DCIT, New Delhi V. M/s Global Trust Bank Limited, New Delhi

ITA 474/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4318 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 06-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SHYAMA S BANSIA
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH C CC C : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI K.D.RANJAN, AM ITA NO. ITA NO. ITA NO. ITA NO.474/DEL/2009 474/DEL/2009 474/DEL/2009 474/DEL/2009 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2004 2004 2004 2004- -- -05 0505 05 DY.COMMISSIONER OF DY.COMMISSIONER OF DY.COMMISSIONER OF DY.COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -13(1), 13(1), 13(1), 13(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S GLOBAL TRUST BANK LIMITE M/S GLOBAL TRUST BANK LIMITE M/S GLOBAL TRUST BANK LIMITE M/S GLOBAL TRUST BANK LIMITED, D,D, D, (NOW KNOWN AS ORIENTAL BANK OF (NOW KNOWN AS ORIENTAL BANK OF (NOW KNOWN AS ORIENTAL BANK OF (NOW KNOWN AS ORIENTAL BANK OF COMMERCE), COMMERCE), COMMERCE), COMMERCE), F FF F- -- -14, 4 14, 4 14, 4 14, 4 TH THTH TH FLOOR, COMPETENT HOUSE, FLOOR, COMPETENT HOUSE, FLOOR, COMPETENT HOUSE, FLOOR, COMPETENT HOUSE, CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN NO. PAN NO. PAN NO. PAN NO.AAACG7477L. AAACG7477L. AAACG7477L. AAACG7477L. (APPELLANT) (RESPONDENT) APPELLANT BY : MRS.SHYAMA S.BANSIA, CIT-DR RESPONDENT BY : SHRI K.V.S.R.KRISHNA, CA. ORDER ORDER ORDER ORDER PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI, J , J, J , JM : M : M : M : THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 17 .11.2008 OF LEARNED CIT(A) PERTAINING TO THE AY 2004-05. 2. THE PRESENT APPEAL FILED BY THE REVENUE INITIALL Y STOOD DISMISSED FOR WANT OF COD APPROVAL VIDE ORDER DATED 17.6.2009 OF THE TRIBUNAL. THEREAFTER, THE REVENUE MADE AN APPLICATION U/S 254 (2) OF THE ACT WITH A REQUEST TO RECALL THE AFORESAID TRIBUNALS ORDER DATED 17.6.2009 AND TO PROCEED WITH THE APPEAL ON THE ISSUE OF EXCESS D EPRECIATION ALLOWED BY THE LEARNED CIT(A) ON LAN, WAN, ATM ETC. AT 60% AS AGAINST 25% ALLOWED BY THE AO INASMUCH AS THE COD VIDE MINUTES OF THE MEETING OF THE COMMITTEE HELD ON 25.2.2010 HAS PERMITTED TH E REVENUE TO PURSUE THE PRESENT APPEAL ON THE AFORESAID ISSUE OF DEPRECIATION ON LAN, WAN, ATM ETC. THE MISCELLANEOUS APPLICATION F ILED BY THE REVENUE WAS REGISTERED AS M.A.NO.384/DEL/2010 WHICH WAS DISPOSED OF VIDE ORDER DATED 7.1.2011 BY RECALLING THE TRIBU NALS ORDER DATED 17.6.2009 TO THE EXTENT OF THE APPROVAL GRANTED BY THE COD. THE TRIBUNALS ORDER DATED 7.1.2011 READS AS UNDER:- ITA-474/DEL/2009 2 3. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE GONE THR OUGH THE COD APPROVAL DATED 30 TH APRIL, 2010. AS PER ITEM 14, THE CENTRAL BOARD OF DIRECT TAXES HAS BEEN PERMITTE D TO PURSUE THE SECOND APPEAL BEFORE THE ITAT IN RESPECT OF ALLOWABILITY OF DEPRECIATION @ 60% ON LAN/WAN, ATM ETC. THE REVENUE HAS NOT BEEN PERMITTED TO PURSUE THE AP PEAL IN RESPECT OF DISALLOWANCE DELETED BY THE LD.CIT(A) UNDER SECTION 14-A READ WITH RULE 8-D AND ALSO ADDITION O N ACCOUNT OF INTEREST FOR BROKEN PERIOD AMOUNTING TO RS.3,69,00,000/- HELD TO BE MATURITY OR INVESTME NT. IN VIEW OF THE ABOVE, WE RECALL THE ORDER DATED 17 TH JUNE, 2009 TO THE EXTENT OF THE APPROVAL GRANTED BY THE C OD. THE REGISTRY IS DIRECTED TO FIX THE CASE IN DUE COU RSE. 3. IN THE LIGHT OF THE TRIBUNALS ORDER DATED 7.1.2 011 RECALLING THE TRIBUNALS EARLIER ORDER DATED 17.6.2009 TO THE EXT ENT OF APPROVAL GRANTED BY THE COD, THE PRESENT APPEAL WAS RESTORED TO ITS FILE TO THAT EXTENT AND THEN THE MATTER CAME UP FOR HEARING ON 2 0.4.2011. 4. BOTH THE PARTIES WERE HEARD. 5. IN THE PRESENT APPEAL, WE ARE ONLY CONCERNED WIT H THE GROUND REGARDING ASSESSEES CLAIM OF DEPRECIATION ON LAN, WAN, ATM ETC. AT 60% AS AGAINST 25% ALLOWED BY THE AO. THE OTHER GR OUNDS OF APPEAL RAISED BY THE REVENUE IN THIS APPEAL ARE NOT MAINTA INABLE FOR WANT OF COD APPROVAL, AND THEY HAVE ALSO NOT BEEN RESTORED BACK FOR FRESH DISPOSAL WHILE RECALLING THE TRIBUNALS EARLIER ORD ER DATED 17.6.2009. 6. IN THE COURSE OF HEARING OF THIS APPEAL, THE LEA RNED COUNSEL FOR THE ASSESSEE RELIED UPON SEVERAL DECISIONS INCLUDIN G THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. BSE S RAJDHANI POWER LTD. IN ITA NO.1266/2010. THE HON'BLE DELHI HIGH C OURT IN THE AFORESAID CASE VIDE ORDER DATED 31.08.2010 HAS HELD THAT COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS PRINTERS, SCANN ERS AND SERVER ETC. FORMED AN INTERNAL PART OF THE COMPUTER SYSTEM AND, IN FACT, THE COMPUTER ACCESSORIES AND PERIPHERALS CANNOT BE USED WITHOUT THE ITA-474/DEL/2009 3 COMPUTER. THE HONBLE HIGH COURT THUS HELD THAT TH EY ARE THE PART OF THE COMPUTER SYSTEM AND ARE ENTITLED TO DEPRECIATIO N AT THE HIGHER RATE OF 60%. IN THE PRESENT CASE, WE ARE CONCERNED ABOUT THE DEPRECIATION ON LAN, WAN, ATM EQUIPMENTS. DURING T HE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS PURCHASED CERTAIN E QUIPMENTS IN THE FORM OF LAN, WAN, ATM ETC. APART FROM COMPUTER AND OTHER RELATED ITEMS. IT IS NOT IN DISPUTE THAT LAN, WAN, ATM EQU IPMENTS CANNOT BE USED WITHOUT THE COMPUTER. IN THE CASE OF DCIT VS. DATACRAFT INDIA LTD. (2010) 6 TAXMANN.COM 85 (MUM.-ITAT)(SB), THE ITAT SPECIAL BENCH OF MUMBAI HAS OBSERVED THAT ROUTER IS A HARDWARE DE VICE THAT ROUTES DATA FROM A LOCAL AREA NETWORK (LAN) TO ANOTHER NET WORK CONNECTION. IN THAT CASE, THE SPECIAL BENCH HAS TAKEN A VIEW TH AT ROUTERS AND SWITCHES IN THE CIRCUMSTANCES OF THAT CASE ARE TO B E INCLUDED IN THE BLOCK OF COMPUTER ENTITLED TO RATE OF DEPRECIATION AT 60%. SINCE THE LAN, WAN, ATM ETC. CANNOT FUNCTION WITHOUT A COMPUT ER, THEY CAN BE HELD TO BECOME A PART AND PARCEL OF COMPUTER AND AS LONG AS THEY ARE AN INTEGRAL PART OF THE COMPUTER, THEY ARE CLASSIFI ED AS A COMPUTER. 7. AUTOMATED TELLER MACHINE OR AUTOMATIC TELLER MAC HINE (ATM) IS THE COMPUTERIZED TELECOMMUNICATION DEVICE THAT ALLO WS BANKS CUSTOMERS TO ACCESS THE BANK AT PLACES OTHER THAN T HE NORMAL BANK WITHOUT HAVING TO TAKE THE TROUBLE TO GO TO THE BAN K IN PERSON AND COLLECT THE CASH AS IS DONE UNDER THE CONVENTIONAL METHOD OF WITHDRAWING MONEY FROM THE BANK. THE ATM MACHINES ARE COMPUTERIZED MACHINES WHICH NOT ONLY ALLOW THE CUST OMERS TO WITHDRAW MONEY BUT THEY CAN CHECK THE ACCOUNT BALAN CE, PAY BILLS, PURCHASE GOODS AND SERVICES, AND THEREFORE, UNLESS IT IS COMPUTERIZED AND LINKED WITH THE MAIN SERVER, IT IS NOT POSSIBLE TO OPERATE THE ATM. 8. THE LAN EQUIPMENT IS CALLED LOCAL AREA NETWORK E QUIPMENT WHICH IS PART OF THE COMPUTER HARDWARE WHICH ENABLE S FOR A GROUP OF COMPUTERS AND ASSOCIATED COMPUTER DEVICES TO SHARE THE DATA THROUGH ITA-474/DEL/2009 4 THIS DEVICE. IN OTHER WORDS, THE DATA IS STORED AT SINGLE COMPUTER PROCESSOR OR SERVER AND ALL THE OTHER COMPUTERS ARE CONNECTED THROUGH LOCAL AREA NETWORK EQUIPMENT AND THE SINGLE PROCESS OR CAN BE ACCESSED BY THE OTHER COMPUTERS AND THE DATA STORED IS USED BY THE OTHER COMPUTERS. 9. THE WAN EQUIPMENT IS CALLED WIDE AREA NETWORK, M EANING, TWO OR MORE LAN WOULD FORM A WAN I.E. TO COVER LARGE GE OGRAPHICAL AREA. THE COMPUTER NETWORK IS DONE BY USE OF WIDE AREA NE TWORK EQUIPMENT. THUS, THIS IS ALSO AN INTEGRAL PART OF COMPUTER HARDWARE. 10. IN THIS CONNECTION, A REFERENCE IS ALSO INVITED TO THE INFORMATION TECHNOLOGY ACT, 2000 WHEREIN SECTION 2(I) DEFINES T HE TERM COMPUTERS WHICH ALSO INCLUDES COMPUTER NETWORK. THE TERM COMPUTER NETWORK MEANS THE INTERCONNECTION OF ONE OR MORE COMPUTERS THROUGH THE USE OF SATELLITE, MICROWAVE, TERRESTRIAL LINE OR OTHER COMMUNICATION MEDIA, AND TERMINALS OR A COMPL EX CONSISTING OF TWO OR MORE INTERCONNECTED COMPUTERS WHETHER OR NOT THE INTERCONNECTION IS CONTINUOUSLY MAINTAINED. FROM T HIS ANGLE ALSO, LAN, WAN AND ATM WOULD UNDOUBTEDLY FORM A PART OF COMPUT ER. 11. IN THE LIGHT OF THE VIEW WE HAVE TAKEN ABOVE, W E DIRECT THE AO TO ALLOW DEPRECIATION AT THE RATE OF 60% ON LAN, WAN A ND ATM EQUIPMENTS. WE ORDER ACCORDINGLY. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSION OF HEARING ON 20 TH APRIL, 2011. SD/- SD/- (K.D.RANJAN (K.D.RANJAN (K.D.RANJAN (K.D.RANJAN) )) ) (C.L.SETHI (C.L.SETHI (C.L.SETHI (C.L.SETHI) )) ) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 20.04.2011. VK. ITA-474/DEL/2009 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR