ACIT, Muzaffarnagar V. M/s. Muzaffanagar Distt. Co. Bank Ltd., Muzaffarnagar

ITA 4996/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66030 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 21-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA NO. 4996/DEL/2012 ASSESSMENT YEAR: 2009-10 ACIT, CIRCLE 1, MUZAFFARNAGAR. VS. MUZAFFARNAGAR DISTT. CO. BANK LTD., COURT ROAD, MUZAFFARNAGAR. PAN NO. AAAAM4327P (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SATPAL SINGH, SR. DR RESPONDENT BY: SH. ANIL GARG, FCA O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A) DATED 26/06/2012 FOR A.Y. 2009-10. 2. THE ASSESSEE IS A COOPERATIVE BANK. IT HAD FILE D ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 17,58,69,540/-. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD PURCHASED COMPUTERS, SERVERS AND OTHER COMPUTER RELATED ACCESSORIES ON 14/03/2009 FOR RS. 3,30,86,4 03/- AND HAD CLAIMED DEPRECIATION TO THE EXTENT OF RS. 99,25,921/-. HE REQUIRED THE ASSESSEE TO ITA NO. 4996/D/2012 2 EXPLAIN THE PURPOSE OF PURCHASING THESE ARTICLES IN SUCH A HUGE QUANTITY AND WHEN WAS THE ADDITIONS TO THE COMPUTERS AS FIXED AS SET WAS MADE. FURTHER HE REQUIRED THE ASSESSEE TO EXPLAIN THAT IF IT HAD BEEN MADE TO COMPUTERIZE THE BRANCH/BRANCHES, WHAT WAS THE DATE ON WHICH THE COMPUTERS WERE PUT TO USE. HE ALSO REQUIRED THE ASSESSEE TO FURNISH THE EVIDENCE OF HAVING USED THE COMPUTERS. FURTHER, HE REQUIRED THE ASSESSEE T O FURNISH THE DETAILS IN CASE ANY CONTRACTOR HAD BEEN HIRED FOR INSTALLATION OF COMPUTERS AND TO FILE THE COPY OF CONTRACT IF THAT WAS SO. THE ASSESSEE S REPLY VIDE ITS LETTER DATED 07/12/2011 WAS AS UNDER: - AS REGARDS ADDITION IN COMPUTER AS FIXED ASSETS, THE BANK STARTS COMPUTERIZATION OF ITS BRANCHES AS PER POLICY AND GUIDELINES FROM REGISTRAR OF CO-OPERATIVE SAHKA RI SANGH LTD., LUCKNOW. THE ORDER WAS PLACED TO U.P. UPBHOKTA SAHAKARI SANGH, LUCKNOW, WHICH WAS NOMINATED BY GOVT. OF U.P. AS NODAL AGENCY. THE NO DAL AGENCY WAS ENTRUSTED TO FINALIZED THE SPECIFICATION , RATES WITH THE VENDORS. THEY SUPPLY HARDWARE AND SOFTWAR E FOR RUNNING THE BANKING TRANSACTIONS. THE COPY OF BILL WAS SUBMITTED TO YOU ALONGWITH OUR REPLY DATED 13.0 9.11. THE VENDOR SUPPLIES TO THE BRANCHES THE SYSTEM INCL UDING SOFTWARE ON 14.03.09 AND THE SAME WAS INSTALLED BY THEM ON SAME DAY. NO OTHER CONTRACTOR WAS HIRED FOR THE INSTALLATION. THE SYSTEM WAS PUT TO USE NEXT DAY A FTER THE INSTALLATION OF THE SYSTEM I.E. 15.03.2009. THERE IS NO OTHER TIME REQUIRED TO PUT TO USE IN CASE OF THE CO MPUTER AFTER INSTALLATION. THE TAX AUDIT REPORT ALSO SHOW S THAT ITA NO. 4996/D/2012 3 THE ADDITION WAS MADE AFTER 01.10.08 AND DEPRECIATI ON HAS BEEN CALCULATED FOR 6 MONTHS AS PER INCOME TAX RULES. THE BILLS OF SUPPLY OF COMPUTER SHOW THAT HARDWARE AND SOFTWARE HAS BEEN SUPPLIED BY THEM. SOFTWARE FOR BANKING IS APPLICATION SOFTWARE FOR TBA AND M.S. OF FICE. WE ARE ENCLOSING THE COPY OF LETTER OF REGISTRAR COOPERATIVE SOCIETIES, LUCKNOW FOR YOUR READY REFERENCE. 