MACAWBER ENGINEERING SYSTEMS (I) P.LTD, MUMBAI V. ACIT 10(3), MUMBAI

ITA 5312/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8755 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 13-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V C SHAH
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 5312/MUM/2011 (ASSESSMENT YEAR: 2008-09) MACAWBER ENGINEERING SYSTEM ACIT, CIRCLE 8-1 (I) PVT. LTD., 130-131 HINDUSTAN ROOM NO. 451, AAYA KAR BHAVAN KOHINOOR COMPLEX, LBS MARG VS. M.K. ROAD, MUMBAI 400020 VIKHROLI (W), MUMBAI 400083 PAN - AAACM 4275 G APPELLANT RESPONDENT APPELLANT BY: SHRI V.C. SHAH RESPONDENT BY: SHRI SANDEEP GOEL DATE OF HEARING: 18.09.2012 DATE OF PRONOUNCEMENT: 18.09.2012 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23.05.2011 PASSED BY THE CIT(A)-22, MUMBAI AND IT P ERTAINS TO A.Y. 2008-09. 2. THE FACTS CONCERNING THE ONLY ISSUE IN DISPUTE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PNEUMATIC CON VEYING SYSTEMS. THE COMPANY IS LOCATED AT AMBARNATH, BEYOND KALYAN WHER EIN THERE IS FREQUENT POWER FAILURES MAKING IT IMPOSSIBLE TO CARRY ON ACC OUNTS, DESIGNS AND OTHER TECHNICAL WORKS DEPENDENT ON COMPUTERS. ACCORDING T O THE ASSESSEE COMPANY USE OF UPS ALONG WITH THE COMPUTER WAS A NE CESSITY SO AS TO OBTAIN TECHNICAL INFORMATION UNINTERRUPTEDLY. UPS I S LIKE INVERTER SO AS TO PROTECT FROM SUDDEN POWER FAILURES BY PROVIDING IMM EDIATE POWER BACKUP. ASSESSEE CLAIMED THAT THE UPS HAS TO BE TREATED AS AN INTEGRAL PART OF THE COMPUTER AND HENCE DEPRECIATION PROVIDED TO THE COM PUTER TO BE EXTENDED ITA NO. 5312/MUM/2011 MACAWBER ENGINEERING SYSTEM (I) PVT. LTD. 2 TO THE UPS ALSO. THE AO AS WELL AS THE CIT(A) REJEC TED THE CONTENTION OF THE ASSESSEE. HENCE ASSESSEE COMPANY IS IN APPEAL BEFOR E US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ITAT D SPECIAL BENCH MUMBAI IN THE CASE OF DATACRAFT INDIA LTD. (9 ITR 712) OBSERVED THAT THE EXPRESSION COMPUTER HAS NOT BEE N DEFINED IN THE INCOME TAX ACT OR RULES AND HENCE ANY DEVICE, WHICH IS ESS ENTIAL TO RUN THE COMPUTER, HAS TO BE TREATED AS PART OF THE COMPUTER AND ENTITLED TO THE SAME RATE OF DEPRECIATION AS THAT OF THE COMPUTER. 4. ON THE OTHER HAND, THE LEARNED D.R. SUBMITTED THAT UPS CAN BE USED WITH ANY GADGET FOR UNINTERRUPTED POWER SUPPLY AND IT CANNOT BE TREATED AS PART OF COMPUTER. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE PLEA OF THE ASSESSEE THAT THERE WAS POW ER FAILURE IN AMBARNATH AND IN ORDER TO RUN THE COMPUTER EFFECTIVELY UPS IS AN ESSENTIAL INGREDIENT IS NOT DISPUTED BY THE AO. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE SAID UPS HAS BEEN USED FOR ANY OTHER PURPOSE OTHER THAN CONNECTING THE SAME TO THE COMPUTER. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE AND ALSO IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH (SUP RA) WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION ON UPS AT THE RATE AT WHICH DEPRECIATION IS AVAILABLE TO COMPUTERS. THE AO IS D IRECTED ACCORDINGLY. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH SEPTEMBER 2012. SD/- SD/- (RAJENDRA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 18 TH SEPTEMBER 2012 ITA NO. 5312/MUM/2011 MACAWBER ENGINEERING SYSTEM (I) PVT. LTD. 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 22, MUMBAI 4. THE CIT 10, MUMBAI CITY 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.