M/s Globerian India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5215/DEL/2011

• Counselvise Citation: 521520114 RSA 2011
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 23-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C DELHI) BEFORE SHRI S.V. MEHROTRA AND SHRI A.D. JAIN ITA NO. 5215(DEL)2011 ASSESSMENT YEAR: 2007-08 M/S.GLOBERIAN INDIA PVT. LTD. DY.COMMISSIO NER OF INCOME TAX, C-511, CHITRANJAN PARK, V. CIR. 12(1) , NEW DELHI. NEW DELHI-110019. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAHUL KHARE , ADVOCATE RESPONDENT BY: SHRI PIYUSH JAIN, DR ORDER PER A.D. JAIN, J.M . THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2 007-08, RAISING THE FOLLOWING GROUNDS:- 1. THE LEARNED DCIT ERRED IN FACT AND IN LAW IN MA KING AS DISALLOWANCE OF ` 1,14,36,265/- ON ACCOUNT OF DEPRECIATION ON COMPUTERS. 2. THE LEARNED DCIT ERRED IN FACT AND IN LAW IN M AKING AN ADDITION OF ` 4,12,04,919/- BEING A DIFFERENCE IN ARMS LENGTH PRI CE. ITA 5215(DEL)2011 2 2. THE ASSESSEES OBJECTIONS AGAINST THE DRAFT ASSE SSMENT ORDER DATED 20.1.2011 PASSED U/S 144 C OF THE I.T. ACT ON 24.10 .2011 BY THE ACIT, WERE REJECTED BY THE DRP BY PASSING THE FOLLOWING SHORT ORDER DATED 2.8.2011:- DIRECTIONS U/S 144C(5) OF THE INCOME TAX ACT, 196 1 THE PRESENT PROCEEDINGS BEFORE THE DISPUTE RESOLUTI ON PANEL (DRP/ THE PANEL) ARE WITH REFERENCE TO THE DRAFT ASSESSM ENT ORDER PREPARED BY THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 12( 1), NEW DELHI (AO) FOR THE A.Y. 2007-08 IN RESPECT OF GLOBERIAN INDIA PVT. LTD. THE DRAFT ORDER U/S 144C(1) OF THE INCOME TAX ACT, 1961 (THE ACT) WAS FORWARDED TO THE ASSESSEE 29 TH DECEMBER, 2010 IN RELATION TO THE ASSESSMENT ORDER PROPOSED TO BE PASSED BY THE AO U/ S 143(3). 1.1 THE ASSESSEE HAS FILED OBJECTIONS TO THE DRAFT ASSESSMENT ORDER IN FORM NO. 35A ON 31 ST JANUARY, 2011, WHICH ARE THE SUBJECT MATTER OF CONSIDERATION BEFORE THE PANEL. 1.2 THE DRP, SET UP UNDER CHAPTER XIV RELATING TO P ROCEDURE FOR ASSESSMENT, IS REQUIRED TO ISSUE DIRECTIONS U/S 144 C(5) FOR THE GUIDANCE OF AO FOR ENABLING HIM TO COMPLETE ASSESSM ENT ORDER. BEFORE DOING SO, THE DRP HAS TO CONSIDER THE CONTEN TIONS OF THE DEPARTMENT AS WELL AS THE OBJECTIONS AND SUBMISSION S FILED BY THE ASSESSEE. HENCE, THE PRESENT PROCEEDINGS IN ACCORD ANCE WITH CIRCULAR NO. 5 OF 2010 DATED 03.06.2010 OF CBDT. AS INDICATED ABOVE, THE DRAFT ORDER WAS SERVED ON T HE ASSESSEE ON 29.12.2010. AS PER SECTION 144C(2) OF THE I.T. ACT , 1961, THE DRAFT OBJECTION, IF ANY, WAS TO BE FILED WITH THE DRP WIT HIN 30 DAYS OF RECEIPT OF THE DRAFT ORDER. IN THIS CASE THE LAST DATE TO FILE OBJECTION WAS 28.01.2011. BUT THE PRESENT OBJECTIONS WERE FI LED ON 31.01.2011 WHICH IS OUT OF TIME. AS THE DRP HAS NO POWERS TO CONDONE DELAY, THE OBJECTIONS FILED ARE TREATED AS REJECTED. ITA 5215(DEL)2011 3 SD/- SD/- SD/- (RASHMI SAXENA SAHNI) (PROMILA BHARDWAJ) (GOPAL MU KHERJEE) MEMBER MEMBER MEMBER DRP-I, NEW DELHI DRP-I, NEW DELHI DRP-I,NEW DELHI 3. FROM THE ABOVE ORDER OF THE DRP, IT IS SEEN THA T THE DRP REJECTED THE ASSESSEES OBJECTIONS AGAINST THE DRAFT ASSESSMENT ORDER, OBSERVING THAT THE ASSESSEE HAD FILED ITS OBJECTIONS ON 31.1.2011; THA T AS PER THE PROVISIONS OF SECTION 144 C(2) OF THE ACT, THE LIMITATION FOR FI LING SUCH OBJECTIONS WAS 30 DAYS FROM THE RECEIPT OF THE DRAFT ASSESSMENT ORDER BY THE ASSESSEE; THAT THE LAST DATE OF FILING THE OBJECTIONS WAS 28.1.2011 AN D THEREFORE, THE OBJECTION WAS TIME BARRED; THAT THE DRP HAVING NO POWER TO CO NDONE THE DELAY, THE OBJECTION WAS BEING REJECTED. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE SAME TWO ISSUES AS THOSE INVOLVED IN THE PRESENT YE AR, WERE ALSO THE SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL IN THE IMMEDIA TELY PRECEDING ASSESSMENT YEAR, I.E., ASSESSMENT YEAR 2006-07; THA T THE TRIBUNAL, VIDE ORDER DATED 24.10.2011 (COPY PLACED BEFORE US AT PAGES 91 TO 95 OF THE ASSESSEES PAPER BOOK , APB FOR SHORT), HAS RESTORED BOTH TH ESE ISSUES TO THE FILE OF THE AO FOR FRESH ADJUDICATION AFTER GRANTING REASON ABLE OPPORTUNITY OF HEARING TO THE ASSESSEE; THAT IN THE YEAR UNDER CON SIDERATION, AS FOR ASSESSMENT YEAR 2006-07, THE AO, WHILE DECIDING BOT H THESE ISSUES, DID NOT ITA 5215(DEL)2011 4 AFFORD ANY PROPER OPPORTUNITY OF HEARING TO THE ASS ESSEE; THAT THE DECISION OF THE AO ON THE MERITS OF THESE ISSUES FOR THE ASSESS MENT YEAR 2006-07 WILL HAVE A DIRECT BEARING ON THE MERITS OF THESE ISSUES FOR THE YEAR UNDER CONSIDERATION; THAT THEREFORE, THE MATTER MAY BE DI RECTED TO THE FILE OF THE AO TO BE DECIDED AFRESH, AS DONE BY THE TRIBUNAL FO R THE ASSESSMENT YEAR 2006-07. 5. THE LD. DR, ON THE OTHER HAND, HAS CONTENDED THA T THE ASSESSEE PREFERRED OBJECTIONS AGAINST THE DRAFT ASSESSMENT O RDER, WHICH OBJECTIONS HAVE BEEN REJECTED BY THE DRP AS BEING TIME BARRED; THAT THEREFORE, THE ASSESSEE CANNOT RACK UP THESE ISSUES NOW BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. THE DRP HAS REJECTED THE OBJECTIONS RAISED BY THE A SSESSEE AGAINST THE DRAFT ASSESSMENT ORDER, ON THE ISSUE OF LIMITATION, SAYIN G THAT THE DRP HAS NO POWER TO CONDONE THE DELAY. AS SUCH, THE MERITS O F THESE ISSUES HAVE NOT BEEN EITHER ADVERTED TO OR ADJUDICATED UPON BY THE DRP. HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT IN THE PRESENT PROCEEDI NGS BEFORE US, THE ASSESSEE IS ENTITLED TO CONTEST THE MERITS OF THE ISSUES INV OLVED. 7. FOR THE ASSESSMENT YEAR 2006-07, I.E., THE IMMED IATELY PRECEDING ASSESSMENT YEAR, IT IS SEEN, THE TRIBUNAL HAS REMIT TED THE MATTER CONCERNING BOTH THE ISSUES WHICH ARE COMMON FOR THE YEAR UNDER CONSIDERATION ALSO, TO ITA 5215(DEL)2011 5 THE FILE OF THE AO TO BE DECIDED AFRESH ON AFFORDIN G A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE DECISION OF THE A O ON THESE ISSUES FOR THE ASSESSMENT YEAR 2006-07, WOULD OBVIOUSLY HAVE A DIR ECT BEARING ON THE DECISION OF THESE ISSUES FOR THE YEAR UNDER CONSIDE RATION, AS WELL. 8. APROPOS THE ISSUE OF EXCESS CLAIM OF DEPRECIATIO N, IT IS SEEN, THAT THE ASSESSEE HAD CLAIMED DEPRECIATION @ 60% ON CERTAIN ASSETS WHICH THE ASSESSEE CLAIMED TO BE COMPUTED. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO DISALLOWED THE CLAIM OF THE ASSESSEE, O BSERVING THAT THE ITEMS ON WHICH THE DEPRECIATION HAS BEEN CLAIMED DID NOT FAL L UNDER THE CATEGORY OF COMPUTERS. AS TO WHAT THESE ITEMS ARE, HAS NOWHER E BEEN DELINEATED BY THE AO IN PARA 3 OF THE ASSESSMENT ORDER UNDER NAME O F THE ASSET, HAS BEEN RECORDING DIFFERENT PERIPHERALS. THE TRIBUNAL, FOR THE ASSESSMENT YEAR 2006-07 (SUPRA), HAS HELD THAT COMPUTER PERIPHERALS ARE NOT COMPUTERS. NOW, COMPUTER PERIPHERALS ARE ENTITLED TO DEDUCTION @ 60%, AS HELD BY THE TRIBUNAL (SUPRA) FOR THE ASSESSMENT YEAR 2006-07, I N KEEPING WITH THE DECISION OF THE HONBLE DELHI HIGH COURT DATED 31.0 8.2010 IN THE CASE OF BSES RAJDHANI POWERS LTD., AS THEY CANNOT BE USED WITHOUT THE COMPUTER AND THAT THUS FORM AN INTEGRAL PART OF THE COMPUTER SYSTEM. THE TRIBUNAL FURTHER HELD THAT THE AO HAD NOT DISCUSSED AS TO WH ETHER THE COMPUTER PERIPHERALS COULD OR COULD NOT BE USED WITH THE COM PUTERS. IT WAS FOR THIS ITA 5215(DEL)2011 6 REASON THAT THE ISSUE WAS REMITTED TO THE FILE OF T HE AO. IN THE PRESENT CASE TOO, THE AO HAS NOWHERE MADE ANY DISCUSSION AS TO W HETHER THE COMPUTER PERIPHERALS CANNOT BE USED WITHOUT THE COMPUTER. THEREFORE, AS FOR THE ASSESSMENT YEAR 2006-07, THIS ISSUE IS REMITTED TO THE FILE OF THE AO TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW ON AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. SO FAR AS REGARDS THE ISSUE OF DIFFERENCE IN ARM S LENGTH PRICE, FOR THE ASSESSMENT YEAR 2006-07, THE MATTER IS REMITTED TO THE AO, THE DRP HAS APPROVED THE DRAFT ASSESSMENT ORDER CONSIDERING THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE AND THEIR VALIDITY. HEREIN AL SO, SIMILAR IS THE POSITION THOUGH FOR THE YEAR UNDER CONSIDERATION, THE OBJECT IONS OF THE ASSESSEE WERE REJECTED FOR WANT OF LIMITATION, WHICH WAS NOT THE CASE FOR THE ASSESSMENT YEAR 2006-07. BE THAT AS IT MAY, THE FACT REMAINS THAT THE SUBMISSIONS OF THE ASSESSEE WITH REGARD TO THIS ISSUE WERE NOT GONE IN TO, MUCH LESS ADJUDICATED UPON. BEING SEIZED OF THE MATTER BY WAY OF GROUND NO.2 RAISED BY THE ASSESSEE, WE DEEM IT APPROPRIATE TO REMIT THIS MATT ER ALSO TO THE FILE OF THE AO TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW ON P ROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE AO SHAL L, NO DOUBT, KEEP IN CONSIDERATION, BESIDES FACTS FOR THE YEAR UNDER CON SIDERATION, THE DECISION TO BE ARRIVED AT ON BOTH THE ISSUES, FOR THE ASSESSMEN T YEAR 2006-07. ITA 5215(DEL)2011 7 10. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.03.2012. SD/- SD/- (S.V. MEHROTRA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15.03.2012 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER ASSISTANT REGISTRAR