3. IN REPLY TO FURTHER QUERY OF AO, THE ASSESSEE SU BMITTED VIDE ITS LETTER DATED 13/12/2011 AS UNDER: - AS REGARDS COMPUTERIZATION OF THE BRANCHES OF THE BANK, WE WOULD LIKE TO INFORM YOU THAT THE COMPUTERIZATION IN BANK IS TO BE MADE IN PHASES. TH E FIRST PHASE IS TO COMPUTERIZE THE DEPOSITS ACCOUNTS, I.E. SAVING BANK ACCOUNT, FDR ACCOUNT AND RD ACCOUNT. NEXT PHA SE IS TO COMPUTERIZE THE ADVANCES TO THE CUSTOMERS AND FINAL PHASE IS TO CBS THE BRANCHES AND OTHER AREA I.E. DD AND OTHER ACTIVITY. WE ARE IN THE FIRST PHASE DURING T HE YEAR. THE INFORMATION ASKED BY YOU ARE AS UNDER: 1. NO. OF BRANCHES DURING THE YEAR UNDER CONSIDERATION 32 BRANCHES WERE COMPUTERIZE. 2. DISTANCE BETWEEN THE BRANCHES: THE LIST OF DISTANCE FROM H.O. MUZAFFARNAGAR TO BRANCHES IS ENCLOSED (ANNEX.1) 3. THE BRANCHES ARE NOT CONNECTED WITH INTERNET IT IS THE LAST STAGE OF COMPUTERIZATION. HOWEVER THE ITA NO. 4996/D/2012 4 BRANCHES ARE TBA, AND CLIENT AND SERVER WERE INSTALLED. THERE IS LAN MODE IN THE BRANCHES. 4. THE BRANCHES ARE NOT INTER-CONNECTED DURING THE YEAR. ONLY SERVER IS CONNECTED WITH CLIENT PC AS MENTIONED ABOVE. 5. THERE WAS 32 SERVERS I.E. ONE FOR EACH BRANCH AND 160 NODES I.E. CLIENT PC. THE BRANCH WISE LIST WAS ALREADY SUBMITTED TO YOU ON 13.09.11. 6. THE BRANCHES ARE COMPUTERIZING INDIVIDUALLY AND SERVER IS CONNECTED WITH THE NODES/CLIENT PC. THE SOFTWARE USED IN TBA AND OPERATING SYSTEM IN WINDOWS. THE SAME HAS ALREADY BEEN INFORMED TO YOU IN OUR REPLY DATED 07.12.11. BRANCH WISE LIST OF SOFTWARE AND HARDWARE HAS ALREADY BEEN GIVEN IN THE COPY OF BILL SUBMITTED ALONG WITH OUR REPLY DATED 13/09/11. 7. THE EVIDENCE OF INSTALLATION IS COPY OF CHALLAN OF SUPPLY OF THE SYSTEM AND SOFTWARE WHICH HAS BEEN RECEIVED BY THE BRANCHES AFTER INSTALLATION AND SUPPLIER TAKEN AS PROOF RECEIPT OF SUPPLY OF SYSTEM S TO THE BRANCHES. MOST OF THEM HAVE BEEN INSTALLED UP TO 17.03.2009. THE BRANCHES STARTED DATA FEEDING SO THAT THE TRANSACTION WITH CUSTOMERS CAN BE MADE AT THE EARLIEST. HENCE ALL THE SYSTEM WAS PUT TO USE UP TO 17.03.11 AS PER RECEIPTS BY THE BRANCHES MANAGERS AT THE CHALLAN. WE ARE ALSO ENCLOSING THE COPY OF LETTER FROM SOME BRANCHES TO HEAD OFFICE ABOUT INSTALLATION OF THE SYSTEM AND SOFTWARE FOR YOUR KIND PERUSAL WHICH SHOWS THAT ITA NO. 4996/D/2012 5 THE SYSTEM WERE PUT TO USE DURING MARCH, 2009. REASON BEING THE ASSESSEE CLAIMED DEPRECIATION FOR 6 MONTHS ON THE ADDITION OF COMPUTERS AS PER INCOME TAX RULES. (ANNEX. II AND III). 8. NO TRANSPORTATION EXPENSES WERE PAID BY THE ASSESSEE. THE SUPPLY WAS F.O.R. AND THE TRANSPORTATION COST HAS BEEN BORN BY THE SUPPLIER HENCE THE ASSESSEE DID NOT KEEP THE COPY OF GR WITH US. HOWEVER, THE SUPPLIER TAKEN THE RECEIPT ON THE CHALLAN FROM THE BRANCHES AFTER INSTALLATION WHICH HAS BEEN SUBMITTED TO YOU AS MENTIONED IN PARA 7 ABOVE (ANNEX. II). THE SUPPLY WAS MADE BY U.P. UPBHOKTA SAHKARI SANGH LTD., LUCKNOW, WHICH IS A U.P. GOVT. UNDERTAKING. 4. THE AO, HOWEVER, TAKING INTO CONSIDERATION THE D ISTANCES BETWEEN THE BRANCHES AND HEAD OFFICE AND ALSO WITH REFERENCE TO THE DATE OF RECEIPT OF GOODS, CONCLUDED THAT ONLY IN SOME OF THE BRANCHES SOFTWARE INSTALLATION HAD BEEN COMPLETED. HE DISALLOWED THE ASSESSEES CLAIM , INTER-ALIA, OBSERVING AS UNDER: - IT IS PERTINENT TO MENTION THAT ONLY INSTALLATION OF THE SOFTWARE IS NOT SUFFICIENT. THE COMPUTERS HAVE TO BE OPERATIONAL AND THE WORK HAS NECESSARILY TO BE STARTED. AS EVERYONE IS AWARE WHENEVER ANY NEW SYSTEM COMES INTO BEING THE TRAINING IS PROVIDED TO THE STAFF, THE TEST REPORTS ARE GENERATED TO SEE ACCURACY OF THE GENERATION OF DATA, TO SEE THE IMPLEMENTATION OF THE COMPUTERIZATION. ITA NO. 4996/D/2012 6 NO SUCH REPORT HAS BEEN FURNISHED TO EVIDENCE THAT THE COMPUTERS WERE PUT TO USE BY 31 ST MARCH. NO COPY OF CONTRACT WITH U.P. UPBHOKTA SAHKARI SANGH, LUCKNOW HAS BEEN FURNISHED DESPITE A SPECIFIC QUERY RAISED ON 28.11.2011 VIDE WHICH COPY OF CONTRACT WAS ASKED FOR. 5. LD. CIT(A) ALLOWED THE ASSESSEES APPEAL FOR THE FOLLOWING REASONS: - I) THE AO HAD NOT DISPUTED THE PURCHASE AND INSTAL LATION OF COMPUTERS PARTICULARLY BECAUSE SHE HAD ACCEPTED THE CERTIFICA TES FILED BY BRANCHES; II) INSTALLATION REPORTS OF THE BRANCH MANAGERS WER E SUBMITTED BEFORE THE AO TO CONFIRM THAT THE DATA FEEDING WORK HAD ST ARTED IN MOST OF THE CASES FROM 20/03/2009 TO 31/03/2009. THIS IMPL IED THAT THE ASSETS WERE ALREADY INSTALLED AND READY FOR USE; III) THE ASSESSEE FILED COPY OF TRIAL BALANCE AS O N 31/03/2009 OF SOME OF THE BRANCHES IN SUPPORT OF ITS CONTENTION; IV) THE ASSESSEE HAD ESTABLISHED THAT THE COMPUTER S WERE INSTALLED DURING THE RELEVANT ACCOUNTING PERIOD ITSELF BY FUR NISHING COPIES OF BILLS FOR SUPPLY OF HARDWARE AND SOFTWARE OF COMPUT ERS, COPY OF LETTERS FROM REGISTRAR OF COOPERATIVE SOCIETIES, LU CKNOW, COPY OF CHALLANS FOR SUPPLY OF COMPUTERS, CONFIRMATION OF C OMPUTER INSTALLATION FROM THE BRANCHES ETC., WHICH HAD SHIF TED THE ONUS FROM ITA NO. 4996/D/2012 7 ASSESSEE ONTO THE AO, BUT AO HAD NOT DISCHARGED HER ONUS TO SHOW ANY DISCREPANCY/FALSITY IN SUCH EVIDENCES. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. THE FINDINGS OF L D. CIT(A), AS NOTED EARLIER, ON THE BASIS OF WHICH HE HAS ACCEPTED THE ASSESSEE S CONTENTION, HAVE BEEN CONTROVERTED BY THE DEPARTMENT. THE EVIDENCE ON RE CORD IS SUFFICIENT TO ARRIVE AT A CONCLUSION THAT THE COMPUTERS PURCHASED ON 14/03/2009 WERE DULY INSTALLED AT DIFFERENT BRANCHES AS PER THE CER TIFICATE RECEIVED FROM BRANCHES AND THE TRIAL BALANCE HAD ALSO BEEN PREPAR ED FROM THE COMPUTER. THEREFORE, THERE IS NO EVIDENCE TO HOLD THAT THE CO MPUTERS WERE NOT PUT TO USE. WE, ACCORDINGLY, CONFIRM THE ORDER OF LD. CIT (A) ON THIS ISSUE. 7. IN THE RESULT, THE DEPARTMENTS APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.12.2012 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 14.12.2012 *KAVITA ITA NO. 4996/D/2012 8 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR