CINETECH ENTERTAINMENT INDIA PRIVATE LIMITED , MUMBAI V. INCOME TAX OFFICER WARD-16(1)(1), MUMBAI

ITA 2030/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9316 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 03-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3); 143(2); 32

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 2030/MUM/2018 (ASSESSMENT YEAR 2014-15 ) M/S CINETECH ENTERTAINMENT INDIA PVT. LTD., 27, CAMA INDUSTRIES, WALBHAT ROAD, GOREGAON (EAST), MUMBAI- 400063. PAN: AAECC3526G VS. ITO-16(1)(1) AIR INDIA BUILDING, MUMBAI. APPELLANT RESPONDE NT APPELLANT BY : SHRI RAKESH JOSHI (AR) RESPONDENT BY : SHRI ABI RAMA KARTHIKEYAN (DR) DATE OF HEARING : 04.09.2019 DATE OF PRONOUNCEMEN T : 17.09.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(A)-4, MUMBAI DATED 27.02.2018 FOR ASSESSMENT YEAR 2014-15 .THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WEL L AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD . ASSESSING OFFICER IN DISALLOWING THE CLAIM OF DEPRECIATION AMOUNTING TO RS. 47,13,344/- ON THE ALLEGED PLEA THAT THE FILM PROJECTOR IS TO BE DEPRE CIATED @15% INSTEAD OF @60%, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANC ES OF THE CASE. 2. THE ASSESSEE HAS ALSO FILED THE FOLLOWING ADDITIONA L GROUND OF APPEAL: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN MAKING ADDITION OF EXCES S DEPRECIATION, WHICH ITA NO. 2030 MUM 2018-M/S CINETECH ENTERTA INMENT INDIA PVT. LTD 2 IS BEYOND HIS JURISDICTION AS THE SAID ISSUE WAS NO T PART OF THE REASONS FOR LIMITED SCRUTINY ISSUED U/S 143(2) OF THE ACT. 3. AT THE OUTSET OF HEARING, THE LD. AUTHORIZED REPRES ENTATIVE (AR) OF THE ASSESSEE SUBMITS THAT GROUND OF APPEAL RAISED BY AS SESSEE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF TRIBUNAL FO R ASSESSEES OWN CASE FOR A.Y. 2013-14. HOWEVER, THE LD. AR SUBMITS THAT THE DEPRECIATION MAY BE ALLOWED TO THE ASSESSEE AS PER REVISED W.D.V . THE LD AR FOR THE ASSESSEE ALSO FURNISHED A CHART SHOWING THE DEPRECI ATION CLAIMED AND ALLOWED BY AO IN THE ASSESSMENT ORDER UNDER SECTION 143(3) IN 2013-14 AND 2014-15, WHICH IS EXTRACTED BELOW. AS PER RETURN OF INCOME AY OPENING WDV ADDITION DURING THE YEAR TOTAL DEPRECIATION @60% CLOSING WDV 2013 - 14 ---- 20544188 20544188 12250283 8293905 2014-15 82,93,905 2172800 2172800 10466705 4186682 AS PER ASSESSMENT ORDER AY OPENING WDV ADDITION DURING THE YEAR TOTAL DEPRECIATION @15 CLOSING WDV 2013-14 --- 20544188 20544188 3062571 17481617 2014-15 17481617 2080800 19562417 2934363 16628055 PARTICULARS AY 2013-14 AY 2014-15 DEPRECIATION CLAIMED AS PER ITR 122,50,283 62,80,0 23 DEPRECIATION ALLOWABLE AS PER ASST. ORDER 30,62,571 2934,363 DEPRECIATION 91,87,712 3345,661 ITA NO. 2030 MUM 2018-M/S CINETECH ENTERTA INMENT INDIA PVT. LTD 3 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE SUBMITS THAT THE GROUND OF APPEAL IS COVERE D AGAINST THE ASSESSEE BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2013-14, WHEREIN THE TRIBUNAL HAS PASSED THE FOLLOW ING ORDER: 7. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. THE LD. COUNSEL OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEF ORE THE AUTHORITIES BELOW. HE INSISTED THAT THE PROJECT IS A COMPUTER A ND IT SHOULD BE GRANTED DEPRECATION IS APPLICABLE TO COMPUTERS. IN THIS REG ARD, THE LD. COUNSEL OF THE ASSESSEE PLACED RELIANCE UPON THE DECISION OF I TAT MUMBAI SPECIAL BENCH IN THE CASE OF DCIT VS. DATACRAFT INDIA LTD . [2011] 9 ITR(T) 712 (MUM) (SB) AND THE ITAT BANGALAORE BENCH DECISION I N THE CASE OF DY. CIT VS. UAE EXCHANGE AND FINANCIAL SERVICES LTD . [2016] 69 TAXMANN.COM 84 (BANG-TRIB). 8. PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTAT IVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9. UPON CAREFUL CONSIDERATION, I NOTE THAT SECTION 32 OF THE ACT WHICH GRANTED DEPRECIATION ALLOWANCE DOES NOT DEFINE THE WORD 'COMPUTER'. HOWEVER, THE ITAT SPECIAL BENCH IN THE CASE OF DATA CRAFT INDIA LTD. (SUPRA) HAD THE OCCASION TO CONSIDER THE MEANING OF WORD 'COMPUTER'. AFTER ELABORATELY CONSIDERING THE SPECIAL BENCH HAS EXPOU NDED AS UNDER: 25. THUS IN ORDER TO DETERMINE WHETHER A PARTICULAR MACHINE CAN BE CLASSIFIED AS A COMPUTER OR NOT, THE PREDOMINANT FU NCTION, USAGE AND COMMON PARLANCE UNDERSTANDING, WOULD HAVE TO BE TAK EN INTO ACCOUNT. TO ANALYSE FURTHER, LET US TAKE THE CASE OF A TELEV ISION, THE PRINCIPAL TASK OF WHICH IS TO DELIVER VISUALS ACCOMPANIED WITH AUD IO. THE SIGNALS ARE RECEIVED THROUGH THE RELEVANT NETWORKS SUCH AS DISH TV, TATA SKY ETC. BUT TV DOES NOT BECOME COMPUTER FOR THE REASON THAT ITS PRINCIPAL FUNCTION CANNOT BE DONE ONLY WITH THE AID OF 'COMPU TER FUNCTIONS' ITA NO. 2030 MUM 2018-M/S CINETECH ENTERTA INMENT INDIA PVT. LTD 4 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 FUNCTIONS ARE NE CESSARILY INVOLVED. SIMILARLY TAKE THE CASE OF MOBILE PHONE. ITS PRINCI PAL TASK IS TO RECEIVE AND SEND CALLS. IT IS NOT A STAND-ALONE APPARATUS W HICH CAN OPERATE WITHOUT THE RELEVANT NETWORK, SUCH AS AIRTEL, BSNL, RELIANCE. IT, THEREFORE, FOLLOWS THAT ANY MACHINE OR EQUIPMENT CA NNOT BE DESCRIBED AS COMPUTER, IF ITS PRINCIPAL OUTPUT OR FUNCTION IS THE RESULT OF SOME SORT OF 'COMPUTER FUNCTIONS' IN CONJUNCTION WITH SOME NO N-COMPUTER FUNCTIONS. IN ORDER TO BE CALLED AS COMPUTER, IT IS SINE QUA NON THAT THE PRINCIPAL OUTPUT/OBJECT/FUNCTION OF SUCH MACHINE SH OULD BE ACHIEVABLE ONLY THROUGH 'COMPUTER FUNCTIONS'. 10. FROM THE ABOVE EXPOSITION IT IS EVIDENT THAT JU ST BECAUSE SOME SORT OF COMPUTER FUNCTIONS ARE NECESSARILY INVOLVED, MECHAN ICAL SYSTEM CANNOT BE SAID TO BE COMPUTER UNLESS ITS PRINCIPAL FUNCTION C ANNOT BE DONE WITHOUT THE AID OF COMPUTER FUNCTION. IN OTHER WORDS, ANY M ACHINE OR EQUIPMENT CANNOT BE DESCRIBED AS COMPUTER IF ITS PRINCIPAL OU TPUT OR FUNCTION IS THE RESULT OF SOME SORT OF 'COMPUTER FUNCTIONS' IN CONJ UNCTION WITH SOME NON- COMPUTER FUNCTIONS. IT WAS HELD THAT IN ORDER TO BE CALLED AS COMPUTER, IT IS SINE QUA NON THAT THE PRINCIPAL OUTPUT/OBJECT/FUNCT ION OF SUCH MACHINE COULD BE ACHIEVED ONLY THROUGH 'COMPUTER FUNCTIONS' . 11. NOW WE EXAMINE THE PRESENT CASE ON THE TOUCH ST ONE OF THE DEFINITION. IN THE PRESENT CASE, THE CONCERNED MACHINE IS A FIL M PROJECTOR. THIS IS AN OPTICAL INSTRUMENT FOR PROJECTING AN IMAGE UPON A S URFACE. IT IS A DEVICE THAT PROJECTS A BEAM OF LIGHT ON TO A SCREEN FOR VI EWING A PICTURE ALREADY PROGRAMMED, FED AND INPUT. THOUGH SOME ELEMENTS OF COMPUTER FUNCTION ARE NECESSARILY INVOLVED, THE PROJECTOR CANNOT BE S AID TO BE A MACHINE WHOSE PRINCIPAL OUTPUT/OBJECT/FUNCTION IS ACHIEVED ONLY THROUGH COMPUTER FUNCTION. HENCE, I AM OF THE CONSIDERED OPINION THA T THE FILM PROJECTOR IN THIS CASE CANNOT BE SAID TO BE COMPUTER ENTITLED FO R HIGHER RATE OF DEPRECIATION OF 60% APPLICABLE FOR COMPUTATION. THE DECISIONS REFERRED BY ITA NO. 2030 MUM 2018-M/S CINETECH ENTERTA INMENT INDIA PVT. LTD 5 THE LD. COUNSEL OF THE ASSESSEE WERE WITH RESPECT T O PRINTER, SCANNER AND ROUTER WHICH ARE ALTOGETHER DIFFERENT ITEMS. IN FAC T, THE EXPOSITION FROM SPECIAL BENCH, MUMBAI DECISION IN THE CASE OF DATAC RAFT INDIA LTD. (SUPRA) HAD DEFINED THE TERM 'COMPUTER' WHICH HAS CLINCHED THE ISSUE IN FAVOUR OF THE REVENUE. ACCORDINGLY, I DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE AUTHORITIES BELOW. HENCE, I AFFIRM THE SAME. 5. CONSIDERING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2013-14, THE APPEAL OF THE ASSESSEE IS DISMISSED. H OWEVER, THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE WORKIN G OF THE DEPRECIATION AS FURNISHED BY THE ASSESSEE, WHICH WE HAVE MENTION ED IN PARA IN 3 ABOVE AND PASS THE ORDER IN ACCORDANCE WITH LAW. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COUR T ON 17/09/2019. SD/- SD/- R.C. SHARMA PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 17.09.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI