ADITYA BIRLA MONEY LIMITED, CHENNAI V. DCIT COMPANY CIRCLE 1 (1), CHENNAI

ITA 1797/CHNY/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2071 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 25-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R ANITA J
• Assessee Lawyers: ANAND DEVKUMAR
• Keywords: Depreciation
• Section: 13; 32; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , !' , # $ BEFORE SHRI GEORGE MATHAN , JUDICIAL MEMBER AND SHRI S.JAYARAMAN, ACCOUNTANT MEMBER ' ./ ITA NOS.1795,1796,1797/CHNY/2018 !% /ASSESSMENT YEARS: 2011-12, 2012-13 & 2013-14 M/S.ADITYA BIRLA MONEY LTD ., 55,ALI TOWERS,GREMAS ROAD, CHENNAI 600 006. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 1(1), CHENNAI 600 034. [ PAN: AAACA 7472 K ] ( & /APPELLANT) ( '(& /RESPONDENT) & ) * / APPELLANT BY : MR.ANANDDEV KUMAR,ADVOCATE '(& ) * /RESPONDENT BY : MS.R.ANITA J.C.I.T, D.R + ! ) ,# /DATE OF HEARING : 02.12.2019 -.% ) ,# /DATE OF PRONOUNCEMENT : 06.12.2019 / / O R D E R PER S.JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THE ABOVE THREE APPEALS AGA INST THE COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS )-I, CHENNAI, IN ITA NOS.1795,1796,1797/CHNY/2018 :- 2 -: ITA NOS 118/CIT(A)-1/2014-15, 172/CIT(A)-1/2015-16 & 174/CIT(A)- 1/2016-17 DATED 21.03.2018, FOR THE ASSESSMENT YEA RS 2011-12,2012- 13 & 2013-14, RESPECTIVELY. SINCE IDENTICAL ISSUES ARE INVOLVED IN ALL THESE APPEALS OF ASSESSEE, THEY ARE HEARD TOGETHER AND BEING DISPOSED TOGETHER, FOR CONVENIENCE SAKE. 2. M/S.ADITYA BIRLA MONEY LTD, THE ASSESSEE IS ENG AGED IN THE BUSINESS OF STOCK BROKING AND INSURANCE. WHILE MA KING THE ASSESSMENTS FOR ASSESSMENT YEARS 2011-12, 2012-13 & 2013-14, THE ASSESSING OFFICER (AO), INTER ALIA RESTRICTED THE DEPRECIATION ON OFFICE EQUIPMENT TO 10% INSTEAD OF 15% AS CLAIMED BY THE A SSESSEE. 3. AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE ASSESSEE PROVIDED THE DETAILS OF IT EMS COMPRISED UNDER THE HEADING OFFICE EQUIPMENT. ON EXAMINATION OF T HEM, THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE AO ON OFFICE EQU IPMENT ON THE GROUND THAT THE NATURE OF ITEMS COMPRISED UNDER THI S HEAD ARE MORE IN THE NATURE OF ELECTRICAL FITTINGS AND INSTALLATIONS ELIGIBLE FOR DEPRECIATION @ 10% AND NOT PLANT AND MACHINERY ON WHICH DEPRECIATI ON OF 15% IS PERMISSIBLE. THE LD.CIT(A) DISMISSED THE APPEALS O F THE ASSESSEE. AGGRIEVED AGAINST THOSE ORDERS OF LD.CIT(A), THE A SSESSEE FILED THESE APPEALS BEFORE THE LD.CIT(A). ITA NOS.1795,1796,1797/CHNY/2018 :- 3 -: 4. BEFORE US, THE LD. A.R ARGUED AND PRESENTED THE CASE ON THE LINES OF THE GROUNDS OF THE APPEAL. LD.A.R SUBMITTED THA T THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE I N ITA NO.1452/MDS./2015 FOR