ESENSE LEARNING P.LTD, MUMBAI V. ACIT 6(2)(2), MUMBAI

ITA 4391/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8650 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 04-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Keywords: Depreciation; Set aside
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , HON'BLE ACCOUNTANT MEMBER ITA NO. 4391 /MUM/201 8 (A.Y: 2014 - 15) M/S. ESSENCE LEARNING PVT. LTD., NAVNEET BHAVAN, BHAVAN SHANKAR ROAD DADAR (W), MUMBAI 400 028 PAN: AACCN7509C V. ACIT 6 (2)( 2 ) MUMBAI 400 020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJAY PARIKH DEPARTMENT BY : SHRI AMIT PRATAP SINGH DATE OF HEARING : 09 .01.2020 DATE OF PRONOUNCEMENT : 20 .07 .2020 O R D E R PER C.N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 12, MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 04.04.2018 FOR THE A.Y. 2014 - 15 . 2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: - 1. T HE LEARNED CIT (APPEALS) ERRED IN FACTS AND LAW IN CONFIRMING THE DEPRECIATION ON COMPUTER PROJECTOR AND COMPUTER TROLLEY @ 15% BY CONSIDERING THE SAME UNDER THE RESIDUAL HEAD IN BLOCK OF PLANT 2 ITA NO.4391/MUM/2018 (A.Y: 2014 - 15) M/S. ESSENCE LEARNING PVT. LTD., AND MACHINERY INSTEAD OF INCLUDING BOTH AS PART OF BLOCK O F COMPUTERS ON FUNCTIONALITY TEST BASIS. 2. THE LEARNED CIT (APPEALS) ERRED IN FACTS IN APPRECIATING THAT THE PROJECTORS ARE A PART OF THE ENTIRE COMPOSITE COMPUTER SYSTEM PROVIDED TO THE CUSTOMERS ON LEASE BASIS BY YOUR APPELLANT AND ACT AS AN OUTPUT INTE RFACE THROUGH WHICH THE DESIRED RESULT IS DISPLAYED ON THE SCREEN, THEREBY SERVING THE PURPOSE OF MONITOR AND THUS THE PROJECTOR IS AN OUTPUT DEVICE ATTACHED TO THE COMPUTER FALLING WITHIN THE TERM OF 'COMPUTER' ELIGIBLE FOR DEPRECIATION @ 60%. 3. THE LEARNED CIT (APPEALS) ERRED IN FACTS IN APPRECIATING THAT COMPUTER TROLLEYS ARE A PART OF THE KIT TO KEEP THE WHOLE CLASSROOM TRAINING AS USER - FRIENDLY AND SAFE FOR THE STUDENTS AS POSSIBLE, THUS BEING AN ANCILLARY EQUIPMENT IS FALLING WITHIN THE TERM OF ' 'COMPUTER'' ELIGIBLE FOR DEPRECIATION @ 60%. 3. AT THE OUTSET, L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL FOR THE A.Y. 2012 - 13 IN ITA.NO.7055/ MUM /2016 DATED 24.06.2019 WHEREIN THE TRIBUNAL ALLOWED DEPRECIATI ON ON COMPUTER PROJECTORS AT 60% AND SUSTAINED THE ACTION OF THE ASSESSING OFFICER IN ALLOWING THE DEPRECIATION ON COMPUTER TROLLEY S AT 15%. 4. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE O RDERS OF THE AUTHORITIES BELOW AND ALSO ORDER OF THE TRIBUNAL FOR THE A.Y. 2012 - 13 . WE FIND THAT THE ISSUE IN APPEAL HAS BEEN DECIDED BY THE TRIBUNAL PARTLY IN FAVOUR OF THE ASSESSEE WHEREIN THE TRIBUNAL ALLOWED THE DEPRECIATION ON COMPUTER PROJECTORS AT 60% AND SUSTAINED THE ACTION OF THE ASSESSING 3 ITA NO.4391/MUM/2018 (A.Y: 2014 - 15) M/S. ESSENCE LEARNING PVT. LTD., OFFICER IN ALLOWING THE DEPRECIATION ON COMPUTER TROLLEYS AT 15% OBSERVING AS UNDER: - 4. U NDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE RESTRICTION OF THE DEPRECIATION TO THE EXTENT OF 15% UPON THE PROJECTO R AS AGAINST THE DEPRECIATION ALLOWABLE IF ANY @ 60%. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE COMPUTER PROJECTOR IS THE PART AND PARCEL OF THE COMPUTER OPERATING SYSTEM, THEREFORE, THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION @ 60% IN VIEW OF THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS. CACTUS IMAGING INDIA PVT. LTD. (2018) 406 ITR 406 (MAD). HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS STRONGLY RELIED UPON THE ORDER PASSED BY CIT(A) IN QUESTION. IN TH E INSTANT CASE, THE CLAIM OF THE ASSESSEE IS IN CONNECTION WITH THE COMPUTER PROJECTOR. THE COMPUTER PROJECTOR CANNOT WORK ALONE WITHOUT OPERATING THE COMPUTER SYSTEM. IT IS INTEGRAL PART OF THE COMPUTER, THEREFORE, THIS ITEM IS ENTITLED FOR THE DEPRECIATI ON @ 60%. IN THIS REGARD, WE ALSO FIND SUPPORT OF LAW SETTLED IN THE CASE OF CIT VS. BSES RAJDHANI POWERS LTD. 1266 (DELHI) OF 2010 DATED 31.08.2010 AND DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS. CACTUS IMAGING INDIA PVT. LTD. (2018) 406 ITR 406 (MAD). TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES MENTIONED ABOVE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND ALLOWED THE DEPRECIATION @ 60% UPON THE COMPUTER PROJECTOR. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AG AINST THE REVENUE. ISSUE NO. 2 5. UNDER THIS ISSUE THE ASSESSEE HAS CLAIMED THE DEPRECIATION ON COMPUTER TROLLEYS RESTRICTED @ 15%. COMPUTER TROLLEYS ARE MADE FROM WOOD AND OTHER THINGS USED FOR PUTTING THE COMPUTERS ON IT. IT IS LIKE THE TABLE WHICH IS USED TO PUT THE COMPUTERS AND OTHERS ITEMS ABOVE FOR WORKING. IT CANNOT BE TREATED AS PART AND PARCEL OF THE COMPUTER OPERATING SYSTEM. HOWEVER, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE IS ENTITLED TO CLAIM THE DEPRECIATION @ 60% ON THE COMPUTER TROLLEYS BUT HE NOW HERE FURNISHES ANY EVIDENCE IN SUPPORT OF HIS CLAIM THAT COMPUTER TROLLEYS IS LIABLE TO BE CONSIDERED AS THE PART AND PARCEL OF THE COMPUTER SYSTEM. NO LAW SETTLED BY ANY AUTHORITY PRODUCED BEFORE US IN SUPPORT OF HIS CLAIM. TAKING INTO ACCOUNT ALL THE CIR CUMSTANCES MENTIONED ABOVE, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY RESTRICTED THE DEPRECIATION TO THE EXTENT OF 15 % OF THE VALUE OF COMPUTERS TROLLEY. ACCORDINGLY, WE CONFIRMED THE FINDING OF THE CIT(A) ON THIS ISSUE AND DECIDE THE ISSUE IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE. 4 ITA NO.4391/MUM/2018 (A.Y: 2014 - 15) M/S. ESSENCE LEARNING PVT. LTD., 6. RESPECTFULLY FOLLOWING THE SAID ORDER, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE DEPRECIATION ON COMPUTER PROJECTORS AT 60% AND ON COMPUTER TROLLEY AT 15% AS WAS ALLOWED WHILE COMPLETING THE ASSESSMENT . 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. BEFORE PARTING , WE NOTICED THAT THIS APPEAL WAS HEARD ON 09.01.2020 AND THE PRONOUNCEMENT IS DELAYED DUE TO LOCKDOWN IN VIEW OF COVID - 19 PANDEMIC. THE PRONOUNCEMENT IS AS PER RULE 34(5) OF INCOME TAX APPELLATE TRIBUNAL RULES, 1963 AND HON'BLE BOMBAY HIGH COURT DECISION VIDE ORDERS DATED 15.04.2020 AND 15.06.2020 EXTENDIN G THE TIME BOUND PERIODS SPECIFIED BY HON'BLE HIGH COURT BY REMOVING THE PERIOD UNDER LOCKDOWN. THIS ASPECT WAS ALSO DEALT WITH IN DETAIL BY THE MUMBAI BENCH OF THE TRIBUNAL IN CASE OF DCIT V. JSW STE EL VIDE ORDER DATED 15.05.2020. ORDER PRONOUNCED ON 20 . 07.2020 AS PER RULE 34(4) OF ITAT RULES BY PLACING THE PRONOUNCEMENT LIST IN THE NOTICE BOARD. SD/ - SD/ - ( S. RIFAUR RAHMAN ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 20 / 0 7 / 2020 GIRIDHAR , S R. PS 5 ITA NO.4391/MUM/2018 (A.Y: 2014 - 15) M/S. ESSENCE LEARNING PVT. LTD., COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM