERE WITH THE FINDING OF THE REVENUE AUTHORITIES ON THIS ISSUE. THE GROUND OF APPEAL IS ACCORDINGLY REJ ECTED. 13. AS IN THE PRESENT CASE ALSO, THE EXPENDITURE IN CURRED IS CONNECTED TO APPARATUS WITH WHICH ASSESSEE CARRIED ON ITS BUSINESS, THE NATURE OF EXPENDITURE IS ALSO CAPITAL. THOUGH I T IS TRUE THAT WHETHER A PARTICULAR EXPENDITURE IS CAPITAL OR REVE NUE WOULD DEPEND ON THE FACTS INVOLVED IN A PARTICULAR CASE BUT CONS IDERING THE FACTS OF THE PRESENT CASE, THE DECISION OF THE ITAT BANGALOR E SB SQUARELY APPLIES. SO FAR AS THE DECISIONS RELIED UPON BY THE LEARNED AR ARE CONCERNED, ON CAREFUL EXAMINATION, WE FIND THEY A RE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS IN NONE OF THES E DECISIONS, THE EXPENDITURE INCURRED RELATE TO AMOUNT PAID ON TERMI NATION OF A LEASE AGREEMENT. IN THE AFORESAID VIEW OF THE MATTER, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). ACCORDINGLY THE SAME IS UPHELD BY DISMISSING GROUND RAISED BY A SSESSEE. 14. THE NEXT ISSUE AS RAISED IN GROUND NO. 4 WITH I TS SUB-GROUNDS IS IN RESPECT OF DISALLOWANCE OF DEPRECIATION OF AN AM OUNT OF RS. 1,43,99,145 CLAIMED @ 60% ON PRINTERS, SCANNERS, MO DEMS, ETC. AND RESTRICTING THE SAME TO 25% BY TREATING THEM AS PLA NT AND MACHINERY. 15. BRIEFLY THE FACTS ARE, DURING THE COURSE OF ASS ESSMENT PROCEEDING, AO NOTICED THAT ASSESSEE HAS CLAIMED DE PRECIATION OF RS. 11,43,63,771 @ 60% ON THE BLOCK OF COMPUTERS. O N FURTHER VERIFICATION OF THE DETAILS SUBMITTED BY ASSESSEE, AO NOTICED THAT THE BLOCK OF COMPUTERS ALSO INCLUDE PRINTERS, SCANNERS, MODEMS, SWITCHES, PHOTO/EDIT V-SAT EQUIPMENT, UPS, NETWORK CABLES, SOFTWARES, ETC. AO AFTER VERIFYING THESE FACTS WAS OF THE VIEW THAT COMPUTERS CONNECTED TO PHOTO TRANSMISSION EQUIPMENT , EDITING 9 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. EQUIPMENT, V-SAT AND DATA PROCESSING EQUIPMENT ARE TO BE TREATED AS COMPUTERS. HOWEVER, SCANNERS, PRINTERS, MODEMS, SWI TCHES, NETWORKING CABLE, TRANSMISSION EQUIPMENT AND SOFTWA RE DO NOT FORM PART OF COMPUTERS. AO OPINED THAT EVERY PERIPHERAL DEVICE CONNECTED TO THE COMPUTER DOES NOT FORM PART OF THE COMPUTER. HE OBSERVED THAT COMPUTER RUNS WITHOUT PERIPHERALS LIKE PRINTER, SCA NNER ETC. , BUT NOT THE OTHER WAY ROUND. THE AO WAS OF THE OPINION THAT COMPUTERS USED FOR PHOTO TRANSMISSION EQUIPMENT, DECODING EQUIPMEN T V-SAT, DATA PROCESSING EQUIPMENT ARE ELIGIBLE FOR DEPRECIATION @ 60% WHEREAS THE OTHER PERIPHERALS LIKE PRINTERS, SCANNERS, MODE MS, SWITCHES, PHOTO/EDIT/EQUIPMENT UPS, NETWORK CABLES AND SOFTWA RES FORM PART OF PLANT AND MACHINERY, ON WHICH, DEPRECIATION IS ALLO WABLE @25% ONLY. ACCORDINGLY, HE PROPOSED TO RESTRICT DEPRECIATION @ 25% ON THEM. THOUGH, ASSESSEE OBJECTED TO SUCH ACTION, THE AO, H OWEVER, REJECTING THE SUBMISSIONS OF ASSESSEE, RESTRICTED DEPRECIATIO N @ 25% ON ROUTERS FACSIMILE SYSTEMS, MODEM, V-SAT, ETC AND IN THE PROCESS DISALLOWED AN AMOUNT OF RS. 1,43,99,145. BEING AGGR IEVED OF SUCH DISALLOWANCE, ASSESSEE PREFERRED APPEAL BEFORE CIT( A). THE CIT(A) FOLLOWING HIS OWN ORDER FOR THE AY 2002-03 IN CASE OF SAME ASSESSEE, SUSTAINED THE DISALLOWANCE MADE BY AO. 16. THE LEARNED AR AT THE OUTSET SUBMITTED BEFORE U S THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT IN ASSE SSEES OWN CASE FOR AY 2002-03 AD 2003-04 AS WELL AS FOR AY 2005-0 6 AND 2006-07. THE LEARNED DR THOUGH AGREED THAT THE ISSUE IS COVE RED BY THE DECISIONS OF THE COORDINATE BENCH, BUT, HE NEVERTHE LESS SUPPORTED THE ORDER OF CIT(A). 17. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD AS WELL AS THE ORDERS OF RE VENUE AUTHORITIES. AS CAN BE SEEN, AO HAS RESTRICTED THE DEPRECIATION TO 25% ON MODEMS, SWITCHES, ROUTERS, PRINTERS, SCANNERS ETC B Y TREATING THEM AS PLANT AND MACHINERY. THE CIT(A) HAS SUSTAINED THE O RDER OF AO BY 10 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. FOLLOWING HIS OWN ORDER PASSED INCASE OF ASSESSEE F OR THE AY 2002- 03. HOWEVER, IT IS SEEN FROM RECORD THAT THE ORDER PASSED BY CIT(A) FOR AY 2002-03 AND 2003-04 ON IDENTICAL ISSUE WAS CHALLENGED BY ASSESSEE BEFORE THE TRIBUNAL. THE TRIBUNAL WHILE CO NSIDERING THE DISPUTE IN APPEAL PREFERRED BY ASSESSEE IN ITA NOS. 1241/H/08 AND 591/HYD/10 FOR AY 2002-03 AND 2003-04 RESPECTIVELY ALLOWED ASSESSEES CLAIM OF DEPRECIATION @ 60% ON THESE ITE MS. WHILE DOING, SO THE TRIBUNAL FOLLOWED ITS EARLIER ORDER IN ASSES SEES OWN CASE FOR AY 2005-06 AND 2006-07. THE FINDING OF THE TRIBUNAL IS EXTRACTED HEREUNDER FOR READY REFERENCE: 11. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES A ND PERUSED THE MATERIAL ON RECORD. AS PER THE LIST SU BMITTED BY THE ASSESSEE IN ANNEXURE-B AND THE DETAILED NOTE SUBMI TTED EXPLAINING THEIR FIMCTION, THE ITEMS ON WHICH THERE IS A DISPUTE REGARDING CLAIM OF DEPRECIATION ARE EDITING EQUIPM ENTS, EDIT CONTROL UNIT, CHARTER GENERATOR V. SAT EQUIPMENTS E TC., AND SEVERAL TYPES OF SOFTWARE AND VARIOUS PARTS AND C