DCIT, New Delhi V. M/s. Engineering Projects India Ltd., New Delhi

ITA 2650/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3044 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-05-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 31-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Difference of opinion; Reason to believe; Unabsorbed depreciation; Change of opinion; Reassessment proceedings
• Section: 143(3); 147

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH B , NEW DELHI BEFORE : SHRI I.C. SUDHIR , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO S . 2650, 2652 & 2653/DEL./2012 ASSESSMENT YEAR S : 2004 - 05, 2007 - 08 & 2008 - 09 D.C.I.T., CIRCLE 11 (1), NEW DELHI (APPELLANT) VS. ENGINEERING PROJECTS INDIA LTD., CORE - 3, SCOPE COMPLEX - 7, INSTITUTIONAL AREA, LODHI ROAD, NEW DELHI (PAN - AAACE0061C) (RESPONDENT) C.O. NO. 278/DEL./2012 (IN ITA NO. 2650/DEL./2012 ASSESSMENT YEAR: 2004 - 05 ENGINEERING PROJECTS INDIA LTD., CORE - 3, SCOPE COMPLEX - 7, INSTITUTIONAL AREA, LODHI ROAD, NEW DELHI. (APPELLANT) VS. D.C.I.T., CIRCLE 11 (1), NEW DELHI (RESPONDENT) ASSESSEE BY SH. TARANDEEP SINGH, C.A. REVENUE BY SH. ANIL KUMAR SHARMA, SR. DR ORDER PER L.P. SAHU, A.M.: BY MEANS OF THESE APPEALS AND CROSS OBJECTION, THE REVENUE AND THE ASSESSEE HAVE ASSAILED RESPECTIVE ORDERS OF THE LD. CIT(A) - XIII, NEW DELHI DATED 12.03.2012, 20.03.2012 AND 22.03.2012 FOR THE ASSESSMENT YEARS 2004 - 05, 2007 - 08 & 2008 - 09 DATE OF HEARING 04.05.2017 DATE OF PRONOUNCEMENT 26 .05.2017 ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 2 RESPECTIVELY. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENUE IN THEIR RESPECTIVE APPEALS : GROUNDS RAISED IN APPEAL FOR A.Y. 2004 - 05: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.62,83,936/ - MADE ON ACCOUNT OF EXPENSES BEING TREATED AS PRIOR PERIOD EXPENSES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRE D IN DELETING THE ADDITION OF RS.8,29,378/ - MADE ON ACCOUNT OF PROVISION OF ADVANCE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW THE CARRY FORWARD UNABSORBED BROUGHT FORWARD DEPRECIATION AND BUSINESS LOSSES OF RS.2,21,66,35,511/ - INSTEAD OF RS.2,05,05,11,020/ - . GROUNDS RAISED IN APPEAL FOR A.Y. 2007 - 08: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,36,28,506/ - MADE ON ACCOUNT OF EXPENSES BEING TREATED AS PRIOR PERIOD EXPENSES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.60,581/ - MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON COMPUTER ACCESSORIES CLAIMED AT THE RATE OF 60% INSTEAD OF ALLOWABILITY AT THE RATE OF 15%. GROUNDS RAISED IN APPEAL FOR A.Y. 2008 - 09: ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 3 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.4,50,24,165/ - MADE ON AC COUNT OF EXPENSES BEING TREATED AS PRIOR PERIOD EXPENSES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.80187/ - MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON COMPUTER ACCESSORIES CLA IMED AT THE RATE OF 60% INSTEAD OF ALLOWABILITY AT THE RATE OF 15%. 2. THE CROSS OBJECTION FILED BY THE ASSESSEE FOR A.Y. 2004 - 05 CHALLENG ES THE ACTION OF LD. CIT(A) FOR HOLDING THE INITIATION OF REASSESSME NT PROCEEDINGS AS LEGALLY VALID, ON THE FOLLOWING GROUNDS : 1. THAT ON FACTS AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS) {HEREINAFTER REFERRED TO AS THE 'CIT(A)'} ERRED IN UPHOLDING THE ASSUMPTION OF JURISDICTION UNDER SECTION 147 OF THE INCOME - TAX ACT, 1961 {HEREINAFTER REFERRED TO AS ' THE ACT'} BY THE ASSESSING OFFICER {HEREINAFTER REFERRED TO AS THE 'AO'}. 2. THAT ON FACTS AND IN LAW THE CIT(A) ERRED IN NOT APPRECIATING THAT THE ASSUMPTION OF JURISDICTION U/S 147 WAS PREMISED UPON A MERE CHANGE OF OPINION AND IS THUS BAD IN LAW AND VO ID AB INITIO RENDERING THE ASSESSMENT ORDER PASSED PURSUANT THERETO ALSO AS BAD IN LAW. 3. THAT ON FACTS AND IN LAW THE CIT (A) ERRED IN NOT APPRECIATING THAT THE AO BY NOT SPEAKING ORDER DISPOSING OFF THE OBJECTIONS RAISED BY THE ASSESSEE VIDE SUBMISSION S 05 TH NOVEMBER 2009 HIS ASSUMPTION OF JURISDICTION US/147 WAS VOID AB INITIO AND BAD IN LAW. ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 4 3. A COMPOSITE GLANCE OVER THE GROUNDS RAISED BY THE REVENUE IN ALL THE THREE APPEALS REVEALS THAT FOLLOWING FOUR ISSUES ARE TO BE ADJUDICATED IN THESE APPEALS : (I). DELETION OF DISALLOWANCE OF PRIOR PERIOD EXPENSES CLAIMED BY ASSESSEE. (II). DELETION OF ADDITION MADE BY AO ON ACCOUNT OF PROVISION FOR ADVANCE. (III). DIRECTION TO ALLOW THE CARRY FORWARD UNABSORBED BROUGHT FORWARD DEPRECIATION AND BUSINESS LOSSES OF RS.2,21,66,35,511/ - INSTEAD OF RS.2,05,05,11,020/ - IN A.Y.2004 - 05 . (IV). DELETION OF DISALLOWANCE MADE BY AO ON ACCOUNT OF DEPRECIATION ON COMPUTER ACCESSORIES CLAIMED AT THE RATE OF 60% INSTEAD OF ITS ALLOWABILITY AT THE RATE OF 15%. 4. OUT OF ABOVE FOUR ISSUES, THE FIRST ISSUE RAISED BY WAY OF GROUND NO. 1 IS COMMON IN ALL THESE APPEALS AND THE ISSUE NO. (IV) IS COMMON IN APPEALS FOR A.YRS. 2007 - 08 & 2008 - 09. THEREFORE, FOR THE SAKE OF CONVENIENCE A ND BREVITY, ALL THESE APPEALS ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 5. WE FIRST TAKE UP THE CROSS - OBJECTION OF THE ASSESSEE AND THE APPEAL OF REVENUE FOR A.Y. 2004 - 05. ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 5 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS A GOVERNMEN T OF INDIA UNDERTAKING ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION OF MAJOR INFRASTRUCTURAL PROJECTS ALL OVER INDIA AND ABROAD. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED ITS RETURN OF INCOME ON 20.10.2004 DECLARING LOSS OF RS.2,21,66,35,511/ - AFTER ADJUSTING THE BROUGHT FORWARD LOSSES FROM THE CURRENT YEAR S INCOME OF RS.43,11,46,228/ - . THE ASSESSMENT WAS COMPLETED ON 22.09.2006 DETERMINING TOTAL INCOME AT NIL. THE AO OBSERVED THAT THE ASSESSEE HAD DECLARED INCOME FROM BUSINESS AND PROFESSION T O THE TUNE OF RS.43,11,46,228/ - AND AFTER SETTING OFF THE BROUGHT FORWARD LOSSES OF RS.164,77,81,739/ - IT SHOWED LOSSES OF RS.221,66,35,511/ - TO BE CARRIED FORWARD TO THE NEXT YEAR, BUT THE SAME WAS INADVERTENTLY TAKEN AS RETURNED LOSS U/S. 143(1), WHICH A S PER IT ACT SHOULD BE RETURNED AND PROCESSED AT NIL. THE AO FURTHER OBSERVED IN THE ORIGINAL ASSESSMENT ORDER THAT ON PERUSAL OF COMPUTATION OF INCOME FILED WITH THE RETURN OF INCOME, IT IS CLEAR THAT THE BUSINESS LOSS OF A.Y. 1996 - 97 AMOUNTING TO RS.59,7 2,70,719/ - WAS UTILIZED TO SET OFF TO THE EXTENT OF CURRENT YEAR S INCOME OF RS.43,11,46,228/ - AND BALANCE UNABSORBED LOSS ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 6 OF RS.1,66,12,449/ - (CORRECT FIGURE RS.16,61,24,491) IS NOT ALLOWABLE TO BE CARRIED FORWARD, HAVING BEEN LOST, AS PER SECTION 72(3) OF THE ACT. THEREFORE, THE BROUGHT FORWARD LOSSES OF RS.205,05,11,020/ - [ 221,66,35,511 1,66,12,449 (CORRECT FIGURE RS.16,61,24,491)] WAS ALLOWED TO BE CARRIED FORWARD TO THE N EXT YEAR. ACCORDINGLY, THE AO ASSESSED THE INCOME OF THE ASSESSEE AT NIL. 6.1 SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PROCEEDINGS U/S. 147 AND ISSUED NOTICE U/S. 06.03.2009 AFTER RECORDING THE REASON TO BELIE VE THE ESCAPEMENT OF INCOME ON THE GROUND THAT ON VERIFICATION OF CASE RECORDS, THE PRIOR PERIOD EXPENSES OF RS.62,83,936/ - CLAIMED BY ASSESSEE WERE NOT ALLOWABLE EXPENDITURE, AS THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND THAT ON FURTHER VERIFICATION OF CASE RECORDS, THE PROVIS IONS FOR ADVANCES AMOUNTING TO RS.8,29,378/ - HAVE NOT BEEN ADDED BACK ALTHOUGH IT IS NOT ASCERTAINED LIABILITY. HE, THEREFORE, DISALLOWED BOTH THE ABOVE AMOUNTS TOTALING TO RS.71,13,314/ - AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE VIDE REASSESS MENT ORDER DATED 27.11.2009. THE ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 7 ASSESSEE CHALLENGED THE REASSESSMENT ON BOTH VALIDITY OF INITIATION OF PROCEEDINGS U/S. 147 AND ON MERITS OF THE ADDITION BEFORE THE FIRST APPELLATE AUTHORITY, WHO AFTER CONSIDERING VARIOUS SUBMISSIONS OF THE ASSESSEE, HEL D THE INITIATION OF PROCEEDINGS AS LEGALLY VALID, BUT DELETED THE ADDITIONS ON MERITS VIDE IMPUGNED ORDER. THE ASSESSEE WAS NOT SATISFIED WITH THE SUSTENANCE OF PROCEEDINGS U/S. 147 AND REVENUE FELT AGGRIEVED BY THE DELETION OF ADDITIONS ON MERITS, HENCE, BOTH THE PARTIES HAVE COME UP IN APPEAL AND CROSS OBJECTION BEFORE THE TRIBUNAL. 7. WHILE ASSAILING THE ACTION OF LD. CIT(A) WITH RESPECT TO HOLDING THE INITIATION OF PROCEEDINGS U/S. 147 AS LEGALLY VALID, SHRI TARANDEEP SINGH, CA, APPEARING ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE OBJECTIONS RAISED AGAINST INITIATION OF PROCEEDINGS U/S. 147 WERE NOT DISPOSED OF BY THE AO BY WAY OF SPEAKING ORDER, WHICH IS AGAINST THE PRINCIPLE OF LAW LAID DOWN BY HON BLE SUPREME COURT IN GKN DRIVESHAFTS (INDIA) VS. I TO, 259 ITR 19 (SC) , RENDERING THE ASSESSMENT ORDER AS INVALID . THE REPLY AND OBJECTIONS RAISED BY THE ASSESSEE COMPANY WERE THAT THE CONTENTS TO SCHEDULE 18 PRIOR PERIOD ADJUSTMENTS TO THE FINAL ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 8 ACCOUNT IS FOR THE YEAR ENDED 31.03.2004 WHEREIN SUB - HEAD S AGGREGATING TO RS.62,83,936/ - ARE DEPICTED FOR PRIOR PERIOD EXPENDITURE . SIMILAR DETAILS AGGREGATING TO RS.19,99,877/ - ARE DEPICTED FOR PRIOR PERIOD INCOME, RESULTING IN A NET CLAIM FOR AN AMOUNT OF RS.42,84,059/ - . IT WAS OBJECTED THAT ON ACCOUNT OF MISAP PROPRIATION OF THE FACTS OF THE CASE AND COMPLETELY OVERLOOKING THE INCLUSION OF PRIOR PERIOD INCOME OF RS.19,99,877/ - IN THE ASSESSED INCOME , IT IS WRONG TO INITIATE THE PROCEEDINGS U/S. 147 FOR RE - EXAMINATION OF FACTS, WHICH ALREADY EXISTED AND CONSIDERE D AT THE ORIGINAL ASSESSMENT STAGE. SIMILARLY, IT WAS SUBMITTED WITH RESPECT TO PROVISIONS FOR ADVANCES THAT INCREASE IN PROVISION FOR ADVANCES BY RS.8,29,378/ - CONSIDERED DOUBTFUL DURING THE YEAR ENDED 31.03.2003 WAS DULY ADDED BACK IN THE COMPUTATION OF TOTAL INCOME FILED WITH THE RETURN OF INCOME AND SAME HAS BEEN ACCORDINGLY TREATED WHILE COMPLETING THE ASSESSMENT U/S. 143(3) DATED 22.09.2006. IN THE COMPUTATION OF TOTAL INCOME FILED WITH THE RETURN OF INCOME, AN AMOUNT OF RS.21,41,59,276/ - HAS BEEN ADD ED BACK AS PROVISION FOR PROJECT/CONTRACT CONTINGENCIES . ALL THE ABOVE DETAILS WERE AVAILABLE ON RECORD AND WELL DEPICT ED IN ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 9 THE COMPUTATION OF INCOME AND THE SAME BEING CONSIDERED AS SUCH, THE LD. AUTHORITIES BELOW WERE NOT JUSTIFIED IN INITIATING AND S USTAINING THE PROCEEDINGS U/S. 147 OF THE ACT, AS THERE WAS NO NEW INFORMATION OR MATERIAL BASED ON WHICH THE ASSESSING OFFICER CAN BE SAID TO HAVE REASON TO BELIEVE ANY ESCAPEMENT OF INCOME. THE LD. AR THEREFORE, CONTENDED THAT IN VIEW OF ABOVE SUBMISSION S , THE REOPENING OF ASSESSMENT WOULD AMOUNT TO RECONSIDERATION OF THE MATERIAL/INFORMATION ALREADY ON RECORD WHICH DOES NOT JUSTIFY INITIATION OF REASSESSMENT PROCEEDINGS ON THE BASIS OF CHANGE OF OPINION. RELIANCE IS PLACED , INTER ALIA, ON THE FOLLOWING D ECISIONS : (I). CIT VS. USHA INTERNATIONAL LTD. 348 ITR 485 (DEL.)(FB) (II). CIT VS. GOETZ INDIA LTD., 229 CTR 167 (DEL.) (III). CIT VS. MODIPON LTD., 2011 - TOIL - 355 - HC - DEL - IT (IV). CIT VS. BATRA BHATTA COMPANY 321 ITR 526 (DEL.) (V). FERROUS INFRASTRUCTURE P. LTD. VS. DCIT, 120 DTR 281 (DEL.) (VI). PCIT VS. TUPPERWARE INDIA P. LTD., 127 DTR 161 (DEL.). 8. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW ON THIS COUNT. ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 10 9. HAVING CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF ENTIRE MATERIAL AVAILABLE ON RECORD, WE FIND THAT IT IS NO DOUBT TRUE THAT THE FIGURES OF PRIOR PERIOD EXPENDITURE AND PROVISION FOR ADVANCES ARE DISCERNIBLE FROM THE COMPUTATION OF INCOME AND THE NOTES APPENDED THERETO, BUT A PERUSAL OF THE O RIGINAL ASSESSMENT ORDER SHOWS THAT THERE IS NO REFERENCE TO THE ISSUE REGARDING ALLOWABILITY OR OTHERWISE OF PRIOR PERIOD EXPENSES OR REGARDING PROVISION FOR ADVANCES. THE ASSESSMENT ORDER NOWHERE SPEAKS THAT THE AO HAD TAKEN A CONSCIOUS DECISION OR FORME D ANY OPINION ON BOTH THESE ISSUES NOR WAS THERE ANY APPLICATION OF MIND BY THE AO THEREUPON. IN PRESENCE OF THESE FACTS BORNE OUT ON RECORD, WE DO NOT FIND ANY JUSTIFICATION TO DISCARD THE DECISION REACHED BY THE LD. CIT(A) FOR SUSTAINING THE INITIATION O F PROCEEDINGS U/S. 147 IN THE INSTANT CASE. FOR THIS VIEW, SUPPORT HAS RIGHTLY BEEN TAKEN FROM THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CONSOLIDATED PHOTO AND FINVEST LTD. VS. ACIT, 28 ITR 394 AND OF HON BLE GUJRAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL VS. ACIT, 236 ITR 832 (GUJ). THE DECISIONS RELIED ON BY THE ASSESSEE ARE NOT FOUND APPLICABLE, BEING BASED ON DIFFERENT FOOTING AND DISTINGUISHABLE ON THE FACTS OF THE ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 11 PRESENT CASE. HON BLE JURISDICTIONAL HIGH COURT IN THE CA SE OF CONSOLIDATED PHOTO (SUPRA) HAS OBSERVED AS UNDER : 'THE PRINCIPLE THAT A MERE CHANGE OF OPINION CANNOT BE A BASIS FOR REOPENING COMPLETED ASSESSMENTS WOULD BE APPLICABLE ONLY TO SITUATIONS WHERE THE ASSESSING OFFICER HAS APPLIED HIS MIND AND TAKEN A CONSCIOUS DECISION ON A PARTICULAR MATTER IN ISSUE. IT WI LL HAVE NO APPLICATION WHERE THE ORDER OF ASSESSMENT DOES NOT ADDRESS ITSELF TO THE ASPECT WHICH IS THE BASIS FOR REOPENING OF THE ASSESSMENT, AS IS THE POSITION IN THE PRESENT CASE. IT IS IN THAT VIEW INCONSEQUENTIAL WHETHER OR NOT THE MATERIAL NECESSARY FOR TAKING A DECISION WAS AVAILABLE TO THE ASSESSING OFFICER EITHER GENERALLY OR IN THE FORM OF A REPLY TO THE QUESTIONNAIRE SERVED UPON THE ASSESSEE. WHAT IS IMPORTANT IS WHETHER THE ASSESSING OFFICER HAD BASED ON THE MATERIAL AVAILABLE TO HIM TAKEN A VIE W. IF HE HAD NOT DONE SO, THE PROPOSED REOPENING CANNOT BE ASSAILED ON THE GROUND THAT THE SAME IS BASED ONLY ON A CHANGE OF OPINION.' THIS DECISION IS SQUARELY APPLICABLE IN THE INSTANT CASE, AS THE ASSESSING OFFICER HAS NEITHER ADDRESSED BOTH THE ISSUES IN THE ORIGINAL ASSESSMENT ORDER NOR FORMED ANY OPINION NOR TOOK ANY EXPRESS DECISION THEREUPON. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT, WE SUSTAIN THE CONCLUSION REACHED BY THE LD. CIT(A) ON THIS COUNT. ACCORDIN GLY, THE CROSS - OBJECTION OF THE ASSESSEE DESERVES TO FAIL. ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 12 1 0 . ADVERTING TO THE MERITS OF THE ADDITION RAISED BY THE REVENUE IN ITS APPEAL REGARDING PRIOR PERIOD EXPENDITURE, WE FIND NO JUSTIFICATION TO DISCARD THE CONCLUSION REACHED BY THE LD. FIRST APP ELLATE AUTHORITY AFTER CONSIDERING DETAILED SUBMISSIONS OF THE ASSESSEE. THE OBSERVATIONS OF THE LD. FIRST APPELLATE AUTHORITY READ AS UNDER : 7. ON CONSIDERATION OF THE SUBMISSIONS OF THE LD. COUNSEL AS ALSO THE FACTS ON RECORD THE FOLLOWING OBSERVATION S ARE MADE. (A). AS PER SUBMISSIONS OF THE LD. COUNSEL THE DISALLOWANCE OF PRIOR PERIOD EXPENSES CAN BE CATEGORIZED AS UNDER : S.NO. PARTICULARS AMOUNT (RS.) (I) EXPENSES OF SOUTHERN REGIONAL OFFICE RS.14,87,217/ - (II). EXPENSES OF NORTHERN REGION OFFICE RS.5,17,079/ - (III) PRIOR PERIOD EXPENSES OF CONTROLLED PROJECTS RS. 30,46,853/ - (IV) EXPENSES PERTAINING TO MANAGEMENT CONSULTANCY PROJECTS RS. 4,41,742/ - (V) CORPORATE OFFICE EXPENSES RS. 6,08,144/ - (VI) WESTERN REGIONAL OFFICE EXPENSES RS. 89,197/ - (VII) EASTERN REGION OFFICE EXPENSES RS. 50,337/ - (VIII) HYDERABAD REGIONAL OFFICE EXPENSES RS. 43.365/ - TOTAL RS.62,83,934/ - THE DISALLOWANCE MADE BY THE AO IS ONLY OF RS. 62, 83,934 / - IS ONLY WITH REGARD TO THE PRIOR PERIOD EXPENSES CLAIMED BY THE APPELLANT. THERE IS A PRIOR PERIOD INCOME OF RS. 19,99,877 / - . THE SAME HAS NOT BEEN GIVEN SET OFF BY ASSESSING OFFICER AND THE SAME HAS BEEN ACCEPTED BY THE ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 13 ASSESSING OFFICER IN THE ASSESSMENT ORDER . IF THE 'PRIOR PERIOD INCOME IS C ONSIDERED THE NET PRIOR PERIOD EXPENSES COMES TO RS. 42,84,059 / - . ON GOING THROUGH THE DETAILS SUBMITTED BY THE APPELLANT AS PER ANNEXURE - 1 TO HIS SUBMISSION AND SCHEDULE - 18 OF THE ANNUAL REPORT THE PRIOR PERIOD EXPENSES OF VARIOUS CLAIMS AND CONTROLLED P ROJECTS IS IDENTIFIABLE AT RS. 62,83,934/ - . THESE PRIOR PERIOD EXPENSES PERTAINS TO THE CLAIMS RECEIVED OR DISPUTE SETTLED DURING THE F.Y. 2003 - 04 AND ALSO PERTAINS TO THE CONTROLLED PROJECTS WHEREIN THE INCOME HAS BEEN ESTIMATED ON THE BASIS OF PERCENTAGE COMPLETION METHOD. IT IS SEEN THAT EXPENSES OF RS. 14,8 7 ,2 17/ - PERTAINING TO SOUTHERN REGION OFFICE AND EXPENSES OF RS. 517079 / - PERTAINING TO NORTHERN REGION OFFICE ARE NOT OF CONTROLLED PROJECTS. HOWEVER, THESE EXPENSES HAVE BEEN INCLUDED WRONGLY IN T HE PRIOR PERIOD EXPENDITURES. THE EXPENSES OF RS.14,87,217 / - PERTAINS TO PIP, DIG I.E. SETTING OF INDUSTRIAL GROWTH CENTRE AT POLAGAM IN KARAIKAL, PONDICHERY. THESE PAYMENTS WERE RELEASED DURING THE F.Y. 2003 - 04 WHICH WAS PERTAINING TO ESCALATION AND EXTRA WORK, WHICH ARE ACCOUNTED FOR ON CASH BASIS. THIS CLAIM WAS ACCEPTED DURING THE YEAR, THEREFORE, THE PAYMENT WAS MADE DURING THE YEAR. SIMILARLY, THE PAYMENT OF RS. 5,17,079 / - PERTAINS TO THE SERVICE TAX, LIABILITY OF THE PROJECT STYLED AS DEVELOPMENT OF SECTOR 37, GREATER NOIDA. THIS LIABILITY WAS ARISEN DURING THE YEAR, THEREFORE, SAME WAS RECOGNIZED IN F.Y. 2003 - 04. THEREFORE, THESE EXPENSES WERE NOT OF EARLIER YEARS BUT PERTAINS TO THE F.Y. 2003 - 04 RELEVANT TO A.Y. 2004 - 05 AND SAME WERE ALLOWABLE IN TH IS YEAR. IT IS ALSO OBSERVED THAT AMOUNT OF RS.30,46,853/ - REPRESENTS PRIOR PERIOD EXPENSES OF CONTROL PROJECTS. IT IS CLAIMED BY THE APPELLANT THAT THESE EXPENSES ARE ADMISSIBLE IN VIEW OF THE FACT THAT APPELLANT CONSISTENTLY AND REGULARLY SHOWING THE INCOME AS PE R THE 'PERCENTAGE OF COMPLETION METHOD' WHILE CLAIMING THE EXPENSES, THE APPELLANT HAS ALSO SHOWN A CORRESPONDING AMOUNT (REPRESENTING PERCENTAGE OF PROFIT) AS INCOME AS THE CONCEPT OF REFLECTING INCOME IS EMBEDDED TO THE EXTENT TO WHICH JOB IS EXECUTED BA SED ON ESTIMATED COST. ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 14 THE APPELLANT HAS EXPLAINED THAT REGULAR METHOD OF EXPENDITURE/REVENUE RECOGNITION IS ALSO GOVERNED BY THE FACT THAT ESCALATION AND EXTRA WORKS NOT PROVIDED IN THE CONTRACT, INSURANCE CLAIM ACCOUNTED FOR ON CASH BASIS, LIQUIDATED DAM AGES ARE NOT TREATED AS PAYABLE/SECURABLE TILL FINAL SETTLEMENT, TERMINAL BENEFITS TO EMPLOYEES ARE RECOGNIZED IN THE YEAR OF PAYMENT, THEREBY RESULTING IN INCLUSION OF PRIOR PERIOD EXPENSES IN THE CONTROLLED PROJECTS. IT IS SEEN THAT BROADLY THE REASONS WHY PRIOR PERIOD EXPENSES HAVE BEEN BOOKED IN THE CONTROLLED PROJECTS IS THAT COMMERCIAL DECISION RELATING TO SETTLEMENT OF DISPUTES AND EXISTING ISSUES HAVE BEEN SORTED OUT DURING THE PRESENT FINANCIAL YEAR. BESIDES THERE ARE ERRORS AND OMISSIONS DUE TO C IRCUMSTANCES BEYOND THE CONTROL OF THE CONCERNED STAFF ON ACCOUNT OF NON RECEIPT OF DOCUMENTS/APPROVALS IN RESPECT OF VARIOUS SITES BEING CONTROLLED BY DIFFERENT REGIONAL OFFICES. THUS SETTLEMENT OF THESE EXPENSES HAVE TAKEN PLACE DURING THE ACCOUNTING YEA R ENDED 31.03.04 AND THEREFORE, THESE EXPENSES HAVE BEEN CLAIMED AS PER THE ACCOUNTING POLICY BEING REGULARLY FOLLOWED BY THE APPELLANT COMPANY EVER SINCE ITS INCEPTION. FURTHERMORE THE ORDERS PASSED U/S 264 IN CASE OF THE ASSESSEE ITSELF ON 17.01.1985 FOR AYS. 1978 - 79, 1979 - 80 & 1980 - 81 AND ON 24.12.1996 FOR AY 1992 - 93 ON THE ISSUE OF CLAIM OF PRIOR PERIOD EXPENSES HAVE ALSO BEEN GONE THROUGH WHICH ALSO SUPPORT THE CLAIM OF THE APPELLANT REGARDING THE APPROACH FOLLOWED BY THE COMPANY IN CLAIM OF PRIOR PERI OD EXPENSE AS WELL AS CREDIT OF PRIOR PERIOD RECEIPTS WHICH ARE DEBITED/CREDITED IN ACCORDANCE WITH THE CONSISTENT ACCOUNTING POLICY FO LLOWED BY THE APPELLANT COMPANY. BE THAT AS IT MAY, AS THE METHOD ADOPTED BY THE APPELLANT IS IN ACCORDANCE WITH THE REG ULAR METHOD OF ACCOUNTING FOR REVENUE RECOGNITION AND AS IN THE PERCENTAGE OF COMPLETION METHOD WORK DONE FOR THE YEAR IS COMPUTED BY AGGREGATING THE PROJECT COST TILL THE END OF A YEAR AND ENHANCING IT BY CONSIDERING PROPORTIONATE ESTIMATED PROFIT, AND AS IN THE SAID CALCULATION FOR A.Y. 2004 - 05 THE COST OF THE PROJECTS INCLUDES THE AMOUNT OF RS.30,46,853/ - AS PRIOR PERIOD EXPENSES FOR WHICH CORRESPONDING INCOME HAS BEEN CREDITED TO THE PROFIT & ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 15 LOSS ACCOUNT, IN ACCORDANCE WITH THE MATCHING PRINCIPLE OF AC COUNTANCY, THE EXPENDITURE OF RS.30,46,853/ - CANNOT BE DISALLOWED EVEN THOUGH GROUPED UNDER PRIOR PERIOD EXPENSES AS THE INCOME ARISING OUT OF THE SAME HAS BEEN OFFERED FOR TAXATION DURING THE YEAR. ACCORDINGLY THE ASSESSING OFFICER IS DIRECTED TO DELETE T HE DISALLOWANCE TO THE EXTENT OF RS.30,46,853 / - WHICH IS IDENTIFIABLE WITH THE DETAILS FURNISHED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS. THE OTHER EXPENSES OF CORPORATE OFFICE, NEW DELHI AND OTHER REGIONAL OFFICES WHICH IS NOT RELATED TO CONTROLLED PROJECTS AND MANAGEMENT CONSULTANCY PROJECT EXPENSES OR ALSO ALLOWABLE AS LIABILITY TO PAY THESE EXPENSES HAVE ARISEN DURING THE YEAR BECAUSE OF THE DISPUTES OR BECAUSE OF LATE RECEIPTS OF CLAIMS. THEREFORE, SUCH EXPENSES ARE ALSO ALLOWABLE DURING THE YEAR, THOUGH THEY PERTAINS TO EARLIER YEAR BUT LIABILITY WAS CRYSTALLIZED DURING THE YEAR. IN VIEW OF THE FACTS STATED ABOVE THE ADDITION OF RS. 62,82,936 / - MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES IS DELETED. 11 . BASED ON THE ENTIRE MATERIAL AVAILABLE ON RECORD AND THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY, THE LD. CIT(A) HAS RECORDED COGENT REASONING TO DELETE THE IMPUGNED ADDITION AS ABOVE AND THE LD. DR COULD NOT BE ABLE TO ADDUCE ANY CONTRARY MATERIAL ON RECORD TO DISTURB THE A BOVE FINDINGS REACHED BY THE LD. CIT(A). S O, WE ARE IN COMPLETE AGREEMENT WITH THE FINDINGS REACHED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. BESIDES, THE ONLY THRUST OF THE AO HAS BEEN ON THE ASPECT THAT PRIOR PERIOD EXPENDITURE IS NOT AN ALLOWABLE EXPENDI TURE IN THE MERCANTILE ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 16 SYSTEM OF ACCOUNTING. HOWEVER, THE OPINION OF THE AO IS NOT SUSTAINABLE IN VIEW OF THE OPINION GIVEN BY LD. CIT S IN OWN CASES OF THE ASSESSEE VIDE ORDERS PASSED U/S 264 DATED 17.01.1985 FOR AYS. 1978 - 79, 1979 - 80 & 1980 - 81 AND DATED 2 4.12.1996 FOR AY 1992 - 93, HOLDING THAT PRIOR PERIOD EXPENSES ARE ALLOWABLE TO THE ASSESSEE. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THERE IS ANY MATERIAL CHANGE IN THE FACTS, CIRCUMSTANCES , ACTIVITIES AND THE ACCOUNTING POLICY ADOPTED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. HENCE, THE VIEW FORMED BY THE AO IS NOT SUSTAINABLE AT ALL. FOR THIS, WE STAND FORTIFIED BY THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. JAGATJIT INDUSTRIES LTD., (20 10) 194 TAXMAN 158 (DELHI), WHEREIN THE HON BLE COURT AFTER CONSIDERING CATENA OF DECISIONS, HAS HELD AS UNDER : 16. THE PRESENT FACTUAL MATRIX HAS TO BE TESTED ON THE TOUCHSTONE AND ANVIL OF THE AFORESAID ENUNCIATION OF LAW. ON A SCRUTINY OF THE FACTS T HAT HAVE BEEN BROUGHT ON RECORD, IT IS DISCERNIBLE THAT THE ASSESSEE HAS BEEN CLAIMING PRIOR PERIOD EXPENSES ON THE GROUND THAT THE VOUCHER OF SUCH EXPENSES FROM THE EMPLOYEES/BRANCH EMPLOYEES WERE RECEIVED AFTER 31 ST MARCH OF THE FINANCIAL YEAR. IT HAS AL SO COME AS A MATTER OF FACT THAT THE ASSESSEE HAS BRANCH OFFICES THROUGHOUT THE COUNTRY. THE ASSESSEE HAS BEEN DEBITING THE EXPENDITURE SPILL OVER TO THE SUBSEQUENT YEARS AND THE ASSESSING OFFICER HAD BEEN ALLOWING THE SAME. THE SAID ACCOUNTING PRACTICE HA S ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 17 BEEN CONSISTENTLY FOLLOWED BY THE ASSESSEE AND ACCEPTED BY THE DEPARTMENT. IF A PARTICULAR ACCOUNTING SYSTEM HAS BEEN FOLLOWED AND ACCEPTED AND THERE IS NO ACCEPTABLE REASON TO DIFFER WITH THE SAME, THE DOCTRINE OF CONSISTENCY WOULD COME INTO PLAY. THE S AID ACCOUNTING SYSTEM HAS BEEN FOLLOWED FOR A NUMBER OF YEARS AND THERE IS NO PROOF THAT THERE HAS BEEN ANY MATERIAL CHANGE IN THE ACTIVITIES OF THE ASSESSEE AS COMPARED TO THE EARLIER YEARS. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THERE HAS BEEN D ISTORTION OF PROFIT OR THE BOOKS OF ACCOUNT DID NOT REFLECT THE CORRECT PICTURE IN THE ABSENCE OF ANY REASON WHATSOEVER, THERE WAS NO WARRANT OR JUSTIFICATION TO DEPART FROM THE PREVIOUS ACCOUNTING SYSTEM WHICH WAS ACCEPTED BY THE DEPARTMENT IN RESPECT OF THE PREVIOUS YEARS. 17. IN VIEW OF OUR PRECEDING ANALYSIS, WE DO NOT PERCEIVE ANY MERIT IN THIS APPEAL AND, ACCORDINGLY THE SAME STANDS DISMISSED WITHOUT ANY ORDER AS TO COSTS. 1 2 . IN VIEW OF THE EXPLANATIONS OFFERED BY THE ASSESSEE, FINDINGS REACHED BY THE LD. CIT(A) WHICH STAND UNREBUTTED ON BEHALF OF THE REVENUE AND RESPECTFULLY FOLLOWING THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT (SUPRA) , WE ARE OF THE CONSIDERED OPINION T HAT THE LD. CIT(A) HAS RIGHTLY DELETED THE IMPUGNED ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF PRIOR PERIOD EXPENDITURE. NOT ONLY THIS, IT IS WORTH CONSIDERATION THAT THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER HAS TAKEN THE INCOME OF THE ASSES SEE AT NIL AFTER SETTING OFF THE BROUGHT FORWARD UNABSORBED LOSSES AND UNABSORBED DEPRECIATION. IT IS ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 18 ALSO NOTED THAT THE CLAIM FOR THE SET OFF OF THE UNABSORBED LOSSES OF RS.59,72,70,719 / - FOR A.Y. 1996 - 97 WAS UTILIZED ONLY TO THE EXTENT OF CURRENT YEARS INCOME OF RS.43,11,46,228/ - AND THE BALANCE UNABSORBED LOSS OF RS.1,66,12,449/ - (CORRECT FIGURE RS.16,61,24,491/ - ) STOOD LOST FROM BEING CARRIED FORWARD TO THE NEXT YEAR IN TERMS OF SECTION 72(3) OF THE ACT. THEREFORE, EVEN IF THE ALLEGED AMOUNT OF RS.62,8 3,936/ - REPRESENTING TO PRIOR PERIOD EXPENDITURE , FOR ARGUMENTS SAKE , IS HELD TO BE DISALLOWABLE, YET IT WOULD NOT RESULT IN ANY ADDITION/ENHANCEMENT TO THE TAXABLE INCOME OF THE ASSESSEE, AS PAST UNABSORBED LOSSES OF ASSESSMENT YEAR 1996 - 97 WHICH STOOD L OST TO THE EXTENT OF RS.1,66,12,449/ - (CORRECT FIGURE RS.16,61,24,491/ - ) WAS SUFFICIENT ENOUGH TO ABSORB THE IMPUGNED ADDITION. THEREFORE, THE ADDITION MADE IN THE REASSESSMENT ORDER IS FOUND NOT SUSTAINABLE AT ALL ON THIS PREMISE TOO. ACCORDINGLY, GROUND NO. 1 OF REVENUE S APPEAL DESERVES TO FAIL. 1 3 . ADVERTING TO GROUND NO. 2 RAISED BY REVENUE REGARDING DISALLOWANCE OF PROVISION FOR ADVANCES, THE CONTENTION OF THE ASSESSEE HAS BEEN THAT PROVISION FOR ADVANCE OF RS. 8,29,378 / - ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 19 HAS ALREADY BEEN ADDED IN THE COMPUTATION OF INCOME AS PLACED IN THE PAPER BOOK PAGES 1 TO 6 INCLUDING THE EXPLANATORY NOTES TO THE COMPUTATION OF INCOME. THE CASE OF THE ASSESSEE HAS ALSO BEEN THAT THE PROVISION FOR ADVANCE OF RS. 8,29,378 / - IS INCLUDED IN THE FIGURE OF RS. 21,41, 59,276 / - AS SHOWN AT SR. NO. 3 OF THE COMPUTATION OF INCOME AND THEREFORE , THE SAME CANNOT BE ADDED AGAIN BY THE ASSESSING OFFICER. THE LD. CIT(A) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE AFTER MAKING DUE VERIFICATION FROM THE RECORDS AGAINST WHICH NO C ONTRARY MATERIAL IS ADDUCED ON BEHALF OF THE REVENUE. WE, THEREFORE, FIND NO JUSTIFICATION TO INTERFERE WITH THE DECISION REACHED BY THE LD. CIT(A) ON THIS COUNT TOO. ACCORDINGLY, GROUND NO. 2 OF REVENUE S APPEAL ALSO DESERVES TO FAIL. 1 4 . REGARDING THE THIRD ISSUE OF CARRY FORWARD OF UNABSORBED DEPRECIATION AND BUSINESS LOSSES OF RS.2,21,66,35,511/ - INSTEAD OF RS.2,05,05,11,020/ - , WE FIND THAT THE LD. CIT(A) HAS DIRECTED THE AO TO ALLOW CARRY FORWARD OF UNABSORBED BUSINESS LOSSES AND DEPRECIATION TO THE EXTENT OF RS.2,21,66,35,511/ - , WHICH IN OUR OPINION IS NOT JUSTIFIED ON THE FACE OF MATERIAL AVAILABLE ON ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 20 RECORD. WE HAVE GONE THROUGH THE COMPUTATION OF INCOME FILED BY THE ASSESSEE PLACED AT PAGE 1 3 OF THE PAPER BOOK AND WE FIND THAT THE ASSESSEE BY WAY OF NOTE APPENDED TO THE COMPUTATION OF INCOME ITSELF HAS NOTED THAT BUSINESS LOSS OF A.Y. 1996 - 97 AMOUNTING TO RS.59,72,70,719/ - WAS UTILIZED ONLY TO THE EXTENT OF CURRENT YEAR S INCOME OF RS.43,11,46,228/ - AND HAS ALSO NOTED THAT THE BALANCE LOSS OF RS.1,66,12,449 (CORRECT FIGURE RS.16,61,24,491/ - ) HAS BEEN LOST FROM BEING CARRIED FORWARD TO THE NEXT YEAR IN TERMS OF SECTION 72(3) . HE THEREFORE, HAS NOTED THAT THIS WILL REDUCE THE TOTAL CARRY FORWARD LOSSES OF RS.221,66 ,35,511/ - BY THE FIGURE OF RS.1,66,12,449/ - (CORRECT FIGURE RS.16,61,24,491/ - ) . IN VIEW OF THIS NOTE APPENDED TO COMPUTATION OF INCOME, THE LD. ASSESSING OFFICER APPEARS TO HAVE COMMITTED NO ERROR WHILE ALLOWING THE BUSINESS LOSSES TO BE CARRIED FOR W ARD TO THE NEXT YEAR AFTER REDUCING THE FIGURE OF RS.1,66,12,449/ - (CORRECT FIGURE RS.16,61,24,491/ - ) FROM THE FIGURE OF RS.221,66,35,511/ - . THE RESULTANT FIGURE WILL COME TO RS.205,05,11,020/ - . THE LD. CIT(A) HAS NOT GIVEN ANY GOOD REASON TO DIRECT THE AO TO ALLOW CARRY FORWARD OF THE BUSINESS LOSSES TO THE EXTENT OF RS.221,66,35,511/ - . THUS, THE LD. AO WAS JUSTIFIED ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 21 TO ALLOW THE BUSINESS LOSSES OF RS.205,05,11,020/ - TO BE CARRIED FORWARD TO THE NEXT YEAR. ACCORDINGLY THIS GROUND OF APPEAL OF THE REVENUE DESER VES TO BE ALLOWED . 1 5 . IN THE RESULT , THE APPEAL OF THE REVENUE FOR A.Y. 2004 - 05 IS PARTLY ALLOWED. 1 6 . IN APPEALS OF REVENUE FOR A.YRS. 2007 - 08 AND 2008 - 09, THE GROUNDS RAISED ARE COMMON. GROUND NO. 1 IN BOTH THESE APPEALS RELATES TO DISALLOWANCE OF PRIOR PERIOD EXPENDITURES. THIS ISSUE HAS BEEN DECIDED BY US IN FAVOUR OF THE ASSESSEE WHILE DECIDING THE APPEAL FOR A.Y. 2004 - 05. THEREFORE OUR ABOVE DECISION ON THE ISSUE WILL EQUALLY APPLY TO THESE APPEALS FOR A.YRS. 2007 - 08 AND 2008 - 09 ALSO . ACCORDINGL Y, GROUND NO. 1 RAISED BY REVENUE IN BOTH THESE APPEALS DESERVE S TO FAIL. 17 . THE NEXT ISSUE INVOLVED IN BOTH THESE APPEALS RELATES TO RATE OF DEPRECIATION ON COMPUTER ACCESSORIES WHETHER @ 60% CLAIMED BY ASSESSEE TREATING THE SAME AS INTEGRAL PART OF THE COMPUTER OR @ 15% APPLIED BY THE AO AS APPLICABLE TO PLANT AND ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 22 MACHINERY. THE CASE OF THE REVENUE HAS BEEN THAT THE COMPUTER ACCESSORIES PURCHASED BY THE ASSESSEE INCLUDES LASER JET, PORT REPLICATOR, ALVARION CPE DEVIDE WITH ODU CONNECTOR, SCAN JET, HP OFFICE JET, MS WINDOWS 2003 STANDARD SERVER, AUTO DESK AUTO CAD REVIT ETC. WHICH ARE ELIGIBLE FOR DEPRECIATION @ 15% AND AS SUCH, THE ASSESSEE HAS CLAIMED EXCESS DEPRECIATION @ 60%. THE CONTENTION OF THE ASSESSEE HAS BEEN THAT THE SAID ACCESSORIES CANNOT BE USED WITHOUT COMPUTER AND ARE INTEGRAL PART OF THE COMPUTER SYSTEM AND THEREFORE, IN VIEW OF THE DECISIONS OF ITAT KOLKATA BENCH IN ITO VS. SAMIRAN MAJUMDAR, 98 ITD 119 , DECISION OF ITAT DELHI BENCH IN EXPEDITORS INTERNATIONAL (INDIA) P. LTD. VS. CIT, 1 18 TTJ 652 AND OF HON BLE DELHI HIGH COURT IN CIT VS. BSES YAMUNA POWERS LTD., ( 2010) TIOL 636 AND CIT VS. ORIENT CERAMICS & INDUSTRIES LTD. (2011) TIOL 6, THE SAID ACCESSORIES, BEING PART OF THE COMPUTER SYSTEM, ARE ENTITLED TO DEPRECIATION AT THE HIGHER RATE OF 60%. THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND DIRECTED THE AO TO ALLOW DEPRECIATION @ 60% IF THE ABOVE ACCESSORIES OF COMPUTER WERE USED FOR MORE THAN 180 DAYS AND @ 30% IF THE SAME WERE USED FOR LESS THAN 180 DAYS. ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 23 18 . HAVING CONSIDERED THE RIVAL SUBMISSIONS, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE CONCLUSION OF THE LD. CIT(A) ON THIS ISSUE. IN THE DECISION DATED 31 ST AUGUST, 2010 IN THE CASE OF BSES RAJDHANI POWERS LIMITED (SUPRA) , THE JURISDICTIONAL HIGH COURT, CONFIRMING THE DECISION OF KOLKATTA BENCH OF ITAT IN ITO VS. SAMIRAN MAJUMDAR (SUPRA) AND OF ITAT DELHI BENCH IN EXPEDITORS INTERNATIONAL (INDIA) (SUPRA), HAS HELD AS UNDER : WE ARE IN AGREEMENT WITH THE VIEW OF THE TRIBUNAL THAT COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS PRINTERS, SCANNERS AND SERVER ETC. FORM AN INTEGRAL PART OF THE COMPUTER SYSTEM. IN FACT, THE COMPUTER ACCESSORIES AND PERIPHERALS CANNOT BE USED WITHOUT THE COMPUTER. CONSEQUENTLY, AS THEY ARE THE PART OF THE COMPUTER SYSTEM, THEY ARE ENTITLED TO DEPRECIATION AT THE HIGHER RATE OF 60%. 19 . IN VIEW OF THESE DECISIONS OF HON BLE JURISDICTIONAL HIGH COURT AND COORDINATE BENCHES OF TRIBUNAL, WE FIND NO JUSTIFICATION TO DISCARD THE FINDING OF THE LD. CIT(A) THAT THESE COMPUTER ACCESSORIES ARE ENTITLED TO HIGHER RATE OF DEPRECIATION AS DIRECTED IN THE IMPUGNED ORDER. NO CO NTRARY MATERIAL OR DECISION IS CITED ON BEHALF OF THE REVENUE TO TAKE A DIFFERENT VIEW. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENU E IN BOTH THE APPEALS FOR A.YRS. 2007 - 08 ITA NOS. 2650, 2652 & 2653/DEL./2012 AND CO. NO. 278/DEL./2012 24 AND 2008 - 09. AS A RESULT, BOTH THESE APPEALS OF THE REVENUE ARE LIABLE TO BE DISMISSED. 2 0 . IN THE RESULT, THE APPEAL OF THE REVENUE FOR A.Y. 2004 - 05 IS PARTLY ALLOWED AND THOSE FOR A.YRS. 2007 - 08 AND 2008 - 09 ARE D ISMISSED. THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.05.2017 . SD/ - SD/ - ( I.C. SUDHIR ) ( L.P. SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26.05.2017 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI