DCIT, New Delhi V. M/s. ICRA Ltd., New Delhi

ITA 1479/DEL/2011

• Counselvise Citation: 147920114 RSA 2011
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 24-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S AHLAWATDR
• Assessee Lawyers: VIPIN AGARWALAR
• Keywords: Depreciation; Revenue expenditure
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI R.P. YADAV, JM & SHRI A.N. PAHUJA, A M ITA NO.1479/DEL/2011 ASSESSMENT YEAR: 2007-08 DCIT CIRCLE-11(1), ROOM NO.312, C.R. BUILDING, NEW DELHI V/S . M/S ICRA LIMITED, 1105, 11 TH FLOOR, KAILASH BUILDING, 26, KASTURBA GANDHI MARG, CONNAUGHT PLACE, NEW DELHI [PAN : AAACI 0218 B ) (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI VIPIN AGARWAL,AR REVENUE BY SHRI J.S. AHLAWAT,DR DATE OF HEARING 04-07-2012 DATE OF PRONOUNCEMENT 13-07-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 24.03.2011 BY THE REVENUE AGAI NST AN ORDER DATED 14.01.2011 OF THE LD. CIT(A)-XXX, NEW DELHI, RAISES THE FOLLOWING GROUNDS:- 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW,THE CIT(A) HAS ERRED IN DELETING THE ADDITION O F ` ` 17,41,918/- U/S 14A OF INCOME-TAX ACT. 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` ` 80,417/- ON ACCOUNT OF DISALLOWANCE OF CLAIM U/S 35D OF I.T. ACT. 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` `1,17,000/- ON ACCOUNT OF DEPRECIATION ON COMPUTER PERIPHERALS. ITA NO1479/ DEL ./2011 2 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY GROUND OF THE APPEAL RAISED ABOVE AT THE TIME OF HE ARING. 2. ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL, F ACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF ` ` 17,43,92,638/- FILED ON 30.10.2007 BY THE ASSESSEE, A PROFESSIONAL INVESTME NT INFORMATION AND CREDIT RATING AGENCY, AFTER BEING PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), WAS SELECTE D FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ISSUED ON 22.09.2008 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O. IN SHORT) ASKED THE ASSESSEE TO FURNISH DETAILS OF EXPENDITURE INCURRED IN RELATION TO TOTAL INCOME WHICH DO NOT FORM PART OF TOTAL INCOME, IN ORDER TO DISALLOW EXPENDITURE IN TERMS OF PROVISIONS OF SECTION 14A OF THE ACT. IN REPLY, THE ASSESSEE SUBMITTED THAT THEY HAVE ALREADY OFFERED AN AMOUNT OF ` ` 1 LAC FOR DISALLOWANCE IN PURSUANCE TO THE ITATS ORDERS RELATING TO AYS 2001-02, 2003-04 AND 2004-05. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE A ND DISALLOWED AN AMOUNT OF ` `18,41,918/- IN TERMS OF RULE 8D OF I.T. RULES, 196 2 WHILE REFERRING TO DECISIONS IN DAGA CAPITAL MANAGEMENT PVT. LTD. ,26 SOT 603 (M UM)(SB) ;CHEMINVEST LTD. VS. INCOME-TAX OFFICER IN I.T.A. NOS.87/DEL./08; AC IT VS. CHEMINVEST LTD. IN I.T.A. NO.4788/D/07 AND ACIT VS. UTI BANK LTD. I.T. A. NO.233/AHD/2006. 3. ON APPEAL, THE LEARNED CIT(A) RESTRICTED THE DI SALLOWANCE TO ` ` 1,00,000/- WHILE RELYING UPON THE DECISION DATED 20 TH OCTOBER, 2008 IN THE ASSESSEES OWN CASE FOR THE AY 2004-05 IN I.T.A. NO .360/DEL./2008. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. DR SUPPORTED THE ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LD.CIT(A). 5 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, RULE 8D IS NOT APPLICABLE IN TH E YEAR UNDER CONSIDERATION IN ITA NO1479/ DEL ./2011 3 VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN MAXOPP INVESTMENT LTD. VS. CIT,[2011] 15 TAXMANN.COM 390 ( DELHI). MOREOVER IN THE ASSESSEES OWN CASE FOR THE AYS 2001-02 AND 2003-04 IN I.T.A. NO.514/DEL./04 AND I.T.A. NO.2573/DEL./06, A CO-ORDINATE BENCH WHI LE FOLLOWING THE DECISION IN ACIT VS. M/S EICHER LTD. 101 TTJ 369, UPHELD THE DI SALLOWANCE OF ` `1 LAC. THE SAID DECISION WAS FOLLOWED IN THE DECISION DATED 20 TH OCTOBER, 2008 IN THE AY 2004-05 IN I.T.A. NO.360/DEL./08 AND IN THE DECISIO N DATED 21 ST APRIL, 2011 IN I.T.A. NO.4932/DEL./2010 IN THE AY2005-06. IN THE LIGHT OF CONSISTENT VIEW TAKEN IN THESE DECISIONS IN IDENTICAL CIRCUMSTANCES, ESPE CIALLY WHEN THE REVENUE HAVE NOT PLACED ANY MATERIAL BEFORE US SO AS TO ENABLE U S TO TAKE A DIFFERENT VIEW IN THE MATTER NOR BROUGHT TO OUR NOTICE ANY CONTRARY D ECISION, WE ARE NOT INCLINED TO INTERFERE. THEREFORE, GROUND NO.1 IN THE APPEAL I S DISMISSED. 6. GROUND NO.2 RELATES TO CLAIM U/S 35D OF THE ACT . THE AO DISALLOWED AN AMOUNT OF ` ` 80,417/-ON THE GROUND THAT PROVISIONS OF SECTION 35 D WERE NOT APPLICABLE IN THE YEAR UNDER CONSIDERATION. 7. ON APPEAL, THE LD. CIT(A) DELETED THE DISALLOWA NCE, HOLDING AS UNDER:- THE LEARNED ASSESSING OFFICER HAS DISALLOWED ` `80,417/- CONSIDERING THAT AS PER THE PROVISIONS OF SECTION 3 5D BENEFIT COULD BE AVAILED FOR A PERIOD OF 10 SUCCESSIVE YEARS BEGI NNING WITH THE PREVIOUS YEAR IN WHICH THE BUSINESS COMMENCES WHICH HAVE BEEN LAPSED. IT HAS BEEN CONTENDED AS UNDER; 3.1 IN THE INSTANT CASE, THE EXPENSES WERE INCURRED BY THE ASSESSEE IN FINANCIAL YEAR 1999-2000 ON ISSUE OF SHARES TO M/S MOODYS (``2,55,169/-) AND IN FINANCIAL YEAR 2000-01 ON INCREASE IN AUTHORIZED CA PITAL OF THE ASSESSEE (``5,49,000/-). BOTH THESE EXPENSES ARE NOT COVERE D BY SECTION 35D. 3.2 FURTHER, THE ASSESSEE CLAIMED ONE-TENTH OF THE SAID EXPENDITURE I.E. ``80,416/- DURING THE RELEVANT YEAR AND HAD ALSO CL AIMED THE SAID AMOUNT IN EARLIER YEARS. ALL THE EARLIER YEARS WERE ASSESSED U/S 143(3)/143(1) OF THE INCOME-TAX ACT AND NO DISALLOWANCE ON THE SAID ISSU E WAS MADE IN THE EARLIER YEARS RELEVANT CHART IS ENCLOSED AS PER AN ANNEXURE HEREWITH. ITA NO1479/ DEL ./2011 4 3.3 IN THE LIGHT OF THE ABOVE, IT IS PRAYED THAT TH E EXPENDITURE DOES NOT FALL WITHIN THE AMBIT OF SECTION 35D AND NEEDS TO BE ALL OWED AS REVENUE EXPENDITURE. THE CONTENTION OF THE APPLICANT APPEARS TO BE REASO NABLE SINCE 1/10 TH OF THE EXPENDITURE ALLOWED IN THE PREVIOUS YEAR, I DO NOT WANT TO INTERFERE AND DISALLOWANCE OF ` ` 80,417/- TO BE DELETED. 8. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. DR SUPPORTED THE ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE FINDIN GS IN THE IMPUGNED ORDER. 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. INDISPUTABLY, THE EXPENDITURE OF ` `2,55,169/- WAS INCURRED IN THE FINANCIAL YEAR 1999-2000 AND ` ` 5,49,000/- IN THE FINANCIAL YEAR 2000-01, FOR ISSUI NG THE SHARES TO M/S MOODYS. THE ASSESSEE CLAIMED 1/10 TH OF THESE EXPENSES SINCE THEN AND NO DISALLOWANCE HAS BEEN MADE IN ANY OF TH E EARLIER YEARS. THERE IS NO DISPUTE THAT THE ENTIRE EXPENDITURE IS REVENUE IN N ATURE AND WAS ALLOWABLE IN THE YEAR WHEN IT WAS INCURRED. INSTEAD OF CLAIMING THE ENTIRE EXPENDITURE IN THAT YEAR, THE ASSESSEE DEFERRED THE AMOUNT, CLAIMING ONLY 1/1 0 TH IN EACH OF THE SUBSEQUENT 10 YEARS. IN THESE CIRCUMSTANCES, ESPEC IALLY WHEN THE REVENUE HAVE NOT PLACED ANY MATERIAL BEFORE US CONTROVERTIN G THE AFORESAID FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) NOR BOUGHT TO OUR NOTICE ANY CONTRARY DECISION, WE ARE NOT INCLINED TO INTERFERE. THEREFORE, GROUND NO.2 IN THE APPEAL IS DISMISSED. 10. GROUND NO.3 RELATES TO THE DISALLOWANCE OF ` `1,17,000/- ON ACCOUNT OF DEPRECIATION ON COMPUTER PERIPHERALS. THE AO DI SALLOWED THE DEPRECIATION ON UPS PURCHASED FOR ` `2,60,000/- ON THE GROUND THAT UPS DID NOT FALL WIT HIN THE DEFINITION OF COMPUTER AND COMPUTER SOFTWARE, ENTIT LED TO DEPRECIATION @60% AS PER APPENDIX 1 OF THE I.T. RULES, 1962. ITA NO1479/ DEL ./2011 5 11 ON APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM ,FO LLOWING THE DECISION IN INCOME-TAX OFFICER VS. SAMIRAN MAJUMDAR 280 ITR (AT) 74 (KOLKATA) AND ACIT VS. CONTINENTAL CARRIERS (P) LTD. I.T.A. NO.21 37/DEL./08. 12. THE REVENUE IS NOW IN APPEAL AGAINST THE AFORE SAID FINDINGS OF LEARNED CIT(A). THE LD. DR SUPPORTED THE ORDER OF T HE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE FINDINGS IN THE IMPUGNED ORDER. 13. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. WE FIND THAT THE HONBLE DELHI HIGH COURT I N THE CASE OF CIT V. BSES RAJDHANI POWERS LTD. IN I.T. APPEAL NO. 1266 (DELHI ) OF 2010, IN THEIR DECISION DATED 31-8-2010 WHILE ADJUDICATING A SIMILAR ISSUE, HELD AS UNDER: 'WE ARE IN AGREEMENT WITH THE VIEW OF THE TRIBUNAL THAT COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS, PRINTERS, SCANNERS AND SER VER ETC. FORM AN INTEGRAL PART OF THE COMPUTER SYSTEM. IN FACT, THE COMPUTER ACCESSORIES AND PERIPHERALS CANNOT BE USED WITHOUT THE COMPUTER. CO NSEQUENTLY, AS THEY ARE THE PART OF THE COMPUTER SYSTEM, THEY ARE ENTITLED TO DEPRECIATION AT THE HIGHER RATE OF 60 PER CENT.' 13.1 FOLLOWING THE SAID DECISION, ITAT I N ITO VS. V. OMNI GLOBE INFORMATION TECHNOLOGIES INDIA (P.) LTD., 131 ITD 280(DELHI) HELD THAT IF PERIPHERALS SUCH AS PRINTERS, SCANNERS AND SERVERS ETC. FORM INTEGRAL PART OF THE COMPUTER SYSTEM, UPS WILL ALSO BE AN INTEGRAL PART OF THE COMPUTER SYSTEM, ENTITLED FOR DEDUCTION OF DEPRECIATION AT THE RATE OF 60 PER CENT. IN ANOTHER DECISION DATED 9.11.2010, HONBLE DELHI HIGH COURT IN CIT VS. CITYCORP MARUTI FINANCE LTD. IN ITA NOS. 1712& 1714/2010 FOLLOWED T HEIR OWN DECISION IN BSES YAMUNA POWERS LTD.(SUPRA) AND UPHELD THE VIEW OF TH E ITAT, ALLOWING DEPRECIATION @60% ON COMPUTER ACCESSORIES AND PERIP HERALS LIKE PRINTERS ETC. . A SIMILAR VIEW WAS TAKEN IN CIT VS. M/S BONANZA PORTFOLIO LTD.: I.T.A. NO.83 3 OF 2011 BY THE HONBLE JURISDICTIONAL HIGH COURT IN TH EIR DECISION DATED 10.8.2011. IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DECISIONS, ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US ANY CONTRARY DECISION NOR ANY OTHER MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, W E HAVE NO HESITATION IN ITA NO1479/ DEL ./2011 6 UPHOLDING THE FINDINGS OF THE LD. CIT(A),ALLOWING D EPRECIATION @60% ON UPS. THEREFORE, GROUND NO.3 IN THE APPEAL OF THE REVENUE IS DISMISSED. 14. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TER MS OF RESIDUARY GROUND NO.4 IN THE APPEAL, ACCORDINGLY, THIS GROUND IS DISMISSED. 15. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE U S. 16.. IN RESULT, APPEAL IS DISMISSED. SD/- SD/- (RAJPAL YADAV) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. DCIT CIRCLE-11(1), ROOM NO.312, C.R. BUILDING,NE W DELHI 3. CIT CONCERNED 4. CIT (A)-XXX, NEW DELHI 5. DR, ITAT,C BENCH, NEW DELHI 6. GUARD FILE. BY OR DER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT