Sri Sapthagiri Syndicate, Erode V. ITO, Coimbatore

ITA 33/CHNY/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6546 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 11-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI (BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER) .. I.T.A. NO. 33/MDS/2011 ASSESSMENT YEAR : 2002-03 M/S SRI SAPTHAGIRI SYNDICATE, 521, PERUNDURAI ROAD, ERODE. PAN : AAQFS2415K (APPELLANT) V. THE INCOME TAX OFFICER, WARD I(4), ERODE. (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR RESPONDENT BY : SHRI P.B. SEKARAN O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVANC E IS THAT CIT(APPEALS) DID NOT ALLOW ITS PETITION UNDER SECTI ON 154 OF INCOME- TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) WHICH WAS FILED FOR GETTING A CLARIFICATION OF HIS ORDER DATED 2.1.2007 ON AN A PPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEARS 2002-03 AND 2003-04. I.T.A. NO. 33/MDS/11 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD FILED RETURNS FOR ASSESSMENT YEARS 2002-03 AND 2003-04 WHICH WERE INI TIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. ASSESSI NG OFFICER NOTED THAT ASSESSEE HAD CLAIMED DEPRECIATION AT 60% ON UP S AND BATTERY. AS PER THE ASSESSING OFFICER, THESE ITEMS WERE NOT ENERGY SAVING DEVICES AND DEPRECIATION COULD BE ALLOWED ONLY AT T HE RATE OF 25%. THEREFORE, NOTICES WERE ISSUED UNDER SECTION 154 OF THE ACT FOR RECTIFYING THE ASSESSMENTS. IT SEEMS THERE WAS NO RESPONSE FROM ASSESSEE. A.O., THEREFORE, PASSED ORDER UNDER SECT ION 154 OF THE ACT REVISING THE ASSESSMENT AND RESTRICTING THE CLA IM OF THE ASSESSEE ON ACCOUNT OF DEPRECIATION ON UPS AND BATTERY TO 25 %. ASSESSEE FILED APPEALS BEFORE CIT(APPEALS) FOR BOTH THE YEAR S. ONE OF THE GROUNDS TAKEN WAS THAT ASSESSING OFFICER HAD NOT GI VEN IT SUFFICIENT TIME TO RESPOND THE NOTICE UNDER SECTION 154 OF THE ACT. ON MERITS, PLEA OF THE ASSESSEE WAS THAT UPS AND BATTERY WERE PART AND PARCEL OF COMPUTERS AND USED FOR OPERATING COMPUTERS INSTA LLED BY IT. IN THE OPINION OF THE ASSESSEE, SUCH ITEMS WERE ELIGIBLE F OR HIGHER RATE OF DEPRECIATION. AS PER THE ASSESSEE, THE A.O. HAD PA SSED AN ORDER UNDER SECTION 154 OF THE ACT ON A DEBATABLE ISSUE R EGARDING RATE OF DEPRECIATION AND SUCH AN ORDER WAS NOT VALID. LD. CIT(APPEALS), I.T.A. NO. 33/MDS/11 3 HOWEVER, WAS NOT IMPRESSED. ACCORDING TO HIM, A.O. GAVE ENOUGH OPPORTUNITY TO THE ASSESSEE BEFORE PASSING ORDER UN DER SECTION 154 OF THE ACT. AS PER THE CIT(APPEALS), UPS AND BATTE RY WERE BACK UP DEVICES USED IN CASE OF POWER FAILURE AND COULD NOT BE CONSIDERED AS COMPUTER. THEREFORE, AS PER LD. CIT(APPEALS), THER E WAS A MISTAKE APPARENT FROM THE RECORD WHICH WAS CORRECTED BY THE ASSESSING OFFICER BY RESTRICTING THE ALLOWANCE OF DEPRECIATIO N TO 25%. AS PER THE LD. CIT(APPEALS), THERE WAS NO DEBATABLE ISSUE INVOLVED AND ASSESSING OFFICER WAS DEFINITELY WELL WITHIN HIS PO WERS FOR INVOKING UNDER SECTION 154 OF THE ACT FOR RESTRICTING THE CL AIM OF DEPRECIATION. 3. ASSESSEE FILED A RECTIFICATION APPLICATION BEFOR E THE CIT(APPEALS) SEEKING RECTIFICATION OF HIS ORDER. I N ITS PETITION, ASSESSEE SUBMITTED THAT THE CIT(APPEALS) HAD NOT CO NSIDERED TWO DECISIONS OF THIS TRIBUNAL, NAMELY, (I) DCIT V. SU RFACE FINISHING EQUIPMENT (81 TTJ 448) (JODH) AND (II) ITO V. SAMI RAN MAJUMDAR (98 ITD 119) (KOL). ACCORDING TO THE ASSESSEE, NON -CONSIDERATION OF DECISIONS OF THIS TRIBUNAL RENDERED THE ORDER OF TH E CIT(APPEALS) RECTIFIABLE AND THE CIT(APPEALS) COULD INVOKE SECTI ON 154 OF THE ACT FOR EFFECTING RECTIFICATION OF HIS APPELLATE ORDER DATED 2.1.2007. I.T.A. NO. 33/MDS/11 4 HOWEVER, THE CIT(APPEALS) WAS NOT IMPRESSED. ACCOR DING TO HIM, THERE WAS NO ERROR IN HIS EARLIER ORDER WHICH COULD BE CONSIDERED AS APPARENT ON RECORD AND THEREFORE, NO SCOPE FOR RECT IFICATION, AS PER THE DECISION OF HON'BLE APEX COURT IN THE CASE OF T .S. BALARAM, ITO V. VOLCKART BROS. & OTHERS (82 ITR 50) (SC). 4. NOW BEFORE US, ASSESSEE SUBMITTED THAT CIT(APPEA LS) OUGHT HAVE RECTIFIED HIS ORDER DATED 2.1.2007 SINCE IT WA S PASSED WITHOUT CONSIDERING TRIBUNAL ORDERS IN THE CASE OF SURFACE FINISHING EQUIPMENT (SUPRA) AND SAMIRAN MAJUMDAR (SUPRA) WHER EIN IT WAS HELD THAT UPS AND BATTERY COULD BE CONSIDERED FOR H IGHER RATE OF DEPRECIATION AT 60% AS APPLICABLE TO COMPUTERS. 5. PER CONTRA, LEARNED D.R. SUBMITTED THAT THERE WA S NOTHING IN THE ORDER OF LD. CIT(APPEALS) WHICH COULD BE TERMED AS A MISTAKE, WHICH WAS OBVIOUS AND HENCE LD. CIT(APPEALS) COULD NEVER MAKE ANY RECTIFICATION THEREOF UNDER SECTION 154 OF THE ACT. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. NO DOUBT, THE QUESTION WHETHER UPS AND BATTERY CAN BE CONSIDERED AS PART OF A COMPUTER TO BE ELIGIBLE FOR HIGHER DEP RECIATION OF 60% IS A I.T.A. NO. 33/MDS/11 5 DEBATABLE ISSUE. FOR THERE COULD BE TWO VIEWS ON T HIS MATTER, DEFINITELY. THE A.O. HAD PASSED AN ORDER UNDER SEC TION 154 OF THE ACT ON 22.6.2006 ON A DEBATABLE ISSUE AND THIS WAS BEYOND THE SCOPE OF SECTION 154 OF THE ACT, SINCE THE RATE OF DEPRECIATION ON UPS AND BATTERY WAS A DEBATABLE ISSUE. ASSESSEES APPEAL BEFORE THE CIT(APPEALS) WAS NOT SUCCESSFUL SINCE, AS PER T HE CIT(APPEALS), THE PROCEEDINGS UNDER SECTION 154 OF THE ACT FOR RE STRICTING THE CLAIM OF DEPRECIATION WAS VALID. ACCORDING TO CIT(APPEAL S), UPS AND BATTERY WERE ELIGIBLE FOR DEPRECIATION AT 25% ONLY AND BY ALLOWING THE CLAIM AT 60%, THERE WAS A MISTAKE APPARENT FROM REC ORD. HOWEVER, THE ASSESSEE DID NOT FILE ANY FURTHER APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDERS OF THE CIT(APPEALS) FOR ASSESSME NT YEARS 2002-03 AND 2003-04. INSTEAD, IT FILED A RECTIFICATION APP LICATION BEFORE THE CIT(APPEALS) ITSELF, WHO REFUSED TO RECTIFY THE ORD ER SINCE, ACCORDING TO HIM, THERE WAS NO MISTAKE APPARENT ON RECORD. A S PER THE LEARNED A.R., NON-CONSIDERATION OF TRIBUNAL DECISIONS CITED BY THE ASSESSEE, NAMELY, THAT OF JODHPUR BENCH IN THE CASE OF SURFAC E FINISHING EQUIPMENT (SUPRA) AND CALCUTTA BENCHS SAMIRAN MAJU MDAR (SUPRA) RENDERED THE ORDER OF THE CIT(APPEALS) AMENABLE TO A RECTIFICATORY PROCEEDINGS, THERE BEING A MISTAKE APPARENT ON RECO RD. THE VARIOUS I.T.A. NO. 33/MDS/11 6 ORDERS OF THE AUTHORITIES BELOW, MENTIONED BY US SU PRA, CLEARLY SHOW THAT THERE WERE MISTAKES GALORE. IN THE FIRST PLAC E A.O. HAD INVOKED SECTION 154 OF THE ACT ON A DEBATABLE ISSUE REGARDI NG DEPRECIATION RATE ON UPS AND BATTERY. IN THE SECOND PLACE, THE CIT(APPEALS) IN ASSESSEES APPEAL HELD THAT THIS WAS NOT A DEBATABL E ISSUE, WHEN IT WAS A DEBATABLE ISSUE AS TO WHETHER UPS AND BATTERY COULD BE CONSIDERED AS PART OF COMPUTER FOR HIGHER RATE OF D EPRECIATION. ASSESSEE INSTEAD OF FILING APPEAL BEFORE THIS TRIBU NAL AGAINST THE ORDER OF THE CIT(APPEALS), FILED AN APPLICATION FOR RECTIFICATION OF THE ORDER. IN OUR OPINION, CIT(APPEALS) HAVING FOUND T HAT THERE WERE ORDERS IN FAVOUR OF ASSESSEE REGARDING HIGHER RATE OF DEPRECIATION ON UPS AND BATTERY, AND ALSO NOTING THE ERROR COMMITTE D BY THE A.O. IN INVOKING SECTION 154, FOR EFFECTING A RECTIFICATION BASED ON A DEBATABLE ISSUE, COULD HAVE INVOKED SUCH POWERS HIM SELF AND CLEARED THE AIR. THERE WERE APPARENTLY PATENT MIST AKES PERMEATING THROUGH VARIOUS ORDERS, IN THAT A DEBATABLE ISSUE W AS CONSIDERED AS ONE AMENABLE FOR A RECTIFICATORY PROCEEDING UNDER S ECTION 154 OF THE ACT. WHEN THE ORIGINAL ORDER UNDER SECTION 154, OF THE A.O. ITSELF WAS BAD IN LAW, A VIEW TAKEN BY THE LD. CIT(APPEALS) IN HIS EARLIER ORDER, IN THE APPEAL OF THE ASSESSEE, WHICH EFFECTIVELY CONFI RMED THE ORDER OF I.T.A. NO. 33/MDS/11 7 THE A.O., WOULD ALSO BE AMENABLE TO A RECTIFICATORY PROCEEDING. IN OUR OPINION, LD. CIT(APPEALS) WAS NOT JUSTIFIED IN REFUSING TO CONSIDER THE AVERMENT OF ASSESSEE THAT THE EARLIER ORDER PAS SED BY HIM CONFIRMING THE ORDER OF THE A.O. UNDER SECTION 154 OF THE ACT ON A DEBATABLE ISSUE WAS ONE THAT WAS HAVING A MISTAKE A PPARENT ON RECORD, DESPITE ASSESSEE PRODUCING ORDERS OF THE TR IBUNAL WHICH WERE IN ITS FAVOUR. WE ARE, THEREFORE, OF THE OPINION T HAT THE CIT(APPEALS) ERRED IN NOT ALLOWING THE APPLICATION OF THE ASSESS EE. THEREFORE, THE ORDER OF THE CIT(APPEALS) IS QUASHED AND HE IS DIRE CTED TO ALLOW THE PETITION FILED BY THE ASSESSEE UNDER SECTION 154 OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 27 TH MAY, 2011. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 27 TH MAY, 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-I, COIMBATORE / CIT-II, COIMBATORE/D.R./GUARD FILE