DCIT, New Delhi V. M/s. Intertoll ICS Cecons O & M Company (P) Ltd., New Delhi

ITA 4402/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52931 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 01-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H L DIHANA
• Assessee Lawyers: NITIN VAID; SANDEEP NAGPAL CAS
• Keywords: Depreciation

Judgement Text

ITA NO. 4402/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4402/DEL/2010 A.Y. : 2005-06 DCIT, CIRCLE 11(1), NEW DELHI CR BUILDING, NEW DELHI 110 002 VS. M/S INTERTOLL ICS CECONS O&M COMPANY (P) LTD., B-09, 612, ITL TWIN TOWER, NETAJI SUBHASH PLACE, NEW DELHI (PAN/GIR NO. : AAACI9962N) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. NITIN VAID AND SHRI SANDEEP NAGPAL, CAS DEPARTMENT BY : SH. H.L. DIHANA, C.I.T.(D.R.) ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 16.7.2 010 PERTAINING TO ASSESSMENT YEAR 2005-06. 2. THE FIRST ISSUE RAISED IS THAT LD. COMMISSIONE R OF INCOME TAX (APPEALS) ERRED IN DELETING THE DISALLOWANCE OF ` 1,30,25,932/- U/S. 40A(IA) OF THE ACT. 3. IN THIS CASE, DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, IT WAS OBSERVED THAT THE ASSESSEE HAS NOT DEPOSITED THE TDS DEDUCTED ON CONTRACT PAYMENT AND PROFESSIONAL FEES INTO GOVERNM ENT ACCOUNT WITHIN THE DUE DATES. THEREFORE ASSESSING OFFICER OBSERVED THAT THE ITA NO. 4402/DEL/2010 2 PAYMENT ON WHICH TDS IS DEDUCTED IS, THEREFORE, DISAL LOWABLE U/S 40A(IA) OF THE IT ACT. THE ASSESSEE WAS ASKED TO SUBMIT WHY THE PAYMENTS PERTAINING TO TDS NOT PAID IN TIME SHOULD NOT BE DISALLOWED. THE ASSESSEE SUBMITTED THAT THE AMOUNT CREDITED TO TDS ACCOUNT ON 31.3.2005 HAS BEEN PAID PARTLY BEFORE 31.5.2005 AND PARTLY IN JUNE, 2005 THEN THE AMOUNT OF EXPENSES HAS BEEN DISALLOWE D. ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT TAKEN I NTO ACCOUNT THE TDS OF ` 244070/- ON CONTRACT PAYMENT OF ` 116,77,990/- AND TDS OF ` 70093/- ON PROFESSIONAL FEES OF ` 13,47,942/- WHILE DISALLOWING THE CLAIM U/S 40A(IA). HENCE, THE ADDITIONAL DISALLOWAN CE U/S 40(AI) OF THE IT ACT CAME TO ` 130,25,932/-. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT PAYMENT OF CONTRACT CHARGES AMO UNTING TO ` 11677990/- AND PAYMENT OF PROFESSIONAL FEES ` 13479 42/- ON WHICH TDS OF ` 244070 AND ` 70793/- WAS MADE RESPECTIVELY WERE MADE BY THE ASSESSEE COMPANY DURING THE MONTH OF MARCH, 2005. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT TDS MADE IN THE MONTH OF MARCH, 2005 WAS DULY DEPOSITED B Y THE ASSESSEE COMPANY IN THE MONTH OF APRIL, 2005. THEREF ORE, LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT K EEPING IN VIEW THE AMENDED PROVISIONS OF SECTION 40A(IA), NO ADDI TION IS CALLED FOR IN THE CASE OF THE ASSESSEE COMPANY. HENCE, HE DIRECT ED THAT THE ENTIRE ADDITION OF ` 13025932/- TO BE DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT TDS MADE IN THE ITA NO. 4402/DEL/2010 3 MONTH OF MARCH, 2005 WERE DULY PAID IN THE MONTH OF A PRIL, 2005. HENCE, AS THE PER AMENDED PROVISIONS, NO ADDITION I S CALLED FOR IN THIS CASE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF T HE LD. COMMISSIONER OF INCOME TAX (APPEALS), HENCE, WE UPHOLD THE SAME. 7. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE O F ` 94992/- ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED ON COMPUTER. 8. ASSESSING OFFICER HAS DISALLOWED ` 94992/- BEI NG DEPRECIATION CLAIMED ON PRINTER, SCANNER AND UPS. ASSESSEE HAS C LAIMED DEPRECIATION @ 60%, BUT ASSESSING OFFICER WAS OF T HE OPINION THAT THE DEPRECIATION AS APPLICABLE TO PLANT AND MACHINERY S HOULD BE ALLOWED AND HENCE, HE MADE THE DISALLOWANCE. 9. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT ASSESSEE WAS ENTITLED FOR DEPRE CIATION ON THESE COMPUTER PERIPHERALS @ 60%. 10. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 11. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT JURISDICTIONAL HIGH COURT IN ITA NO. 1266/DEL/2010 IN THE CASE OF C.I.T. VS. BSES RAJDHANI POWERS LIMITED VIDE ORDER DATED 31.8.2010 HAS HELD T HAT THE COURT WAS IN AGREEMENT WITH THE VIEW OF THE TRIBUNAL THAT THE COMPUTER PERIPHERALS SUCH AS PRINTER, SCANNER ETC. FORM AN INTEGRAL PART OF 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 DE PRECIATION @ 60%. RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT, WE UPHO LD THE ORDER OF THE ITA NO. 4402/DEL/2010 4 LD. COMMISSIONER OF INCOME TAX (APPEALS) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 12. THE LAST ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE O F ` 2,70,82,859/- BEING PENALTY IN ON CONTRACT. 13. ON THIS ISSUE ASSESSING OFFICER NOTED THAT A SSESSEE HAS CLAIMED ` 2,70,82,859/- BEING PENALTY ON CONTRACT. ASSESS ING OFFICER HELD THAT THE SAME WAS OF PENAL NATURE, THE SAME WAS DISAL LOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 14. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE WITHOUT CALLING ANY EXPLANATION IN THIS REGARD. I T WAS CLAIMED THAT ASSESSING OFFICER DID NOT APPRECIATE THE CIRCUMSTA NCES IN WHICH THE AMOUNT OF ` 2,70,82,859/- WAS RECOVERED BY THE NHAI. LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD OBSERVED THAT WHILE EXECUTING THE O&M AGREEMENT WITH NHAI DUE CAUT IONS WERE EXERCISED BY THE GOVERNMENT SO AS TO ENSURE THAT THE RE IS NO COMPROMISE IN TERMS OF QUANTITY AND QUALITY OF SERVICE S TO BE RENDERED BY THE ASSESSEE COMPANY AND SPECIFIC AND CL EAR STIPULATIONS WERE PROVIDED THAT IN CASE OF ANY DEFICIENCIES FOU ND IN TERMS OF QUANTITY AND QUALITY OF WORK EXECUTED, RECOVERIES S HALL BE MADE FROM THE PAYMENTS TO BE MADE TO THE ASSESSEE COMPANY. IT W AS FURTHER PROVIDED THAT AMOUNT OF RECOVERY WHICH HAS BEEN REF ERRED TO AS ITA NO. 4402/DEL/2010 5 PENALTY WOULD DEPEND ON THE REPORT OF A QUALIFIED ENGINEER TO BE APPOINTED BY THE GOVERNMENT I.E. NHAI. IN THIS REG ARD, THE ASSESSEE COMPANY HAS FILED SPECIMEN COPIES OF SOME CORRESPONDE NCE SO AS TO EXPLAIN THE CORRECT NATURE OF AMOUNT OF ` 27082859/- . UPON GOING THROUGH THE CORRESPONDENCE LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT AMOUNT RECOVERED FROM THE AS SESSEE COMPANY ARE IN ESSENCE RECOVERIES FOR DEFICIENCIES D ETECTED IN THE QUANTITY AND QUALITY OF SERVICES RENDERED BY IT IN TERMS OF O&M AGREEMENTS, THEREFORE, THE PENALTY IN QUESTION IS F OR NON-COMPLIANCE WITH THE CONTRACTUAL OBLIGATIONS AND NOT FOR ANY BR EACH OF LAW. ACCORDINGLY, LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THAT THE ADDITION MAY BE DELETED. 15. AGAINST THE ABOVE ORDER THE REVENUE IS IN APP EAL BEFORE US. 16. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A CORRECT FINDING THAT THE AMOUNT OF ` 27082859/- WAS NOT ACTUALLY PENALTY, BUT IT WAS A RECOVERY MADE ON ACCOUNT OF DEFICIENCIES DETECTED IN THE QUANTITY AN D QUALITY OF SERVICES RENDERED BY IT IN TERMS OF O&M AGREEMENTS. THUS, T HESE AMOUNT RECOVERED ARE NOT FOR ANY INFRACTION OF LAW, RATHE R AS PER THE TERMS OF THE CONTRACT. HENCE, IN OUR CONSIDERED OPINION, T HERE IS NO INFIRMITY IN ITA NO. 4402/DEL/2010 6 THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APP EALS), THEREFORE, WE UPHOLD THE SAME. 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/9/2011. SD/- SD/- [ [[ [I.P. BANSAL I.P. BANSAL I.P. BANSAL I.P. BANSAL] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 30/9/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES