UNI DERITEND LTD, MUMBAI V. DCIT 1(3), MUMBAI

ITA 387/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8116 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 27-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Depreciation
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & RAMLAL NEGI (JM) I.T.A. NO. 387 /MUM/20 16 (ASSESSMENT YEAR 20 11 - 12 ) M/S. UNI DERITEND LIMITED LIBERTY BUILDING SIR VITHALDAS THACKERSEY MARG, MUMBAI - 400 020. PAN : AAACU0028K VS. DY. CIT - 1(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI SANJAY R. PARIKH DEPARTMENT BY S HRI RAJESH KUMAR YADAV DATE OF HEARING 14 . 1 2 . 201 7 DATE OF PRONOUNCEMENT 14 . 12 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.11.2015 PASSED BY THE LEARNED CIT(A) - 3, MUMBAI AND IT RELATES TO A.Y. 2011 - 12. THE ASSESSEE HAS FILED THE APPEAL ON THE FOLLOWING ISSUES : - (A) DISALL OWANCE MADE U/S. 36(1)(VA) OF THE ACT. (B) DISALLOWANCE U/S. 14A OF THE ACT. (C) HIGHER DEPRECIATION ON PRINTERS, SCANNERS ETC. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF VARIOUS FERROUS AND NON - FERROUS INVESTMENT CASTINGS AND GENERATION OF WIN D ENERGY. 3. FIRST ISSUE RELATES TO DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S. 36 (1)(VA) OF THE ACT RELATING TO EMPLOYEES CONTRIBUTION OF ESI PAYMENT S. THE ASSESSING OFFICER TOOK THE DUE DATE OF PAYMENT OF MONTHLY INSTALLMENT OF ESI PAYMENTS AS 15 TH DAY OF SUCCEEDING MONTH AND ACCORDINGLY T HE AO DISALLOWED A SUM OF ` 1,64,691/ - , WHICH CONSISTED OF PAYMENTS BY THE ASSESSEE BEYOND 15 TH DAY OF SUCCEEDING MONTH. BEFORE THE LEARNED CIT(A), THE ASSESSEE SUBMITTED THAT REGULATION 31 OF THE EMPLOYEES STATE INSURANCE REGULATION PERMIT GRACE PERIOD AND ACCORDINGLY DUE DATE FOR REMITTING PAYMENT IS 21 ST DAY OF SUCCEEDING MONTH. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS MADE M/S. UNI DERITEND LIMITED 2 PAYMENT OF ` 18,940/ - PERTAINING TO JUNE, 2010 ON 22.7.2010 AND ACCORDINGLY DISALLOWED THE SAME VOLUNTARILY WHILE COMPUTING RETURNED INCOME. IT WAS SUBMITTED THAT THE ASSESSING OFFICER , WITHOUT NOTICING VOLUNTARY DISALLOWANCE MADE BY THE ASSESSEE, HAS INCLUDED THE SAME AGAIN WHILE MAKING DISALLOWANCE OF ` 1,64,691/ - . THE LEARNED CIT(A), UPO N VERIFICATION OF DETAILS OF PAYMENT, ACCEPTED THE CONTENTION S OF THE ASSESSEE THAT THE DUE DATE OF PAYMENT SHOULD BE ACCEPTED AS 21 ST DAY OF SUCCEEDING MONTH . HOWEVER, INSTEAD OF DELETING OF ADDITION OF ` 1,64,691/ - , THE LEARNED CIT(A) DIRECTED THE ASSES SING OFFICER TO GRANT RELI E F OF ` 1,45,751/ - . I.E., RS.1,64,691/ - LESS ` 18,940/ - . THE LD A.R SUBMITTED THAT THE ENTIRE ADDITION MADE BY THE AO SHOULD BE DELETED, OTHERWISE THE ORDER OF LD CIT(A) WOULD RESULT IN DOUBLE DISALLOWANCE OF SAME ITEM OF RS.18,9 40/ - , ONE BY ASSESSEE AND SECOND TIME BY THE AO. 4 . WE HEARD THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD. WE FIND MERIT IN THE CONTENTION S OF ASSESSEE. WE NOTICE THAT THE LD CIT(A) HAS TAKEN THE DUE DATE FOR PAYMENT OF ESI AMOUNT AS 21 ST DAY OF SUCCE EDING MONTH. AS PER THIS RULE ONLY A SUM OF RS.18,940/ - IS LIABLE TO BE DISALLOWED U/S 36(1)(VA), WHICH THE ASSESSEE ITSELF HA D DISALLOWED . ACCORDINGLY THE LEARNED CIT(A) SHOULD HAVE DELETED THE ENTIRE ADDITION OF ` 1,64,691/ - MADE BY THE ASSESSING OFFIC ER , WHEREAS HE HAS GRANTED RELIEF ONLY TO THE EXTENT OF RS.1,45,751/ - . THIS HAS RESULTED IN DISALLOWANCE OF RS.18,940/ - TWO TIMES. ACCORDINGLY, WE MODIFY THE ORDER OF THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF ENTIRE AMOUNT OF ` 1,64,691/ - MADE BY HIM. 5 . THE N EXT ISSUE RELATES TO DISALLOWANCE MADE U/S. 14A OF THE ACT. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE INVESTMENT IN SHARES. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DISALLOWED A SUM OF ` 5,60, 7 49/ - , WHICH HE FOUND TO BE NOT IN ACCORDANCE WITH RULE 8D OF THE I.T. RULES. ACCORDINGLY, HE COMPUTED DISALLOWANCE AS PER RULE 8D OF THE I.T. RULES AT ` 17,06,900/ - , WHICH CONSIST ED OF INTEREST DISALLOWANCE OF ` 11,46,151/ - AND EXPENDITURE DISALLOW ANCE OF ` 5,60,4 49/ - . THE LEARNED CIT(A) GRANTED PARTIAL M/S. UNI DERITEND LIMITED 3 RELIEF TO THE ASSESSEE WITH REGARD TO THE COMPUTATION OF AVERAGE VALUE OF INVESTMENTS. S TILL AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 6 . THE LEARNED AR SUBMITTED THAT OWN FUNDS AVAI LABLE WITH THE ASSESSEE IS IN EXCESS OF VALUE OF INVESTMENT S AND HENCE NO DISALLOWANCE OUT OF INTEREST EXPENDITURE IS CALLED FOR AS PER THE DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF HDFC BANK LTD. (366 ITR 505) , SINCE THE PRESUMPTION IN CASE OF MIXED FUNDS, THE OWN FUNDS HAVE BEEN USED TO MAKE INVESTMENTS . THE LEARNED AR ALSO INVITED OUR ATTENTION TO THE B ALANCE SHEET OF THE ASSESSEE FILED AT PAGE NO. 26 OF THE PAPER BOOK IN SUPPORT OF HIS CONTENTIONS . 7 . WE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. WE NOTICED THAT THE OWN FUNDS AVAILABLE WITH THE ASSESSEE STANDS AT ` 5754.64 LAKHS AND ` 6451.78 LAKHS AS AT THE BEGINNING AND AT THE END OF THE YEAR UNDER CONSIDERATION RESPECTIVELY. THE INVESTMENTS HELD BY THE ASS ESSEE STAND AT ` 1096.78 LAKHS AND ` 3569.09 LAKHS AS AT THE BEGINNING AND AT THE END OF THE YEAR RESPECTIVELY. HENCE T HERE IS MERIT IN THE CONTENTION S OF THE ASSESSEE THAT OWN FUNDS AVAILABLE WITH THE ASSESSEE ARE IN EXCESS OF THE VALUE OF INVESTMENT S. H ENCE NO DISALLOWANCE OUT OF INTEREST EXPENDITURE IS CALLED FOR AS PER THE DECISION OF HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF HDFC BANK LTD. (SUPRA). ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF INTEREST AMOUNTING TO ` 11,46,451/ - MADE U/S. 14A OF THE ACT. 8 . THE N EXT ISSUE RELATES TO THE REJECTION OF CLAIM OF HIGHER RATE OF DEPRECIATION AT THE RATE OF 60% AS APPLICABLE TO COMPUTERS . THE ASSESSEE CLAIMED HIGHER RATE OF DEPRECIATION ON PRINTERS AND COMPUTER PERIPHERA LS, ON THE ABOVE SAID ITEMS ARE ATTACHED TO COMPUTERS AND SHOULD ALSO BE TREATED AS COMPUTERS. THE ASSESSING OFFICER REJECTED THE SAME AND ACCORDINGLY ALLOWED DEPRECIATION AT THE NORMAL RATE OF 15%. THE LEARNED CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 9 . THE LEARNED AR PLACED RELIANCE ON THE DEC ISION RENDERED BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. BSES YAMUNA POWERS LIMITED (2013) M/S. UNI DERITEND LIMITED 4 358 ITR 47 (DEL) AND SUBMITTED THAT HON'BLE DELHI HIGH COURT HAS HELD THAT THE COMPUTERS ACCESSORIES AND PERIPHERAL FORMS PART OF COMPUTER SYSTEM AND ARE ELIGIBLE FOR HIGHER RATE OF DEPRECIATION AS APPLICABLE TO COMPUTERS. 1 0 . ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LEARNED CI T(A). 11 . WE NOTICED THAT THE ASSESSEE HAS CLAIMED HIGHER RATE OF DEPRECIATION ON THE BASIS OF DECISION RENDERED BY HON'BLE DELHI HIGH COURT IN THE CASE OF BSES YAMUNA POWERS LIMITED (SUPRA) . WE ALSO NOTICED THAT THE SPECIAL BENCH OF THE ITAT HA S EXPRESSE D IDENTICAL VIEW IN THE CASE OF DCIT VS. DATA GROSS INDIA LIMITED (40 SOT 296)(MUM)(SB). SINCE THE CLAIM OF THE ASSESSEE IS COVERED BY THE ABOVE SAID DECISION S , WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFI CER TO GRANT HIGHER RATE OF DEPRECIATION ON THE ABOVE SAID ITEMS. 1 2 . THE ASSESSEE HAS ALSO RAISED AN ALTERNATIVE GROUND WITH REGARD TO DEPRECIATION CLAIMED ON COMPUTER PERIPHERAL REFERRED ABOVE I.E. WHILE WORKING OUT DEPRECIATION AT THE RATE OF 15% , I T APPEARS THAT THE ASSESSING OFFICER HAS COMMITTED AN ERROR IN COMPUT ING WDV VALUE. THIS GROUND WILL BECOME INFRUCTUOUS , SINCE WE HAVE DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATION AS CLAIMED BY THE ASSESSEE. 13 . IN THE RESULT, APPEAL FILED BY THE AS SESSEE IS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 14 . 1 2 .201 7. SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 14 / 1 2 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT M/S. UNI DERITEND LIMITED 5 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSTT. REGISTRAR /SENIOR PS ) PS ITAT, M UMBAI