Schneider Electric India (P) Ltd., Gurgaon V. DCIT, New Delhi

ITA 5867/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65894 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 24-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH JAIN
• Assessee Lawyers: ROHIT TIWARIAMANDEEP SINGH
• Keywords: Depreciation; Transfer pricing; International transaction
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `G : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.5867/DEL /2010 (ASSESSMENT YEAR : 2006-07) SCHNEIDER ELECTRIC INDIA (P) LTD., VS. DCIT, CIRC LE 7(1), 9 TH FLOOR, TOWER C, BLDG. 10, NEW DELHI. DLF CYBER CITY, PHASE-II, GURGAON. (PAN/GIR NO.AABCS1624G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ROHIT TIWARI/AMANDEEP SINGH REVENUE BY : SHRI PEEYUSH JAIN, CIT(DR) ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER PASSED BY THE DISPUTE RESOLUTION PANEL-II, U/S 144C READ WITH SECTION 143 (3) OF THE I.T. ACT, 1961 DATED 12.10.2010 FOR THE ASSESSMENT YEAR 2006-07, WHEREIN FOLLOWING TWO EFFECTIVE GROUNDS HAVE BEEN RAISED: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HONBLE DISPUTE RESOLUTION PANEL HAS ERRED IN CONFIRMING ADDITION O N ACCOUNT OF ADJUSTMENT IN INTERNATIONAL TRANSACTION OF RESEARCH & DEVELOPMENT SERVICES AMOUNTING TO RS.3,92,87,647/-. 2. ON THE FACTS AND CIRCUMSTANCES FO THE CASE, THE HONBLE DISPUTE RESOLUTION PANEL ERRED IN CONFIRMING DISALLOWANCE O F DEPRECIATION ON COMPUTERS AMOUNTING TO RS.74,8800/-. 2. SO FAR AS GROUND NO.1 IS CONCERNED, AT THE VERY OUTSET, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER PASSE D ORDER ON THE BASIS OF DIRECTION I.T.A. NO.5867/DEL./2010 (A.Y. : 2006-07) 2 ISSUED U/S 144C OF THE ACT BY DISPUTE RESOLUTION PA NEL-II (DRP)-II, NEW DELHI DATED 29.9.2010, BUT THE SAID DIRECTION HAS BEEN PASSED B Y THE DRP-II IN A SHORT CUT, INASMUCH AS, A NON-SPEAKING MANNER, NEITHER APPROPRIATELY CO VERS THE ISSUE INVOLVED NOR DISCUSSION HAS BEEN HELD TO ARRIVE AT THE DIRECTION AS ISSUED . THEREFORE, IN THE INTEREST OF JUSTICE AND TO HAVE FAIR PLAY IN THE MATTER, IT WAS REQUESTED T O SET ASIDE THE ORDER OF ASSESSMENT AS WELL AS DIRECTION OF DRP-II AND TO RESTORE THE MATT ER BACK ON THE FILE OF THE DRP FOR PASSING A FRESH ORDER IN A SPEAKING MANNER AFTER AD DRESSING AND DISCUSSING ALL THE RELEVANT ISSUES BY GIVING DUE OPPORTUNITY TO THE ASSESSEE. 3. LD.DR RELIED UPON THE ORDER OF THE ASSESSING OFF ICER AS WELL AS DIRECTION ISSUED BY DRP-II AND PLEADED FOR ITS CONFIRMATION AND WHEN SPECIFICALLY ASKED FOR HIS COMMENTS ON THE ORDER PASSED BY THE DRP-II AS TO WHETHER IT INCORPORATES RELEVANT MATERIAL, DISCUSSION AND BASIS OR NOT. HE JUST RELIED UPON T HE ORDERS OF AUTHORITIES BELOW TO PLEAD FOR ITS CONFIRMATION. 4. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MAT ERIAL ON RECORD AND FIND THAT DRP-II IN THIS CASE HAS PASSED AN ORDER OF 29.9.201 0, AND ASSESSING OFFICER PASSED THE ORDER U/S 143(3) READ WITH SECTION 144C OF THE I.T. ACT, 1961, IN VIEW OF THE DIRECTION ISSUED BY THE DRP-II , BUT ORDER OF DRP-II IS FOUND TO HAVE NOT CONTAINED NECESSARY DETAILS, DISCUSSION OR ELABORATE REASONING ETC., SO IT MAKES THE ORDER OF DRP-II AS NON- SPEAKING ONE AND THE CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE HELD TO BE JUST AND APPROPRIATE. AS SUCH IN VIEW OF FAC TS, CIRCUMSTANCES AND MATERIAL ON RECORD, WE FIND IT JUST AND APPROPRIATE TO SET ASID E THE ORDER OF THE ASSESSING OFFICER AS WELL AS DIRECTION ISSUED BY LD. DRP-II AND RESTORE THE MATTER BACK ON THE FILE OF THE DRP- II WITH THE DIRECTION TO PASS DE NOVO DIRECTION IN ACCORDANCE WITH LAW GIVING RELEVANT I.T.A. NO.5867/DEL./2010 (A.Y. : 2006-07) 3 BASIS AND DISCUSSING ALL RELEVANT MATERIAL ETC. AFT ER AFFORDING DUE OPPORTUNITY TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 5. AS REGARDS GROUND NO.2, LD.COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ISSUE IN RELATION TO DEPRECIATION ON UPS IS COVERED BY VARIO US DECISIONS INCLUDING THAT OF DELHI HIGH COURT IN CIT VS. BSES RAJDHANI POWER LTD., ITA NO.1266/2010 DATED 31 ST AUGUST, 2010, WHICH IS BEING FOLLOWED BY DELHI, ITAT BENCH ES. SO, ORDER IN THIS REGARD NEEDS TO BE AMENDED TO ALLOW DEPRECIATION AS CLAIMED WHIC H MAY BE AMENDED ACCORDINGLY, WHEREAS LD.DR RELIED UPON ORDERS OF AUTHORITIES BEL OW TO PLEAD FOR ITS CONFIRMATION. 5.1 AFTER HEARING BOTH THE SIDES AND CONSIDERING TH E MATERIAL ON RECORD AND PRECEDENT RELIED UPON, WE FIND THAT IN THE CASE OF CIT VS. BS ES RAJDHANI POWER LTD. (SUPRA), IT HAS BEEN HELD AS UNDER: WE ARE IN AGREEMENT WITH THE VIEW OF THE TRIBUNAL ACCESSORIES AND PERIPHERALS SUCH AS, PRINTERS, SCANNERS AND SERVER ETC. FORM AN INTEGRAL PART OF THE COMPUTER SYSTEM. IN FACT, THE COMPUTER ACCESSORIES AND PERI PHERALS CANNOT BE USED WITHOUT THE COMPUTER. CONSEQUENTLY, AS THEY ARE THE PART O F THE COMPUTER SYSTEM, THEY ARE ENTITLED TO DEPRECIATION AT THE HIGHER RATE OF 60%. AND SINCE THE UPS CANNOT BE USED WITHOUT COMPUTER, THEREFORE, RELYING ON FINDING OF DELHI HIGH COURT, WHICH IS BEING FOLLOWED BY VARIOU S BENCHES OF ITAT AT DELHI, WE ACCEPT THIS GROUND OF APPEAL AND DIRECT THE ASSESSI NG OFFICER TO ALLOW THE RELIEF AS CLAIMED WITH REFERENCE TO DEPRECIATION ON UPS BEING PART OF COMPUTER SYSTEM. 6. AS A RESULT, APPEAL OF THE ASSESSEE GETS ACCEPTE D PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 23.11.2012. SD/- SD/- (S.V. MEHROTRA) (U.B.S. BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : NOV. , 2012 SKB I.T.A. NO.5867/DEL./2010 (A.Y. : 2006-07) 4 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. DRP-II, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT