DCIT 8(2), MUMBAI V. METTLER-TOLEDO INDIA P.LTD, MUMBAI

ITA 4619/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3705 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 07-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3); 142(1); 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 4 619 /MUM/ 201 4 ( / ASSESSMENT YEAR : 2009 - 1 0 ) DY. COMMISSIONER OF INCOME TAX - 8 (2),ROOM NO. 216 - A , AYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 / VS. M/S METTLER TOLEDO INDIA PVT. LTD. AMAR HILL, SAKI VIHAR ROAD, POWAI, MUMBAI - 4000072 ./ PAN : AABCM0779N / APPELLANT S HRI RANDHIR GUPTA / RESPONDENT SHRI AMIT AMLANIT / DATE OF HEARING : 3 .8 . 2016 / DATE OF PRONOUNCEMENT : 12. 8. 2016 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A) - 17, MUMBAI DATED 23.4.2014 PERTAINING TO A.Y.2009 - 10. 2. SOLE GROUND RAISED BY THE REVENUE IS AGAINST THE DIRECTION OF THE LD.CIT(A) TO ALLOW DEPRE CIATION AT THE RA T E OF 60% ON SAP SOFTWARE IGNORING THAT THE FACTS THAT THE SAID SOFTWARE W A S FOR IMPLEMENTATION OF SAP WHICH WAS NOTHING BUT THE LICENSE FALLING UNDER INTANGIBLE ASSETS AND WOULD BE LIABLE TO DEPRECIA TED AT THE RATE OF 60%. 2 4619 / MUM/201 4 3 . BRI EF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS E - RETURN OF INCOME ON 31.3.2010 DECLARING TOTAL INCOME OF RS.16,18,41,723/ - . THEREAFTER, SCRUTINY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE AND STATUTORY NOTICES UNDER SECTION 143(2) AND 142(1) WER E ISSUED AND SERVED UPON THE ASSESSEE. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED FROM THE SCHEDULE OF DEPRECIATION AS PER THE INCOME TAX ACT, 1961, THAT THE ASSESSEE HAS MADE ADDITION TO THE FIXED ASSETS IN THE BLOCK OF ASSETS UNDER THE HEAD COMPUTER TO THE TUNE OF RS.2,75,45,377/ - IN THE SECOND HALF WHICH WAS DEPRECIABLE AT THE RATE OF 60%. THE AO WAS OF THE OPINION THAT SAP APPLICATION WOULD BE LIABLE TO DEPRECIATION AT THE R A TE OF 25% , AND ACCORDINGLY ISSUED A SHOW CAUSE NOTICE T O THE ASSESSEE. THE ASSESSEE VIDE WRITTEN SUBMISSIONS DATED 9.3.2013 SUBMITTED THAT SAP APPLICATION WAS COMPUTER SOFTWARE AND SHOULD BE CLASSIFIED UNDER THE HEAD PLANT AND MACHINERY, AND WOULD BE LIABLE TO DEPRECIATION AT THE RATE OF 60% BY RELYING ON THE NUMBER OF DECISIONS AS CITED AT PARA 5.3 OF THE ASSESSMENT ORDER. THE AO NOT FINDING REPLY OF THE ASSESSEE CONVINCING REJECTED THE CLAIM OF THE ASSESSEE THAT THE SAP WAS ELIGIBLE FOR 60% DEPRECIATION AND ALLOWED DEPRECIATION AT THE RATE OF 25% THEREBY MAK ING AN ADDITION OF RS.42,58,612/ - BY FRAMING ASSESSMENT UNDER SECTION 143(3) VIDE ORDER DATED 21.3.2013 AT AN INCOME OF RS.16,61,00340/ - UNDER THE NORMAL PROVISIONS OF THE ACT AND RS. 16,62,05,590/ - UNDER 3 4619 / MUM/201 4 SECTION 115JB OF THE ACT. AGGRIEVED BY THE OR DER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) WHO ALLOWED THE APPEAL OF THE ASSESSEE BY DIRECTING THE AO TO ALLOW THE DEPRECIATION ON SAP WHICH WAS NOTHING BUT COMPUTER SOFTWARE . THE FINDING OF THE LD. CIT(A), FOR THE SAKE OF CONVENIENCE IS REPRODUCED BELOW: 1.3 DECISION 1.3.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND CONTENTION OF THE LD. AR OF THE APPELLANT AND ALSO CAREFULLY GONE THROUGH THE FACTS AND EXPLANATION GIVEN BY THE LD. AR OF THE APPELLANT AS WELL AS THE LD .AO . I FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE APPELLANT BY VARIOUS DECISIONS. THE MUMBAI TRIBUNAL IN CASE OF NAVNEET PUBLICATION (INDIA) LIMITED (2011) ITA NO. 1137 / MUM / 2010 WHEREIN THE ASSESSEE HAS PURCHASED SAP COMPUTER SOFTWARE DURING THE YEAR OF RS.17,82,248 / - AND CLAIMED DEPRECIATION AT 60%. THE ASSESSING OFFICER HAS ALLOWED DEPRECIATION AT 25% AS AGAINST 60% CLAIMED, REWORKED THE DEPRECIATION BOTH ON WDV AND NEW ADDITIONS MADE DURING THE YEAR AND DISALLOWED DIFFERENTIAL DEPRECIATION . T H E CIT(A) CONFIRMED THE STAND OF AO . ON APPEAL BEFORE MUMBAI ITAT, IT HAS HELD THAT, ' ... THE ASSESSEE SHO ULD SUCCEED ON THIS ISSUE FOR THE REASON THAT THE ASSESSEE WAS USING THE SOFTWARE FOR ITS BUSINESS AND THE SOFT WARE IS AN INTANGIBLE ASSET. IN OUR OPINION THE ASSESSEE'S CASE IS COVERED BY THE DECISION OF THE HON'BLE SPECIAL BENCH IN THE CASE OF AMWAY INDIA ENTERPRISE (SUPRA), WE THEREFORE DIRE CT THE ASSESSING OFFICER TO ALLOW DEPRECIATION @ 60% ON THE AMOUNT OF RS.54,89,280/ - WHICH WAS PAID FOR GETTI NG SAP SOFTWARE. IN THE RESULT, APPEAL IS ALLOWED IN FAVOUR OF THE ASSESSEE.' 4 . WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE PARTIES, PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. THE LD. DR HEAVILY RELIED ON TH E ORDER OF AO. THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT THE SAP APPLICATION WAS NOTHING BUT COMPUTER SOFTWARE AND 4 4619 / MUM/201 4 THE ASSESSEE HAS RIGHTLY CLAIMED DEPRECIATION ON THE SAID SOFTWARE AT THE RA T E OF 60% WHICH ALLOWED BY THE LD . CIT(A) AFTER CONSIDERING THE VARIOUS DECISIONS OF THE TRIBUNAL AND ALSO THE DE CISIONS OF HONBLE HIGH COURTS HOLDING THAT THE COMPUTER SOFTWAR E IS TO BE ALLOWED DEPRECIATION AT THE RATE OF 60%. THE LD. AR SUBMITTED THAT THE CASE OF THE ASSESSEE IS FULLY COVERED BY THE VARIOUS D ECISIONS OF THE TRIBUNAL AND HIGH COURTS AND THEREFORE THE ORDER PASSED BY THE FIRST APPELLATE AUTHORITY AFTER CONSIDERING ALL THESE DECISIONS OF THE TRIBUNAL AND HIGH COURTS BE UPHELD BY DISMISSING THE APPEAL OF THE REVENUE . WE FIND THAT THE TRIBUNAL IN THE CASE OF NAVNEET PUBLICATION (INDIA) LIMITED (2011) ITA NO. 1137/MUM/2010 HAS DISCUSSED THE ISSUE IN DETAILED AND ALLOWED THE CLAIM OF THE ASSESSEE TH E REIN . IN OUR OPINION THE FACTS OF THE CASE OF THE ASSESSEE ARE SQUARELY COVERED BY THE RATIO LAI D DOWN IN THE DECISION(SUPRA) AND A CCORDINGLY , WE DISMISS THE APPEAL OF THE REVENUE BY UPHOLDING THE ORDER OF THE CIT(A) . 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 12 . 0 8 . 2016. SD SD ( SHAILENDRA KUMAR YADAV ) (RAJESH KUMAR) / JUDICIAL MEMBER / AC COUNTANT MEMBER MUMBAI ; DATED : 12 . 8 .2016 SR.PS:SRL: 5 4619 / MUM/201 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI