TRENT HYPERMARKET LTD, MUMBAI V. DCIT 1(3), MUMBAI

ITA 5493/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9597 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 02-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Depreciation; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 5493 / MUM/20 1 5 ( ASSESSMENT YEAR : 2012 - 13 ) M/S. TRENT HYPERMARKET LTD., TAJ BUILDING, 2 ND FLOOR D.N. ROAD, FORT, MUMBAI 400 001 V S. DCIT 1(3) AAYAKAR BHAWAN MUMBAI PAN/GIR NO. AACCT9803D APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI NITESH JOSHI REVENUE BY SHRI V. JUSTIN DATE OF HEARING 06 / 09 /201 7 DATE OF PRONOUNCEME NT 13 / 09 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 3, MUMBAI DATED 24/09/2015 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. FOLLOWING TWO GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: - I . THE LD. CIT(A) ERRED IN CONFIRMING ASSESSING OFFICER [A.O.] ORDER IN CLASSIFYING PRINTERS, SCANNERS & OTHER COMPUTER ACCESSORIES UNDER BLOCK OF PLANT & MACHINERY ELIGIBLE FOR DEPRECIATION @ 15% AND NOT UNDER THE BLOCK OF COMPUTERS ELIGIBLE FOR DEPRECIAT ION @ 60% THEREBY DISALLOWING THE DIFFERENTIAL DEPRECIATION OF RS 67,29,610/ - . 2} DISALLOWANCE U/S 14A - RS.2,01,61,927/ - A) THE ID. CIT(A) ERRED IN CONFIRMING AO'S ORDER, WITHOUT GIVING ANY REASONS & HAVING ANY DISCUSSION, DISALLOWANCE OF RS.1,90,90,917/ - TOWARDS INTEREST EXPENSES & RS.10,71,010/ - TOWARDS ADMINISTRATIVE EXPENSES UNDER SECTION 14AOF THE ACT. ITA NO. 5493/MUM/2015 M/S. TRENT HYPERMARKET LTD., 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF RETAILING LIFESTYLE PRODUCTS. DURING THE COURSE OF SCRUTINY ASSESSMENT, AO DISALLOWED ASSESSEES CLAIM OF DEPRECIATION OF RS.67,29,610/ - IN RESPECT OF COMPUTER ACCESSORIES PURCHASED BY IT. THE AO OBSERVED THAT ASSE SSEE HAS CLAIMED DEPRECIATION ON PRINTERS, SCANNERS AND OTHER COMPUTER ACCESSORIES WHICH IS ELIGIBLE FOR DEPRECIATION AT 15% AND NOT UNDER BLOCK OF COMPUTERS ELIGIBLE FOR DEPRECIATION AT 60%. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE DISALLOWANCE. 4. LEARNED AR PLACED ON RECORD THE ORDER OF THE ITAT SPECIAL BENCH IN CASE OF DATA CRAFT INDIA LTD., 40 SOT 295 AND THE DECISION OF DELHI HIGH COURT IN CASE OF BSES YAMUNA POWERS LTD., 358 ITR 47 AND CONTENDED THAT ISSUE IS SQUARELY COVERED BY THESE DECISIONS. 5. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND TH AT ISSUE IS SQUARELY COVERED BY THE DECISION OF DELHI HIGH COURT IN THE CASE OF BSES YAMUNA POWERS LTD., WHEREIN IT WAS HELD THAT COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS PRINTERS, SCANNERS AND CABLES ETC., FORM AN INTEGRAL PART OF THE COMPUTER SYSTEM. IT WAS FURTHER OBSERV ED THAT THE COMPUTER ACCESSORIES AND PERIPHERALS CANNOT BE USED WITHOUT THE COMPUTER, CONSEQUENTLY THEY ARE PART OF THE COMPUTER SYSTEM AND ELIGIBLE FOR DEPRECIATION AT A HIGH RATE OF 60%. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND F OUND THAT AO H AS ALLOWED DEPRECIATION AT 15% ON THE COMPUTER PERIPHERALS ON THE PLEA THAT THESE ITA NO. 5493/MUM/2015 M/S. TRENT HYPERMARKET LTD., 3 PERIPHERALS CANNOT BE CLASSIFIED UNDER COMPUTER. THE AO DID NOT ACCEPT THE SUBMISSIONS AND HELD THAT PRINTER, SCANNERS AND OTHER GADGETS FALLS UNDER THE BLOCK O F OFFICE EQUIPMENT AND NOT UNDER THE BLOCK OF COMPUTERS. AO ADDED BACK DEPRECIATION AMOUNTING TO RS.67,29,610/ - TO THE RETURNED INCOME. AS PER OUR CONSIDERED VIEW WHEN COMPUTER ACCESSORIES IS USED AS AN INPUT OUTPUT DEVICE IN THE COMPUTER IT CAN BE CONSI DERED AS A PART OF THE COMPUTER SYSTEM AND HENCE, WOULD FALL UNDER THE BLOCK COMPUTER. THE OUTPUT DEVICES SUCH AS PRINTERS, SCANNERS AND OTHER GADGETS ARE COMPUTER PERIPHERALS AND FORM ESSENTIAL PARTS OF PC. THESE OUTPUT DEVICES CANNOT WORK IN ISOLATION AND COMPUTER SYSTEM CANNOT WORK WITHOUT AN OUTPUT DEVICE. THE ISSUE IS SQUARELY COVERED BY THE DECISION OF DELHI HIGH COURT. RESPECTFULLY FOLLOWING THE ORDER OF THE DELHI HIGH COURT, WE DIRECT THE AO TO ALLOW DEPRECIATION AT 60% OF COMPUTER PERIPHERALS. WE DIRECT ACCORDINGLY. 7. NEXT GRIEVANCE RELATES TO DISALLOWANCE MADE U/S.14A. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ASSESSEE HAS MADE LONG TERM INVESTMENT IN JOINT VENTURE. THE INVESTMENT WAS MADE WITH THE INTENTION TO HAVE SUBSTANTIAL CON TROL IN THE GROUP CONCERN. IN THE COURSE OF ASSESSMENT, AO DISALLOWED RS.2.01 CRORES BY APPLYING PROVISIONS OF SECTION 14A R.W.R. 8D. IT WAS BROUGHT TO OUR NOTICE BY LEARNED AR THAT DURING THE YEAR ASSESSEE HAD NOT RECEIVED ANY EXEMPT INCOME. HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD., 281 CTR 447 HELD THAT NO DISALLOWANCE U/S.14A CAN BE MADE IN THE YEAR IN WHICH NO ITA NO. 5493/MUM/2015 M/S. TRENT HYPERMARKET LTD., 4 EXEMPT INCOME HAS BEEN EARNED OR RECEIVED BY THE ASSESSEE. IT IS NOT IN DISPUTE BY ANY OF THE LOWER AUTHORITIES THAT ASSESSEE WAS NOT IN RESPECT OF ANY EXEMPT INCOME DURING THE YEAR . R ESPECTFULLY FOLLOWING THE DECISION OF THE DELHI HIGH COURT, WE DO NOT FIND ANY MERIT IN THE DISALLOWANCE SO MADE BY THE AO U/S.14A. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 13 / 09 /2017 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 13 / 09 /201 7 KARUNA SR. PS COPY OF THE O RDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//