ASSESSMENT YEAR 2010-11 VIDE ORDER DATED 10.05.2016, ON REVENUES APPEAL, UPHELD THE DIRECTI ONS ISSUED BY THE LD.CIT(A) TO THE AO TO ALLOW DEPRECIATION @ 15% ON OFFICE EQUIPMENT. THE LD. AUTHORIZED REPRESENTATIVE OF ASSESSEE SUBMI TTED THAT THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS BEFORE THE LD.CIT(A) :- THE APPELLANT BEING A STOCK BROKER HAVING COMPUTER NETWORK COVERING LOCATIONS ACROSS THE COUNTRY, THE UPS BATTERIES, AI R-CONDITIONING, FIRE EXTINGUISHER, STABILIZER, TELEPHONE SYSTEM AND DIFF ERENT TELEPHONE EQUIPMENTS, EXHAUST FANS ARE PART OF THIS NETWORK A ND CAN NEVER BE CALLED UNDER ELECTRICAL INSTALLATIONS. AS THE APP ELLANT HAS ALREADY FILED THE DETAILS OF OFFICE EQUIPMENTS FOR ALL THE ASST. YEARS COVERED IN THE ABOVE APPEAL, I.E. AY.2011-12, 2012-13 AND 2013-14, YOUR CONCLUSION THAT IN FACT, A PERUSAL OF THE BREAKUP INDICATES TH AT MAXIMUM COST HAS BEEN ONLY TOWARDS DIFFERENT TYPES OF BATTERIES, THE APPELLANT HAS NOT EXPLAINED AS TO HOW THESE ITEMS WILL QUALIFY FOR FU NCTIONAL TESTS TO BE TREATED AS PLANT & MACHINERY OF THE APPELLANT AND I T SEEMS THAT THE SAME IS IN THE NATURE OF ELECTRICAL FITTINGS AND INSTALL ATIONS ELIGIBLE FOR DEPRECIATION @ 10% AND NOT PLANT & MACHINERY ON WHI CH DEPRECIATION @ 15% IS PERMISSIBLE IS A MISTAKE APPARENT FROM RECOR D, AS THE QUESTION WAS NEVER PUT TO THE APPELLANT AND HER ASSUMPTION T HAT THEY ARE IN THE NATURE OF ELECTRICAL FITTINGS AND INSTALLATIONS IS A MISTAKE BY OVERSIGHT APPARENT FROM RECORD AS THE BATTERIES REFERRED IN T HE ORDER ARE ACTUALLY UPS BATTERIES, FORMING PART OF COMPUTERS I NETWORK AND HENCE, ELIGIBLE FOR DEPRECIATION @ 60%, THOUGH THE ASSESSEE HAS CLAIMED THE SAME AS PART ITA NOS.1795,1796,1797/CHNY/2018 :- 4 -: OF PLANT & MACHINERY ELIGIBLE FOR 15%. IN ANY CASE, TO AVOID ANY AMBIGUITY, THE APPELLANT DID SUBMIT DETAILED LIST O F OFFICE EQUIPMENTS FOR ALL THE YEARS TOGETHER WITH REASONING FOR EACH ITEM FALLING IN THE SAID BLOCK AS TO WHY IT SHOULD FALL IN THAT BLOCK THEREBY SATI SFYING THE FUNCTIONALITY TESTS REQUIRED AT YOUR END TO ENABLE YOU TO ALLOW T HE CLAIM OF THE APPELLANT FOR DEPRECIATION @ 15% ALONG WITH BILL CO PIES ALONG WITH APPLICATION U/S 154 OF THE ACT. FURTHER, AIR-CONDITIONERS AND EXHAUST FANS ARE REQU IRED FOR MAINTAINING THE TEMPERATURE AND HUMIDITY FOR EFFECTIVE WORKING OF COMPUTER NETWORK, WHICH NEED TO WORK UNINTERRUPTEDLY 24/365 AND MORE PARTICULARLY DURING MARKET TIME AND THEY ARE PART OF COMPUTER NETWORK A ND HENCE, THEY CANNOT BE CATEGORIZED AS FURNITURE & FITTINGS AND E LECTRICAL FITTINGS. SIMILARLY, TELEPHONE SYSTEMS AND TELEPHONE EQUIPMEN TS CAN NEVER BE ELECTRICAL FITTINGS. THEREFORE, THEY ARE CATEGORIZE D AS PLANT & MACHINERY. FURTHER, THE DEFINITION OF PLANT IS WIDE ENOUGH TO COVER THESE ITEMS LIKE AIR-CONDITIONERS, EXHAUST FANS, STABILIZERS, TELEPH ONE SYSTEMS, DIFFERENT PHONE EQUIPMENTS ETC. TELEVISIONS ARE REQUIRED FOR LIVE MARKET INFORMATION AND HENCE, CAN NEVER BE CATEGORIZED AS ELECTRICAL FITTINGS AS ALL THE ITEMS FORMS PART OF COMPUTER NETWORK AND CO NSEQUENTLY, THE APPELLANT HAS CLAIMED DEPRECIATION @ 15% APPLICABLE TO PLANT & MACHINERY AND SOUGHT AN ORDER OF RECTIFICATION U/S.154 FROM T HE LD.CIT(A). HOWEVER, THE LD.CIT(A) HAS NOT DISPOSED THE PETITION TILL DATE. THEREFORE, THE LD.A.R PLEADED T O ALLOW ALL THESE APPEALS BASED ON THE BINDING PRECEDENCE. 5. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF LD. CIT(A) ON THE GROUND THAT THE ASSESSEE HAS NOT EXPLAINED HOW THES E OFFICE EQUIPMENTS WILL QUALIFY THE FUNCTIONAL TEST TO BE TREATED AS P LANT AND MACHINERY. ITA NOS.1795,1796,1797/CHNY/2018 :- 5 -: 6. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. THE RELEVANT PORTIONS OF ORDER OF CO-O RDINATE BENCH OF THE TRIBUNAL VIDE ORDER DATED 10.05.2016 (SUPRA) IS EXT RACTED AS UNDER:- 26. THE SECOND GROUND RAISED IN THIS APPEAL IS WI TH REGARD TO ALLOWABILITY OF DEPRECIATION ON OFFICE EQUIPMENTS. 27. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTICED FROM THE DEPRECIATION STATEMENT THAT THE ASSESSEE H AS CLAIMED DEPRECIATION ON OFFICE EQUIPMENTS AT 15% INSTEAD OF APPLICABLE RATE OF 10%. MOREOVER, THE ASSESSEE HAS ALSO CLAIMED DEPREC IATION ON THE DELETIONS MADE TO THIS BLOCK IN THE SECOND HALF OF THE YEAR. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT THE PRO VISO TO SECTION 32(1)(II) OF THE ACT IS APPLICABLE ONLY TO THE ASSE TS ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND THE ASSESSEE IS ENTITLED TO DEPRECIATION ON THE WDV WITHIN THE MEANING OF SECTI ON 43(6)(C) OF THE ACT. THEREFORE, THE ASSESSING OFFICER HAS RESTRICTE D THE DEPRECIATION AND THE EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 28. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFO RE THE LD. CIT(A) AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATIO N AT 15% ON OFFICE EQUIPMENTS. 29. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL B EFORE THE TRIBUNAL. 30. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL S ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. A GAINST THE RESTRICTION OF DEPRECIATION ON OFFICE EQUIPMENTS FROM 15% TO 10 % BY THE ASSESSING ITA NOS.1795,1796,1797/CHNY/2018 :- 6 -: OFFICER, THE ASSESSEE HAS SUBMITTED THE FOLLOWING S UBMISSIONS BEFORE THE LD. CIT(A). AS PER APPENDIX-I TO RULE 5 OF INCOME TAX RULES, 1 962, BLOCK III(I), THE DEPRECIATION RATE IS 15% FOR OFFICE EQUIPMENTS. DEP RECIATION RATE OF 10% IS APPLICABLE FOR FURNITURE AND FITTINGS FALLING IN BL OCK II TO THE ABOVE APPENDIX- I. OFFICE EQUIPMENTS OBVIOUSLY AND APPARENTLY FALLI NG UNDER BLOCK III ARE ENTITLED TO 15% DEPRECIATION RATE. THE CONTENTION O F THE ASSESSING OFFICER THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION @ 10% IS I NCORRECT, ARBITRARY AND ILLEGAL AND THEREFORE, LIABLE TO BE DISMISSED AS BA SELESS AND FRIVOLOUS. HENCE, THE ASSESSEE PRAYS FOR DIRECTIONS TO THE ASSESSING OFFICER TO ALLOW THE DEPRECIATION @ 15% ON OFFICE EQUIPMENTS AND RENDER JUSTICE AND OTHER CONTENTIONS OF THE ASSESSING OFFICER IN THIS CONNEC TION ARE DEALT WITH AS FOLLOWS. IN THE CASE OF ASSETS ACQUIRED BY THE ASSESSEE DURI NG THE PREVIOUS YEAR, PROVISO TO SECTION 32 OF THE INCOME TAX ACT, 1961 PERMITS 5 0% OF THE APPLICABLE RATE OF DEPRECIATION. HENCE, THE ASSESSEE HAS CLAIMED 50% O F APPLICABLE RATE OF DEPRECIATION AS PER THE ABOVE PROVISO AND COMPLIED WITH THE PROVISIONS OF SECTION 43(6)(C) OF THE INCOME TAX ACT, 1961 APPLIC ABLE TO BLOCK OF ASSETS AND THERE IS NO VIOLATION OF ANY OF THE ABOVE PROVISION S OF INCOME TAX ACT, 1961 QUOTED BY THE ASSESSING OFFICER. AFTER CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSE SSEE, THE LD. CIT(A) WAS OF THE OPINION THAT THE CLAIM OF THE ASSESSEE S EEMS TO BE IN ORDER. HE ALSO OBSERVED THAT AS PER APPENDIX-I TO RULE 5 O F INCOME TAX RULES, 1962, BLOCK III(I), THE DEPRECIATION RATE IS 15% FO R OFFICE EQUIPMENTS. DEPRECIATION RATE OF 10% IS APPLICABLE FOR FURNITUR E AND FITTINGS FALLING IN BLOCK II TO THE ABOVE APPENDIX-I. OFFICE EQUIPMENTS OBVIOUSLY AND APPARENTLY FALLING UNDER BLOCK III ARE ENTITLED TO 15% DEPRECIATION RATE. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO A LLOW THE DEPRECIATION @ 15% ON OFFICE EQUIPMENTS. IN VIEW OF THE ABOVE FI NDINGS OF THE LD. CIT(A), WE FIND NO REASON TO INTERFERE WITH THE ORD ER PASSED BY THE LD. CIT(A) ON THIS ISSUE. THUS, THE GROUND RAISED BY TH E REVENUE IS DISMISSED. ITA NOS.1795,1796,1797/CHNY/2018 :- 7 -: SINCE THE CO-ORDINATE BENCH OF THISTRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11 ( SUPRA) HAS DECIDED THE ISSUE ON ALLOWABILITY OF DEPRECIATION ON OFFICE EQUIPMENTS IN FAVOUR OF THE ASSESSEE, RESPECTFULLY FOLLOWING THE ABOVE ORDER O F THE TRIBUNAL, THE GROUND RAISED IN ALL THESE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2011-12,2012-13 & 2013-14 ARE ALLOWED. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2011-12,2012-13 & 2013-14 ARE ALLOWED. ORDER PRONOUNCED ON THE 06 TH DECEMBER, 2019 IN CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( ) (S. JAYARAMAN) # /ACCOUNTANT MEMBER /CHENNAI, 0' /DATED: 06 TH DECEMBER, 2019. K S SUNDARAM / ) ',12 32%, /COPY TO: 1. & /APPELLANT 4. + 4, /CIT 2. '(& /RESPONDENT 5. 2!56 ', /DR 3. + 4, ( ) /CIT(A) 6. 69 : /GF