OMPONENTS. IT IS THE CONTENTION OF THE ASSESSEE THAT ALL THESE EQUIPMENTS FORM INTEGRAL PART OF THE COMPUTER SYSTEM AND THEY CANNOT FUNCTION INDEPENDENTLY EXCEPT IN CONJUNCTION WITH A COMPUTER SYSTEM. AS CAN BE SEEN FROM THE ASSESSMENT ORDER, THE PRIMARY BASIS ON WHICH THE ASSESSING OFFICER CONCLU DED THAT DEPRECIATION CLAIMED BY THE ASSESSEE IS NOT ALLOWAB LE AT 60% AS ACCORDING TO HIM COMPUTER MEANS A CPU WHICH IS A LSO CALLED AS MOTHER BOARD ALONG WITH ITS MEMORY. MONITOR KE Y BOARD, MOUSE ARE ESSENTIAL TO RUN COMPUTER AS AN INDEPENDE NT ENTITY. THE AFORESAID FINDING OF THE ASSESSING OFFICER WAS UPHELD BY THE CIT (A) WHO ALSO HELD THAT EVERY PERIPHERAL DEV ICE CONNECTED TO THE COMPUTER DOES NOT FORM PART OF THE COMPUTER. LET US NOW EXAMINE HOW FAR THE FINDINGS OF THE REVE NUE AUTHORITIES ARE ACCEPTABLE IN THE CONTEXT OF THE RA TIO LAID DOWN BY THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI (SPECI AL BENCH) IN CASE OF DCIT VS. DATACRAFT INDIA LIMITED (40 SOT 295), THE HONBLE SPECIAL BENCH BEING CONSCIOUS OF THE FACT THE TERM COMPUTER HAS NOT BEEN DEFINED UNDER THE IT ACT NO R IN THE GENERAL CLAUSES ACT, 1987, THE MEANING OF THE TERM COMPUTER HAS TO BE UNDERSTOOD BY APPLYING THE PRINCIPLES OF STATUTORY INTERPRETATION I.E., ONE HAS TO GIVE THE MEANING TO THE EXPRESSION COMPUTER NOT MERELY BY GOING TO THE DI CTIONARY MEANING BUT BY APPLYING COMMON PARLANCE OR COMMERCI AL PARLANCE TESTS AS WELL AS BY ANALYSING THE INTEND MENT OF LEGISLATURE IN PROVIDING HIGHER RATE OF DEPRECIATIO N. THE HONBLE SPECIAL BENCH AFTER INTERPRETING THE EXPRESSION CO MPUTER IN COMMON PARLANCE AS WELL AS COMMERCIAL PARLANCE IN T HE CONTEXT 11 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. OF AVAILABILITY OF DEPRECIATION AT HIGHER RATE OF 6 0% IN THE CASE OF ROUTER AND SWITCHES WHETHER TO BE TREATED AS CO MPUTER HELD AS UNDER:- 25. THUS IN ORDER TO DETERMINE WHETHER A PARTICULAR MAC HINE CAN BE CLASSIFIED AS A COMPUTER OR NOT, THE PREDOMINANT FUNCTION, USAGE AND COMMON PARLANCE UNDERSTANDING, WOULD HAVE TO BE TAKEN INTO ACCOUNT. TO ANALYSE FURTHER, LET US TAKE THE CASE OF A TELEVISION, THE PRINCIPAL TASK OF WHICH IS TO DELIV ER VISUALS ACCOMPANIED WITH AUDIO. THE SIGNALS, ARE RECEIVED T HROUGH THE RELEVANT NET WORKS SUCH AS DISH TV, TATA SKY ETC. B UT TV DOES NOT BECOME COMPUTER FOR THE REASON THAT ITS PRINCIPAL FUNCTION CANNOT BE DONE ONLY WITH THE AID OF 'COMPUTER FUNCT IONS' NOTWITHSTANDING THE FACT THAT IN THE ENTIRE PROCESS OF NETWORKING OR RECEIVING THE OUTPUT FROM DIFFERENT CHANNELS AND MA KING IT AVAILABLE TO THE VIEWERS, SOME SORT OF COMPUTER FUN CTIONS ARE NECESSARILY INVOLVED. SIMILARLY TAKE THE CASE OF MO BILE PHONE. ITS PRINCIPAL TASK IS TO RECEIVE AND SEND CALLS. IT IS NOT A STANDALONE APPARATUS WHICH CAN OPERATE WITHOUT THE RELEVANT NE TWORK, SUCH AS AIRTEL, BSNL, RELIANCE. IT, THEREFORE, FOLLOWS THAT ANY MACHINE OR EQUIPMENT CANNOT BE DESCRIBED AS COMPUTER, IF IT S PRINCIPAL OUTPUT OR FUNCTION IS THE RESULT OF SOME SORT OF 'C OMPUTER FUNCTIONS' IN CONJUNCTION WITH SOME NON-COMPUTER FUNCTIONS. IN ORDER TO BE CALLED AS COMPUTER, IT IS SINE QUA NON THAT THE PRINCIPAL OUTPUT/ OBJECT/F UNCTION OF SUCH MACHINE SHOULD BE ACHIEVABLE ONLY THROUGH 'COMPUTER FUNCTIONS'. 26. HAVING ANALYSED THE MEANING OF 'COMPUTER' IN COMMON PARLANCE, LET US PROCEED TO ASCERTAIN THE CONCEPT, MEANING AND FUNCTIONS OF 'ROUTER AGAIN WE FIND THAT THE TERM ' ROUTER' HAS NOT BEEN DEFINED IN THE INCOME- TAX ACT, 1961. ACCORDIN GLY IT ALSO NEEDS TO BE ASSIGNED THE MEANING AS IT IS UNDERSTOO D IN COMMON PARLANCE. THE LEARNED DEPARTMENTAL REPRESENTATIVE- TIVE HAS PLACED SOME LITERATURE FROM THE INTERNET EXPLAINING THE MEANING OF 'ROUTER' AS A DEVICE IN COMPUTER NETWORKING THAT FO RWARDS DATA PACKETS TO THEIR DESTINATIONS, BASED ON THEIR ADDRE SSES. AS PER THIS LITERATURE THE WORKING OF ROUTER HAS BEEN EXPL AINED BY WHICH DATA PACKETS ARE TRANSMITTED OVER A NETWORK (SAY THE INTERNET), THEY MOVE FROM MANY ROUTERS (BECAUSE THEY PASS THRO UGH MANY NETWORKS) IN THEIR JOURNEY FROM THE SOURCE MACHINE TO BE DESTINATION MACHINE. ROUTERS WORK WITH IP PACKETS, MEANING THAT THEY WORK AT THE LEVEL OF THE IP PROTOCOL. EVERY RO UTER KEEPS INFORMATION ABOUT ITS NEIGHBOURS (OTHER ROUTERS IN THE SAME OR OTHER NETWORKS). WHEN A PACKET OF DATA ARRIVES AT A ROUTER, ITS HEADER INFORMATION IS SCRUTINIZED BY THE ROUTER. BA SED ON THE DESTINATION AND SOURCE IP ADDRESSES OF THE PACKET, THE ROUTER DECIDES WHICH NEIGHBOUR IT WILL FORWARD IT TO. 27. THE ASSESSEE VIDE ITS LETTER DATED 21-2-2005, ADDRESSED TO THE 12 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. ASSESSING OFFICER, SUBMITTED A NOTE ON USE OF ROUTE RS! SWITCHES BY EXPLAINING THAT THE ROUTERS ARE CRUCIAL DEVICE T HAT LET THE MESSAGES FLOW FROM ONE COMPUTER TO ANOTHER. IT WAS FURTHER EXPLAINED THAT THE ROUTER HAS TWO SEPARATE BUT RELA TED JOBS, VIZ., (A) TO ENSURE THAT THE INFORMATION DOES NOT GO WHERE IT IS NOT NEEDED AND (B) IT MAKES SURE THAT THE INFORMATION DOES MAKE IT TO THE INTENDED DESTINATION. 28. A ROUTER IS A NETWORKING DEVICE WHOSE SOFTWARE AND HARDWARE ARE CUSTOMIZED TO THE TASKS OF ROUTING AND FORWARDING INFORMATION. A ROUTER HAS TWO OR MORE NETWORK INTER FACES, WHICH MAY BE TO DIFFERENT PHYSICAL TYPES OF NETWORK (SUCH AS COPPER CABLES, FIBRE OR WIRELESS) OR DIFFERENT NETWORK STA NDARDS. EACH NETWORK INTERFACE IS A SMALL COMPUTER SPECIALIZED T O CONVERT ELECTRIC SIGNALS FROM ONE FORM TO ANOTHER. ROUTERS CONNECT TWO OR MORE LOGICAL SUBNETS, WHICH DO NOT SHARE A COMMON N ETWORK ADDRESS. THE SUBNETS IN THE ROUTER DO NOT NECESSARI LY MAP ONE- TO-ONE TO THE PHYSICAL INTERFACES OF THE ROUTER. TH E TERM 'LAYER 3 SWITCHING' IS USED OFTEN INTERCHANGEABLY WITH THE T ERM 'ROUTING'. THE TERM SWITCHING IS GENERALLY USED TO REFER TO DA TA FORWARDING BETWEEN TWO NETWORK DEVICES THAT SHARE A COMMON NET WORK ADDRESS. 29. IN SIMPLE WORDS, A ROUTER MEANS A DEVICE THAT R OUTES DATA FROM ONE COMPUTER TO ANOTHER OR FROM ONE NETWORK TO ANOTHER. ROUTERS PROVIDE CONNECTIVITY INSIDE ENTERPRISES, BE TWEEN ENTERPRISES AND THE INTERNET, AND INSIDE INTERNET P ROVIDERS. FROM THE ABOVE DISCUSSION IT TRANSPIRES THAT THE FUNCTIO N OF A ROUTER IS TO RECEIVE THE DATA FROM ONE COMPUTER AND MAKE IT A VAILABLE TO ANOTHER COMPUTER FOR VIEWING OR FURTHER PROCESSING. APART: FROM FACILITATING THE FLOW OF DATA BETWEEN TWO COMPUTERS , THE ROUTERS ALSO. HELP IN THE TRANSFER OF DATA FROM NETWORK TO COMPUT ER. THUS THE ESSENTIAL FUNCTION OF THE ROUTER IN A COMMERCIA L ORGANIZATION IS TO FACILITATE THE FLOW OF DATA FROM ONE COMPUTER TO ANOTHER FOR ITS PROCESSING OR STORAGE. SWITCHES ARE SHORTER VER SION OF ROUTERS, WHICH PERFORM SIMILAR FUNCTIONS AS THAT OF ROUTERS BUT WITHIN A LIMITED SPHERE. 30. ON FUNCTIONING OF A 'ROUTER' WE FIND THAT THERE IS NO DISPUTE ON THE FACT THAT A 'ROUTER' DOES NOT PERFORM ANY LO GICAL, ARITHMETIC AND INTERMEDIARY FUNCTIONS ON DATA NOR I T MANIPULATES OR PROCESSES DATA, THE WAY A COM- PUTER WOULD DO. A 'ROUTER' DOES NOT HAVE A 'CPU'. IT ONLY ENABLES TRANSMISSION OF DATA AND DATA PACKAGES, IN A SOPHISTICATED MANNER, TO INTEND ED PLACES. A DATA CABLE ALSO CARRIES DATA FROM ONE PLACE TO ANOT HER, BUT IT DOES NOT SELECTIVELY INTERCHANGE PACKETS OF DATA BE TWEEN PLACES. THE DIFFERENCE BETWEEN A 'CABLE' AND A ROUT ER' IS THAT IN A 'ROUTER' DATA IS 'ROUTED' AS PER THE SPECIFICA TION. THUS A 'ROUTER' MAY NOT BY ITSELF BE CALLED A COMPUTER. 13 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. 31. NOW WE HAVE TO CONSIDER WHETHER A 'ROUTER' CAN BE CONSIDERED AS 'COMPUTER HARDWARE' OR A 'COMPUTER CO MPONENT'. COMPUTER HARDWARE REFERS TO THE PHYSICAL PARTS OF A COMPUTER AND RELATED DEVICES. INTERNAL HARDWARE DEVICES INCL UDE MOTHERBOARDS, HARD DRIVES, AND RAM. EXTERNAL HARDWA RE DEVICES INCLUDE MONITORS, KEYBOARDS, MOUSE, PRINTER S, AND SCANNERS. THE INTERNAL HARDWARE PARTS OF A COMPUTER ARE OFTEN REFERRED TO AS 'COMPONENTS', WHILE EXTERNAL HARDWAR E DEVICES ARE USUALLY CALLED 'PERIPHERALS'. TOGETHER, THEY ALL FA LL UNDER THE CATEGORY OF COMPUTER HARDWARE. 'SOFTWARE', ON THE O THER HAND, CONSIST OF THE PROGRAMS AND APPLICATIONS THAT RUN O N COMPUTERS. BECAUSE SOFTWARE RUNS ON COMPUTER HARDWARE, SOFTWAR E PROGRAMS OFTEN HAVE 'SYSTEM REQUIREMENTS', THAT LIS T THE MINIMUM HARDWARE REQUIRED FOR THE SOFTWARE TO RUN. 31.1 IN SHORT, 'ROUTER' IS A HARDWARE DEVICE THAT ROUTES DATA (HENCE THE NAME) FROM A LOCAL AREA NETWORK (LAN) TO ANOTHER NET WORK CONNECTION. A ROUTER ACTS LIKE A COIN SORTING MACHINE, ALLOWING ONLY AUTHORIZED MACHINES TO CONNECT TO OTH ER COMPUTER SYSTEMS. MOST ROUTERS ALSO KEEP LOG FILES ABOUT THE LOCAL NETWORK ACTIVITY. NOW THE QUESTION IS WHETHER THIS 'MACHINE ' CAN BE USED INDEPENDENT OF COMPUTER. IF YES, THEN IT CANNOT BE CALLED 'COMPUTER HARDWARE' IN ALL CIRCUMSTANCES. 31.2 WHEN 'COMPUTER HARDWARE', IS USED AS A COMPONENT OF THE COMPUTER, IT BECOMES PART AND PARCEL OF THE COMPUTE R, AS IN THE CASE OF OPERATING SOFTWARE IN THE COMPUTER. IN SUCH A SITUATION, HARDWARE IN QUESTION CAN BE CONSIDERED AS A PART OF A COMPUTER AND HENCE A 'COMPUTER'. PER CONTRA, WHEN THE MACHINE IS NOT USED AS A NECESSARY ASSESSOR OR IN COMBINATION WITH A COMPUTER, IT CANNOT BE CALLED A 'COMPUTER COMPONENT '. 31.3 COMING TO THE ROUTERS, IT IS SEEN THAT THESE CAN AL SO BE USED WITH A TELEVISION AND IN SUCH USE, E0 COMPUTER IS REQUIRED. THESE ARE ALSO CALLED T.V. ROUTERS. SIMIL ARLY, 'INTERNET SERVICE PROVIDERS', GIVE CONNECTIVITY, BY INSTALLIN G A ROUTER IN THE PREMISES OF THE PERSONS !INSTITUTIONS AVAILING THE INTERNET CONNECTION. IN THESE CASES THE ROUTER IS NOT USED A LONG WITH A COMPUTER. IN SUCH A SITUATION, IT WOULD BE A 'STAND ALONE' EQUIPMENT. IN SUCH CASES THIS CANNOT BE CONSIDERED A COMPONENT OF A COMPUTER OR COMPUTER HARDWARE. GIVIN G ANOTHER EXAMPLE, A COMPUTER SOFTWARE CAN BE USED IN MANY DE VICES INCLUDING WASHING MACHINE, TELEVISIONS, TELEPHONE EQUIPMENT ETC. WHEN SUCH SOFTWARE IS USED IN THOSE DEVICES, I T INTEGRATES WITH THAT PARTICULAR DEVICES. THE PREDOMINANT FUNCT ION OF THE DEVICE DETERMINES ITS CLASSIFICATION. ONLY IF THE C OMPUTER SOFTWARE, RE- SIDES IN A COMPUTER, THEN IT BECOME A PART AND PARCEL OF A COMPUTER AND, AS LONG AS IT IS AS INTEG RAL PART OF A COMPUTER, IT IS CLASSIFIED AS A 'COMPUTER'. 14 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. 31.4. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF T HE CONSIDERED VIEW THAT ROUTER AND SWITCHES CAN BE CLASSIFIED AS A COM PUTER HARDWARE WHEN THEY ARE USED ALONG WITH A COMPUTER AND WHEN THEIR FUNCTIONS ARE INTEGRATED WITH A COMPUTER. IN OTHER WORDS, WHEN A DEVICE IS USED AS PART OF THE COMPUTER IN ITS FUNCTIONS, THEN IT WOUL D BE TERMED AS A COMPUTER. 12. WHILE COMING TO SUCH CONCLUSION, THE HONBLE SPECIAL BENCH APPROVED THE VIEW TAKEN BY THE INCOME -TAX APPELLATE TRIBUNAL, KOLKOTA BENCH IN CASE OF ITO VS . SAMIRAN MAJUMDAR (98 ITD 119) BUT DID NOT AGREE WITH THE VI EW TAKEN BY THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI BENCH IN THE CASE OF ROUTERMANIA TECHNOLOGIES (P) LTD. VS. ITO (16 SOT 3 84) BY HOLDING THAT THE MEANING OF EXPRESSION COMPUTER C ANNOT BE RESTRICTED ONLY TO THE CPU OF THE COMPUTER BY PULLI NG OUT THE IMPORT AND OUTPUT DEVICES FROM THE AMBIT OF COMPU TER. THE HONBLE SPECIAL BENCH FURTHER WENT ON TO HOLD THAT THOUGH FUNCTIONS OF THE COMPUTER AS ONE COMPOSITE UNIT IS FOR PERFORMING LOGICAL, ARITHMETICAL OR MEMORY FUNCTION S ETC., BUT IT IS NOT THE ONLY EQUIPMENT WHICH PERFORMS SUCH FUNC TIONS THAT CAN BE CALLED AS COMPUTER. ALL THE INPUT AND OUT PUT DEVICES WHICH IN FACT SUPPORT IN THE RECEIPT OF INPUT AND O UTFLOW OF THE OUTPUT ARE ALSO PART OF THE COMPUTER. THEREFORE, THE RATIO WHICH CAN BE CULLED OUT FROM THE AFORESAID DECISION OF HONBLE SPECIAL BENCH (SPECIFICALLY PARAGRAPH 31.4 OF THE O RDER), IT IS TO BE SEEN THAT THE HONBLE SPECIAL BENCH HAS CLEARLY HELD THAT WHEN A PARTICULAR HARDWARE OR SOFTWARE IS USED ALON G WITH A COMPUTER AND WHEN THEIR FUNCTIONS ARE INTEGRATED W ITH A COMPUTER OR IN OTHER WORDS WHEN THE DEVICE IS USED AS PART OF THE COMPUTER IN ITS FUNCTIONS, EVEN THOUGH IT MAY B E HAVING USER ON STANDALONE BASIS, BUT STILL THEN SUCH HARDWARE O R SOFTWARE WOULD BE TERMED AS A COMPUTER. IN APPLYING THE AFORESAID RATIO TO THE FACTS OF THE PRESENT CASE, IT CAN BE S EEN THAT THE REVENUE AUTHORITIES HAVE NOT DISPUTED THE FACT THAT THE ITEMS ON WHICH THE ASSESSEE HAS CLAIMED DEPRECIATION AT THE RATE OF 60% BY TREATING THEM AS COMPUTER ARE BEING USED AS I NPUT OR OUTPUT DEVICE OF THE COMPUTERS. HOWEVER, THE DEPAR TMENTAL AUTHORITIES HAVE NEGATIVED THE CLAIM OF THE ASSESSE E SOLELY ON THE REASONING THAT EVERY PERIPHERAL DEVICE CONNECT ED TO THE COMPUTER CANNOT FORM PART OF THE COMPUTER. HOWEVER, SUCH VIEW OF THE REVENUE AUTHORITIES CANNOT BE THE CORRECT PR OPOSITION OF LAW IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE S PECIAL BENCH IN CASE OF DCIT VS. DATACRAFT INDIA LIMITED (SUPRA) BY HOLDING THAT ANY DEVICE WHEN THEY ARE USED ALONG WITH COMP UTER AND WHEN THEIR FUNCTIONS ARE INTEGRATED WITH THE COMPU TER COMES WITHIN THE AMBIT OF THE EXPRESSION COMPUTER. WE MAY FURTHER OBSERVE THAT IN THE ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2006-07, INCOME-TAX APPELLATE TRIBUNAL, HYDERA BAD BENCH WHILE DECIDING THE DEPARTMENTAL APPEAL IN ITA NOS. 15 ITA NO.1429/HYD/2008 USHODAYA ENTERPRISES LTD. 701/HYD/2009 AND 426/HYD/10 DATED 9-7-2012 ALSO UPH ELD THE ORDER PASSED BY THE CIT (A) IN ALLOWING DEPRECIATIO N AT THE RATE OF 60% BY TREATING THE SCREEN, KEY BOARD, MOUSE, U PS, NET WORKING, ROUTER AS PART OF THE COMPUTER SYSTEM AND THEREBY ELIGIBLE FOR DEPRECIATION AT THE RATE OF 60% AS A VAILABLE TO COMPUTER. IN THE AFORESAID VIEW OF THE MATTER, WE ARE INCLINED TO ACCEPT THE ASSESSEES CONTENTION THAT IT IS ENTI TLED TO AVAIL DEPRECIATION AT THE RATE OF 60% ON THOSE ITEMS AS I S APPLICABLE TO COMPUTER. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE CIT (A) BY ALLOWING THE GROUNDS RAISED BY THE A SSESSEE. AS THE DISPUTE IN THE PRESENT APPEAL IS MATERIALLY THE SAME AND THE LEARNED DR HAS NOT BROUGHT ANY CONTRARY DECISION TO OUR NOTICE, WE RESPECTFULLY FOLLOW THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE AS REFERRED TO ABOVE AND DIRECT THE AO TO ALLOW DEPRECIATION @ 60% AS CLAIMED BY ASSESSEE. ACCORDINGLY, THE GROU ND RAISED BY ASSESSEE IS ALLOWED. 18. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. PRONOUNCED IN THE OPEN COURT ON 22.10.2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 22 ND OCTOBER, 2014 KV COPY TO:- 1) USHODAYA ENTERPRISES LTD., 6-3-570, SOMAJIGUDA, HYDERABAD. 2) ACIT, CIRCLE 16(2),HYDERABAD 3) CIT(A)-V, HYDERABAD 4) CIT-IV, HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD.