DCIT, CHENNAI V. Kumudam Pubications Pvt. Ltd., CHENNAI

ITA 2358/CHNY/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4327 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-07-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 18-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Maximum Marginal Rate; Fair market value; Valuation report
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO.2358/CHNY/2014 / ASSESSMENT YEAR : 2006-2007. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(4) I/C CHENNAI 600 034. VS. M/S. KUMUDAM PUBLICATIONS PVT. LTD, OLD NO.151, NEW NO.306, PURASAWAKKAM HIGH ROAD, KILPAUK CHENNAI 600 010. [PAN AAACK 2957P] ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI. SRIDHAR DORA, JCIT. /RESPONDENT BY : SHRI. V. SRIDHARAN, SR. ADV. FOR P.J. RISHIKESH, ADVOCATE. /DATE OF HEARING : 06-02-2019 /DATE OF PRONOUNCEMENT : 12-02-2019 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER DEPARTMENT IN THIS APPEAL, FILED AGAINST AN ORDER DATED 05.06.2014 OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS)-IV, CHENNAI HAS RAISED TWO ISSUES. FIRST IS ON THE CO ST, WHICH IS TO BE ADOPTED FOR CALCULATING DEPRECIATION ON AN LED PAN EL ACQUIRED BY THE ASSESSEE FROM ITS SISTER CONCERN CALLED M/S. TRICOM VISION. SECOND IS ITA NO.2358/CHNY/2014. :- 2 -: WHETHER THE LED PANEL COULD BE CONSIDERED AS EQU IVALENT TO A COMPUTER FOR ALLOWING DEPRECATION AT THE RATE OF 60 %. 2. LD. COUNSEL FOR THE REVENUE, STRONGLY ASSAILING THE ORDER OF THE LD. CIT(A) ALLOWING THE CLAIMS OF THE ASSES SEE SUBMITTED THAT ASSESSEE HAD ACQUIRED ONE LED PANEL FROM M/S.TRIC OM VISION ON 04.08.2004 AND COMMISSIONED IT ON 05.12.2005. AS P ER THE LD. DR, M/S.TRICOM VISION HAD CLAIMED DEPRECATION ON THIS LED PANEL FROM ASSESSMENT YEAR 2001-2002 AND THE WRITTEN DOWN VAL UE OF THE LED IN THEIR BOOKS WAS RS.8,41,579/- ONLY. FURTHER, AS P ER THE LD. DR, COST FOR THIS LED PANEL, WHEN ORIGINALLY ACQUIRED BY M/S . TRICOM VISION, WAS RS.1,80,00,000/- ONLY. CONTENTION OF THE LD. D R WAS THAT AGAINST A WRITTEN DOWN VALUE OF RS.8,41,579/-, ASSESSEE H AD PAID A SUM OF RS.3,00,00,000/- TO M/S. TRICON VISION AND CLAIMED DEPRECATION THEREON. AS PER THE LD. DR, IF DEPRECATION WAS T O BE ALLOWED ON A COST OF RS.3,00,00,000/-, AGGREGATE DEPRECIATION O N THE LED PANEL WOULD EXCEED ITS ORIGINAL COST OF RS.1,80,00,000/- . THIS ACCORDING TO THE LD. DR WAS AGAINST FIRST PROVISO TO RULE 5(1A) OF INCOME TAX RULES, 1962 (IN SHORT THE RULES). SUBMISSION OF THE LD . DR WAS THAT MANAGING PARTNER OF M/S. TRICOM VISION, FROM WHOM ASSESSEE PURCHASED LED PANEL WAS ALSO THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY. THUS, ACCORDING TO HIM, HUGE PRICE OF RS .3,00,00,000/- ITA NO.2358/CHNY/2014. :- 3 -: PAID WAS ONLY WITH AN INTENTION OF CLAIMING UNDUE BENEFIT BY WAY OF DEPRECATION. 3. ALLUDING TO THE QUESTION OF DEPRECATION RATE APPLIC ABLE FOR AN LED PANEL, LD. DR SUBMITTED THAT IT WAS ONLY AN EL ECTRICAL APPLIANCE AND COULD NOT BE ALLOWED DEPRECIATION AT 60%. AS PER THE LD. DR, LED PANEL WAS NOT A COMPUTER. ACCORDING TO THE LD. DR , LED PANEL COULD AT BEST BE CONSIDERED ONLY AS AN ELECTRICAL APPLI ANCE AND NOT AS A COMPUTER. THUS, ACCORDING TO HIM, IT WAS NOT ELIGI BLE FOR DEPRECIATION @60% AVAILABLE TO A COMPUTER, BUT ONLY 10% AVAILABL E FOR ELECTRICAL APPLIANCE. 4. CONTINUING HIS ARGUMENTS FURTHER, LD. DR SUBMITTED THAT LD. CIT(A) HAD ALLOWED THE CLAIM OF THE ASSESSEE TAKI NG AN ERRONEOUS VIEW THAT EXPLANATION (3) TO SECTION 43(1) OF THE ACT, ENABLED THE LD. AO TO DETERMINE THE MARKET RATE AS ACTUAL COST AND NOT ANY OTHER FIGURE. AS PER THE LD. DR, THIS WAS AN ERRONEOUS C ONCLUSION DRAWN BY THE LD. CIT(A). CONTENTION OF THE LD. DR WAS THAT EVEN IF BOTH M/S. TRICOM VISION AND ASSESSEE WERE SUBJECT TO TAX AT MAXIMUM MARGINAL RATE, IT WAS AN ADMITTED POSITION THAT TH EY WERE CLAIMING SET OFF OF CARRIED FORWARD LOSS AND HENCE THERE WOUL D BE UNDUE TAX BENEFIT ARISING TO THEM IN FUTURE. ACCORDING TO H IM, LD. CIT(A) FELL IN ERROR IN HOLDING THAT THE COST THAT WAS TO BE CON SIDERED FOR ALLOWING ITA NO.2358/CHNY/2014. :- 4 -: DEPRECATION WAS RS.3,12,60,000/- (INCLUDING VAT OF RS.12,60,000/-) PAID BY THE ASSESSEE FOR ACQUIRING THE LED PANEL BO ARD FROM M/S. TRICOM VISION. FURTHER, ACCORDING TO HIM, LD. CIT(A ) ALSO ERRED IN HOLDING THAT LED BOARD WAS A COMPUTER ELIGIBLE FOR DEPRECATION AT THE RATE OF 60%. 5. PER CONTRA, LD. AUTHORIZED REPRESENTATIVE STRONGLY SUPPORTING THE ORDER OF THE LD. CIT(A) SUBMITTED T HAT DEPRECIATION WAS TO BE ALLOWED ON THE ACTUAL COST TO THE ASSESS EE. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF JOGTA COAL CO. LTD VS. CIT (1959) 36 ITR 521 . AS PER THE LD. AR, ACTUAL COST TO THE ASSESSEE WAS RS.3,12,60,000/-. CONTENTION O F THE LD. AR WAS THAT THERE WAS NO REDUCTION OF INCOME TAX LIABILITY IN THE HANDS OF THE SELLER OR THE BUYER, SINCE THE SURPLUS ARISING ON SALE OF THE PANEL WAS CONSIDERED AS SHORT TERM CAPITAL GAINS IN THE HANDS OF THE SELLER M/S. TRICOM VISION AND SUCH ASSESSMENT WAS ACCEPTED BY T HE SAID FIRM. LD. AR ALSO POINTED OUT THAT ASSESSEE HAD FILED A VALU ATION REPORT DATED 02.01.2004 FROM AN APPROVED VALUER WHO HAD PLACED THE FAIR MARKET VALUE OF THE LED DISPLAY AT RS.3,05,00,000/-. HOWE VER, AS PER THE LD. AR, THE LD. AO HAD REJECTED SUCH VALUATION REPORT W ITHOUT GIVING ANY REASON. ITA NO.2358/CHNY/2014. :- 5 -: 6. ADVERTING TO THE RATE OF DEPRECIATION, LD. AUTHORIZ ED REPRESENTATIVE SUBMITTED THAT THE LED PANEL ACQUI RED BY THE ASSESSEE WAS AN ELECTRONIC DISPLAY SYSTEM WITH LA RGE OF NUMBER OF DISPLAY SCREENS AND DATA PROCESSING ABILITIES, F OR DISPLAYING PICTURES IN A SYNCHRONIZED MANNER OVER VARIOUS DISPLAY SCR EENS AFTER PROCESSING THE INPUTS. ACCORDING TO HIM, ITS ARCH ITECTURE AND DESIGN WAS THE SAME AS OF A COMPUTER AND HENCE IT WAS ELIG IBLE FOR CLAIMING DEPRECIATION AT THE RATE OF 60%. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. FIRST WE WILL DE AL WITH THE ISSUE REGARDING COST ON WHICH ON DEPRECATION IS TO BE CA LCULATED. IT IS NOT DISPUTED THAT ASSESSEE HAD ACQUIRED THE LED PANEL FROM M/S. TRICOM VISION FOR A TOTAL COST OF RS.3,12,60,000/- INCLU DING THE VAT. IT IS ALSO NOT DISPUTED THAT MANAGING PARTNER OF THE SAID FIRM AND MANAGING DIRECTOR OF THE ASSESSEE WAS THE VERY SAME PERSON. LD. AO HAD TAKEN THE WRITTEN DOWN VALUE OF RS.8,41,579/- IN THE BOO KS OF M/S. TRICOM VISION AS THE COST FOR THE ASSESSEE, ON WHICH DEP RECIATION WAS ALLOWED. CLAIM OF THE ASSESSEE BEFORE US IS THAT I T HAD FILED A VALUATION REPORT FROM A REGISTERED VALUER WHICH HAD VALUED THE LED PANEL AT RS.3,05,00,000/-. COPY OF THE VALUATION REPORT HAS BEEN PLACED AT PAPER BOOK PAGES 1 TO 11. IT IS NOT DISPUTED BY TH E REVENUE THAT ITA NO.2358/CHNY/2014. :- 6 -: ASSESSEE HAD PLACED THE VALUATION REPORT BEFORE TH E LOWER AUTHORITIES. AT THIS JUNCTURE, IT WILL BE APPOSITE TO HAVE AN UN DERSTANDING OF THE TERM ACTUAL COST AS DEFINED IN SECTION 43(1) OF THE ACT. SAID SECTION IS REPRODUCED HEREUNDER:- ACTUAL COST MEANS THE ACTUAL COST OF THE ASSETS TO THE ASSESSEE, REDUCED BY THAT PORTION OF THE COST THERE OF, IF ANY, AS HAS BEEN MET DIRECTLY OR INDIRECTLY BY ANY OTHER PERSON OR AUTHORITY . EXPLANATION 3 TO THE SAID SECTION WHICH HAS OSTENSI BLY BEEN INVOKED BY THE LD. AO IS REPRODUCED HEREUNDER:- WHERE, BEFORE THE DATE OF ACQUISITION OF THE ASSESS EE, THE ASSETS WERE AT ANY TIME USED BY ANY OTHER PERSON FO R THE PURPOSES OF HIS BUSINESS OR PROFESSION AND THE (ASS ESSING) OFFICER IS SATISFIED THAT THE MAIN PURPOSE OF THE T RANSFER OF SUCH ASSETS, DIRECTLY OR INDIRECTLY TO THE ASSESSEE WAS THE REDUCTION OF A LIABILITY TO INCOME TAX (BY CLAIMING DEPRECIATION WITH REFERENCE TO AN ENHANCED COST) THE ACTUAL COST TO THE ASSESSEE SHALL BE SUCH AN AMOUNT AS THE (ASSESSING) OFFICER MAY, WITH THE PREVIOUS APPROVAL OF THE (JOINT COMMI SSIONER) DETERMINE HAVING REGARD TO ALL THE CIRCUMSTANCES OF THE CASE. THE ABOVE EXPLANATION IN OUR OPINION DOES NOT EMPOW ER THE LD. AO TO ADOPT THE WRITTEN DOWN VALUE OF THE SELLER AS THE A CTUAL COST FOR THE BUYER ACQUIRING THE ASSET. IT HAS TO BE DETERMINE D ACCORDING TO THE CIRCUMSTANCES OF THE CASE. IN THE PRESENT CASE BEF ORE US, ASSESSEE HAD FILED A VALUATION REPORT FROM THE GOVERNMENT AP PROVED VALUER NAMED SHRI. V. SHANMUGAVEL WHO HAD ASSESSED THE FA IR MARKET VALUE ITA NO.2358/CHNY/2014. :- 7 -: AT RS.3,05,00,000/-. NO REASON HAS BEEN MENTIONED BY THE LD. AO FOR DISREGARDING THE VALUATION OF THE APPROVED VALUER. HONBLE APEX COURT IN THE CASE OF JOGTA COAL CO. LTD (SUPRA) HAS CLEARLY HELD THE COST FOR THE PURPOSE OF DEPRECIATION ALLOWANCE WOULD BE COST IN THE HANDS OF THE ASSESSEE AND NOT THAT OF THE PREVIOUS OWNER. TH AT APART, ASSESSMENT ORDER OF M/S. TRICOM VISION, THE SELLER, FOR THE VERY SAME ASSESSMENT YEAR, PLACED AT PAPER BOOK PAGES 1 TO 7 CLEARLY SHOW THAT THE SURPLUS ON SALE OF THE LED PANEL WAS CONSIDERED IN ITS HANDS AS SHORT TERM CAPITAL GAINS. RELEVANT PARAS OF THEIR A SSESSMENT ORDER IS REPRODUCED HEREUNDER:- FROM THE METHOD DEPLOYED AS EXPLAINED ABOVE, IT I S CLEAR THAT THE ASSESSEE HAD RESORTED TO THE PROVISIONS OF SECTION 41(2). ON BEING ASKED TO CLARIFY, THE AA OF THE ASSESSEE FILED IN H IS REPLY DATED 28.11.2007. A NOTE ON THE SALE OF LED - BOARD. IN T HAT REPLY, THE ASSESSEE ADMITTED -THAT IT HAD SOLD ONE OF ITS LED DISPLAY EQUIPMENT BOARD TO M/S. KUMUDAM PUBLICATIONS PRIVATE LTD FOR A CONSIDERATION OF RS 300 LAKHS. THE WDVOF THE CONCERNED BLOCK OF ASSETS AS ON THE DATE OF SALE IS RS 8,41,579. THE ORIGINAL COST OF THE LED DISPLAY EQUIPMENTS IS RS 188.0 LAKHS. THE DIFFERENTIAL VALU E OF RS 1,79,58,421 HAS BUN CONSIDERED AS BALANCING CHARGE U/S 41(2) OF THE IT ACT, 196L' AND THAT THE DIFFERENCE BETWEEN THE SALE CONSIDERATION AND THE ACTUAL COST AMOUNTING TO RS 112.0 L.AKHS (300-188 LAKHS) HAS B EEN ADMITTED AS SHORT TERM CAPITAL GAINS AS PER SECTION 50 AT IT ACT ... HOWEVER, THOUGH THE ASSESSEE HAD QUOTED THE PROVISI ONS OF SECTION 41(2) VERBATIM IN HIS ABOVE MENTIONED REPLY , IT IS SEEN HERE THAT HE HAS FAILED TO UNDERSTAND THE NUANCES OF THE ABOVE MENTIONED SUBSECTION. FOR THE PURPOSE OF CLEAR UNDERSTANDING, THE PROVISI ONS OF ITA NO.2358/CHNY/2014. :- 8 -: SECTION41(2) IS REPRODUCED AS UNDER : 41 (2): WHERE ANY BUILDING, MACHINERY, PLANT OR FURNITURE,- (A) WHICH IS OWNED BY THE ASSESSEE; (B) IN RESPECT OF WHICH DEPRECIATION IS CLAIMED UNDER CLAUSE (I)OF SUBSECTION (1) OF SECTION 32; AND (C) WHICH WAS OR HAS BEEN USED FOR THE PURPOSE OF BUSINESS IS SOLD, DISCARDED, DEMOLISHED OR DESTROYED AND THE MONEYS PAYABLE IN RESPECT OF SUCH BUILDING, MACHINERY, PLANT OR FU RNITURE, AS THE CASE MAY BE, TOGETHER WITH THE AMOUNT OF SCRAP VALUE, IF ANY, EXCEEDS THE WRITTEN DOWN VALUE, SO MUCH OF THE EXCESS AS 00ES NOT EXCEED THE DIFFERENCE BETWEEN THE ACTUAL COST AND THE WRITTEN DOWN VALUE, SHALL BE CHARGEABLE TO INCOME TAX AS INCOME OF THE BUSINESS OF THE PREVIOUS YEAR IN WHICH THE MONEYS PAYABLE FOR THE BUILDING, MACHINERY, PLANT OR FURNITURE BECAME DUE. FROM A CAREFUL READING OF THE ABOVE SUB SECTION, TH ERE EMERGE THREE CONDITIONS THAT ARE TO BE FULFILLED BY Q PERSON TO CLAIM THE BENEFITS AS PER THE PROVISIONS OF SEC41(2). , THEY BEING: 1) TH AT THE ASSET SHOULD BE OWNED BY THE ASSESSEE 2) THAT FOR THAT PA RTICULAR ASSET, DEPREDATION HAS BUN CLAIMED UNDER CLAUSE (I) OF SUB SECTION (1) OF SECTION 32 AND 3) THAT THE ASSET WAS OR HAS BUN USE D FOR THE PURPOSE OF BUSINESS. ALL THE CONDITIONS MUST BE SIMULTANEOU SLY FULFILLED BY A PERSON TO CLAIM, THE BENEFITS CIS GIVEN UNDER S 41(2). FOR THE SAKE OF CLARITY, SUB SECTION 1 OF SECTION 3 2 IS ALSO REPRODUCED BELOW : 32 (1) IN RESPECT OF DEPRECIATION OF - (I) BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEIN G TANGIBLE ASSETS; (II) KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARKS, LICENCE S, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGH TS OF SIMILAR NATURE, BEING INTANGTBTE ASSETS ACQUIRED ON OR AFTER THE 1 ST DAY OF APRIL, 1998, OWNED, WHOLLY OR PARTLY, BY THE ASSESSEE AND USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOLLOWING DEDUCTIONS SHALL BE ALLOW ED - (I) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION OF POWER, SUCH PERCENTAGE ON THE ACTUAL COST THEREOF TO THE ASSESSEE AS MAY BE PRESCRIBED. (II) IN THE CASE OF BLOCK OF ASSETS, SUCH PERCEN TAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED ... ' ITA NO.2358/CHNY/2014. :- 9 -: FROM THE ABOVE, IT IS CLEAR THAT FOR A PERSON WHO C AN CLAIM THE BENEFITS U/S 41 (2), THE DEPRECIATION FOR SUCH AN ASSET MUST SATISFY ALL THE THREE CONDITIONS IMPOSED IN THAT SUB SECTION. A PART FROM BEING OWNED BY THE ASSESSEE AND USED FOR THE PU-PO5E OF BUSINESS, THE DEPRECIATION FOR THE ASSET MUST HAVE BEEN CLAIMED U NDER CLAUSE (I) OF SUB SECTION 1 OF SECTION 32. GOING BACK TO SUCH CLAUSE AND READING IT WOULD CLEARLY MENTION THAT THE ASSETS MUST NOT ONLY BE OF AN UNDERTAKING ENGAGED IN GENERATION A GENERATION AND DISTRIBUTION OF POWER BUT ALSO UNDERGO DEPRECIATION UNDER THE STRAI GHT LINE METHOD. THE WORDS ' ... SUCH PERCENTAGE ON THE ACTUAL COST THEREOF,' CLEARLY MENTIONS THIS. IN THE ABOVE CASE, THE ASSESSEE ENGAGED IN ADVERTISING BUSINESS, CANNOT, U NDER ANY FIGMENT OF IMAGINATION, BE TERMED AS AN UNDERTAKING ENGAGED IN THE GENERATION OF POWER. HENCE, FOR NOT FULFILLING ONE OF THE THREE BASIC CONDITIONS OF SECTION 41(2), THE ASSESSEE WOULD NOT BE ENTITLED T O THE BENEFITS OF THE SUB SECTION, EVEN ASSUMING FOR A MINUTE THAT THE ASSESSEE IS ENG AGED IN THE BUSINESS OF GENERATING POWER AND IS ELIGIBLE TO GET THE BENEFITS OF BALANCING CHARGE, THE ASSESSEE WOULD NOT BE ENTITLED TO CLAIM SO FOR THE REASON GIVEN BELOW : ACCORDING TO RULE 5(1A) AND APPENDIX 1A, A POWER GE NERATING UNIT CAN CLAIM THE BENEFIT OF BALANCING CHARGE ONLY IF T HE DEPRECIATION IS CALCULATED ON A FIXED PERCENTAGE, I.E., STRAIGHT LI NE METHOD OF CLAIMING DEPREDATION ON THE ASSETS WHICH ARE LISTED OUT IN T HE ABOVE MENTIONED IT RULE AND APPENDIX. SINCE THE ASSESSEE HAD CLAIMED DEPREDATION OF ITS ASSETS ON REDUCING BALANCE METHO D, HIS CLAIM OF THE BENEFIT OF BALANCING CHARGES IS NOT ACCORDANCE WITH THE PROVISIONS OF IT ACT. IN SHORT, SINCE THE ASSESSEE IS NOT A POWER GENERAT ING UNDERTAKING, THE CLAIM OF BALANCING CHARGE CANNOT BE ENTERTAINED AND THE CAPITAL GAINS ON THE SALE OF LED DISPLAY EQUIPMENT HAS TO B E DONE FOLLOWING THE PROVISIONS OF SECTION 50 AND 50A. AS PER THESE TWO SECTIONS, THE CAPITAL GAINS ON THE SALE OF THE ASSET SHOULD BE CA LCULATED S UNDER:- SALE CONSIDERATION OF LED : 3,00,00,000 LESS: WDV AS ON 31.3.2004 (AS PER THE PROVISIONS OF 5OA) : 8,41,579 ---------------------- SHORT TERM CAPITAL GAIN (AS PER PROVISIONS OF S 50) : 2,91,58,421 ------------------------ THUS THERE CAN BE NO CASE FOR THE REVENUE THAT THE ACQUISITION OF THE LED PANEL FROM M/S. TRICOM VISION BY THE ASSESSEE WAS FOR REDUCTION OF TAX LIABILITY BY CLAIMING EXCESS DEPRECIATION. IN OUR OPINION LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT COST TO THE AS SESSEE FOR THE PURPOSE CLAIMING DEPRECIATION WAS COST INCURRED BY IT FOR ACQUIRING THE LED PANEL FROM M/S. TRICOM VISION. ITA NO.2358/CHNY/2014. :- 10 - : 8. AS TO THE QUESTION WHETHER THE LED PANEL IS EQUIVA LENT TO A COMPUTER FOR AVAILING DEPRECIATION AT THE RATE OF 6 0% FOR COMPUTERS IN NEW APPENDIX I OF INCOME TAX RULES, 1962, TERM CO MPUTER HAS NOT BEEN DEFINED IN THE ACT. HOWEVER, IT HAS BEEN DEFI NED IN SECTION 2(1) OF INFORMATION TECHNOLOGY, ACT, 2000 AS UNDER:- COMPUTER MEANS ELECTRONIC, MAGNETIC, OPTICAL OR OTHER HIGH- SPEED DATA PROCESSING DEVICE OR SYSTEM WHICH PERFOR MS LOGICAL, ARITHMETIC AND MEMORY FUNCTIONS BY MANIPULATIONS OF ELECTRONIC, MAGNETIC OR OPTICAL IMPULSES, AND INCLUDES ALL INPU T, OUTPUT, PROCESSING, STORAGE, COMPUTER SOFTWARE OR COMMUNICA TION FACILITIES WHICH ARE CONNECTED OR RELATES TO THE C OMPUTER IN A COMPUTER SYSTEM OR COMPUTER NETWORK . CHARACTERISTIC OF THE LED PANEL ACQUIRED BY THE ASS ESSEE HAS BEEN GIVEN IN THE REGISTERED VALUERS REPORT AS UNDER: - 1. THE IDENTIFIED PLANT AND MACHINERY IS THE NATURAL C OLOR LED DIGITAL DISPLAY SYSTEM WITH DISPLAY CONTROLLER AND ACCESSORIES. 2. IN HOUSE SOFTWARE DEVELOPMENT WAS CARRIED FOR ONLIN E MESSAGE CHANGE, TO RUN ANIMATION OR EVEN RUN A DVD ON THE D ISPLAY PANEL. 3. AFTER THE SOFTWARE DEVELOPMENT, THE LED DISPLAY PA NEL IS CAPABLE OF DISPLAYING INSTANT VARIABLE MESSAGES, SC ROLLING OR RUNNING MESSAGES & PLAYING DVD. 4. ROYALTY WAS PAID TO THE ORIGINAL EQUIPMENT SUPPLIER . 5. FUTURE EXPECTED LIFE OF THE EQUIPMENT IS 6 YEARS. IN OUR OPINION, THE ABOVE DESCRIPTION DOES, MORE OR LESS FITS TO THE DEFINITION OF COMPUTER AS GIVEN IN INFORMATION TECH NOLOGY ACT, 2000. IT HAD MEMORY FUNCTION, ABILITY FOR PROCESSING AND COULD ALSO PERFORM LOGICAL ACTION BY SYNCHRONIZING THE INPUTS TO DISPL AY. THUS IN OUR ITA NO.2358/CHNY/2014. :- 11 - : OPINION, THE LED PANEL PURCHASED BY THE ASSESSEE WAS ELIGIBLE FOR CLAIMING DEPRECIATION AT THE RATE OF 60%. 9. FOR THE REASONS MENTIONED AT PARA 7 & 8 ABOVE, WE F IND NO GOOD REASON FOR INTERFERING WITH THE ORDER OF THE L D. CIT(A). 10. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. ORDER PRONOUNCED ON TUESDAY, THE 12TH DAY OF FEBRU ARY, 2019, AT CHENNAI. SD/- (N.R.S. GANESAN) / JUDICIAL MEMBER SD/- (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER ' / CHENNAI # / DATED: 12 TH FEBRUARY, 2019. KV '( )( / COPY TO: 1 . / APPELLANT 3. * () / CIT(A) 5. ( / / DR 2. / RESPONDENT 4. * / CIT 6. / GF