Reju Daniel, New Delhi V. ITO, Ward-39(5), New Delhi

ITA 601/DEL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7508 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 29-01-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: VP BANSAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER ITA NO.601 TO 602/DEL/2019 ASSESSMENT YEAR: 2012-13 & 2013-14 REJU DANIEL D-15/188-189, SECTOR-3, ROHINI, NEW DELHI -110085 PAN NO.AAHPD3535E VS INCOME TAX OFFICER WARD 39 (5) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SHRI V. P. BANSAL, CA RESPONDENT BY SHRI S. L. ANURAGI, SR. DR DATE OF HEARING: 03/07/2019 DATE OF PRONOUNCEMENT: 26/07/2019 ORDER PER R.K. PANDA, AM: THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE SEPARATE ORDERS DATED 27.12.2018 OF THE CIT(A)-13, NEW DELHI RELATING TO A. Y. 2012-13 AND 2013-14 RES PECTIVELY. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE ASSE SSEE IN BOTH THESE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. PAGE | 2 ITA NO.601/DEL/2019 (A. Y. 2012-13) 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF RENTING O F AUDIO VISUAL EQUIPMENTS UNDER THE NAME AND STYLE OF PROPRIETORSH IP CONCERN M/S. DANI MULTIMEDIA SERVICES. HE FILED HIS RETURN OF INCOME ON 30.09.2012 DECLARING TOTAL INCOME OF RS.4,57,180/-. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS OBSERVED FROM THE DEPRECIATION CHART FILED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON ASSETS NAMELY LED WALL @ 60 %, PROJECTOR AND ACCESSORIES @ 60%, SOUND AND ACCESS @ 60% AND V OTER PAD @60%. AS PER THE RATES OF DEPRECIATION DEFINED UND ER THE INCOME TAX RULE, 60% RATE OF DEPRECIATION IS CATEGORIZED F OR PLANT AND MACHINERY OF THE NATURE OF COMPUTERS INCLUDING COM PUTER SOFTWARE AND CERTAIN CATEGORIES OF COMMERCIAL VEH ICLES AND BOOKS. HOWEVER, THE ABOVE ASSETS ON WHICH THE AS SESSEE HAS CLAIMED DEPRECIATION @60% DO NOT FALL IN ANY OF THE ABOVE CATEGORY. HE THEREFORE, HELD THAT THE ASSESSEE IS N OT ENTITLED TO CLAIM DEPRECIATION @ 60% ON LED WALL AND ACCESSORIE S AND CONFRONTED THE SAME TO THE ASSESSEE. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY ASSESSEE AND OBSERVING THAT L ED WALL IS NOT A COMPUTER OR AN INTEGRAL PART OF THE COMPUTER, THE ASSESSING OFFICER HELD THAT ASSESSEE IS ENTITLED TO DEPRECATI ON ON THE RATES APPLICABLE TO PLANT AND MACHINERY. HE, THEREFORE, R ESTRICTED THE DEPRECIATION TO 15% AS AGAINST 60% CLAIMED BY THE A SSESSEE ON SUCH LED WALL AND ACCORDINGLY DISALLOWED AN AMOUNT OF RS.11,85,777/-. SIMILARLY THE ASSESSING OFFICER ALS O DISALLOWED AN PAGE | 3 AMOUNT OF RS.1,20,477/- OUT OF VARIOUS EXPENSES FOR WHICH THE ASSESSEE IS NOT IN APPEAL BEFORE US. THEREFORE, WE ARE NOT CONCERNED WITH THE SAME. THE ASSESSING OFFICER ACCO RDINGLY DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.6 ,04,485/-. 3. IN APPEAL THE LD. CIT(A) UPHELD THE ACTION OF TH E ASSESSING OFFICER IN ALLOWING DEPRECIATION ON LED WALL @15% A S AGAINST @ 60% CLAIMED BY THE ASSESSEE. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING FOLLOWING GRO UNDS OF APPEAL : - 1. THAT THE IMPUGNED ORDER IS AGAINST FACTS AND BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND LEGAL POSITION, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.11,85,777/- ON ACCOUNT OF DEPRECIATION ON LED WALL, PROJECTOR AND ACCESSORIES ETC. ALLOWED BY THE AO @ 1 5% AS AGAINST CLAIMED @ 60% AS APPLICABLE TO COMPUTERS. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AMEND OR VARY THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LED WALL, PROJECTORS AND ACCESSORIES ETC ARE OPERATED T HROUGH SOFTWARE AND FUNCTION THROUGH LAPTOP OR ANY OTHER C OMPUTER AND THE LED WALL CANNOT FUNCTION INDEPENDENTLY. REFERRI NG TO THE PAGE | 4 DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. M/S. CRABTREE INDIA LTD. IN ITA NO.1340/DEL/201 3 ORDER DATED 14.03.2014 HE SUBMITTED THAT THE TRIBUNAL HAS HELD THAT VIDEO CONFERENCING EQUIPMENT ARE ENTITLED FOR DEPRE CIATION @60%. 6. REFERRING TO THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF CIT VS. KARNATAKA POWER CORPORATION REPORTE D IN 247 ITR 268, HE SUBMITTED THAT THE HONBLE SUPREME COURT HA S HELD THAT WHERE IT IS FOUND THAT A BUILDING HAS BEEN SO PLANN ED AND SITUATED AS TO SERVE ASSESSEES SAID TECHNICAL REQU IREMENTS, IT WILL QUALIFY TO BE TREATED AS A PLANT FOR PURPOSE OF INV ESTMENT ALLOWANCE. IT HAS FURTHER BEEN HELD THAT WHERE THE ASSESSEE IS POWER GENERATING STATION, BUILDING WAS SO CONSTRUCT ED AS TO BE AN INTEGRAL PART OF ITS GENERATING SYSTEM, IT HAS TO B E TREATED AS PLANT. 7. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BSES RAJDHANI POWERS LTD. VIDE ITA NO.1266/DEL/2010 ORDER DATED 31.08.2010, HE SUBMITT ED THAT THE HONBLE HIGH COURT HAS ALLOWED DEPRECIATION @ 6 0% ON COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS PRINTE RS AND SCANNERS, SERVER ETC HOLDING THESE TO FORM AN INTEG RAL PART OF THE COMPUTER SYSTEM. IN FACT, THE COMPUTER ACCESSORIES AND PERIPHERALS CANNOT BE USED WITHOUT THE COMPUTER. C ONSEQUENTLY, AS THESE ARE THE PART OF THE COMPUTER SYSTEM, THESE ARE ENTITLED TO DEPRECIATION AT THE HIGHER RATE OF 60%. HE ACCORDIN GLY SUBMITTED PAGE | 5 THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION @ 60% ON THE LED WALL, PROJECTOR AND PERIPHERALS ACCESSORIES. 8. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON T HE ORDER OF THE CIT(A). 9. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES AND PERUSED THE ORDERS OF THE ASSESSING OFFIC ER AND THE CIT(A). I HAVE ALSO CONSIDERED THE VARIOUS DECISIO NS CITED BEFORE ME. I FIND THE ASSESSING OFFICER IN THE INSTANT CA SE RESTRICTED THE DEPRECIATION ON LED WALL, PROJECTOR AND ACCESSORIES ETC. @15% AS AGAINST 60% CLAIMED BY THE ASSESSEE ON THE GROUND T HAT THESE ARE NOT INTEGRAL PART OF COMPUTER TO QUALIFY FOR HIGHER RATE OF DEPRECIATION. ACCORDING TO HIM THESE ITEMS ON WHIC H DEPRECIATION @60% HAS BEEN CLAIMED ARE INDEPENDENT ELECTRONIC MA CHINES WHICH MAY BE USED WITH OR WITHOUT THE HELP OF COMPU TER BUT THESE ARE NEITHER COMPUTER NOR COMPUTER ACCESSORIES OR PERIPHERALS WHICH FORM AN INTEGRAL PART OF THE COMP UTER. I FIND THE LD. CIT(A) UPHELD THE ACTION OF THE ASSESSING O FFICER IN NOT ALLOWING DEPRECATION @ 60% ON SUCH LED WALL, PROJEC TORS AND ACCESSORIES ETC. I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. THE RATE OF DEPRECIATION HAS BEEN PRESCRIBED UNDER THE NEW APPENDIX-1 OF INCOME TAX RULES 1962 W HERE DIFFERENT RATES ARE PRESCRIBED FOR DIFFERENT PLANT, MACHINERY AND OTHER EQUIPMENT. THERE ARE CERTAIN INSTRUMENTS/ EQU IPMENTS WHEREIN LESSER RATE OF DEPRECIATION HAS BEEN PRESCR IBED WHICH ARE ALSO OPERATED BY COMPUTERS/ LAPTOPS. THERE ARE A NU MBER OF PAGE | 6 ITEMS WHICH ATTRACT 40% DEPRECIATION ALTHOUGH THOSE ITEMS CANNOT BE OPERATED WITHOUT HELP OF COMPUTER SUCH AS LIFE SAVING MEDICAL EQUIPMENTS, ENERGY SAVING DEVISE ETC. THERE ARE ALSO CERTAIN PLANT AND MACHINERY ON WHICH 30% DEPRECIATI ON HAS BEEN PRESCRIBED WHICH ALSO CANNOT OPERATE WITHOUT THE HE LP OF COMPUTERS. THEREFORE, THE ARGUMENTS OF THE LD. COU NSEL FOR THE ASSESSEE THAT SINCE THE LED WALLS, PROJECTORS, ACCE SSORIES ETC CANNOT FUNCTION WITHOUT THE HELP OF COMPUTER/ LAPTO P AND THEREFORE IS ENTITLED FOR DEPRECIATION @ 60% IS NOT CORRECT. SINCE NO SEPARATE RATE OF DEPRECATION HAS BEEN PRESCRIBED FOR LED WALL, PROJECTORS / ACCESSORIES ETC, THEREFORE, THESE WILL COME UNDER THE HEAD OTHER PLANT AND MACHINERY AND ACCORDINGLY ENTI TLED FOR DEPRECATION @ 15% ONLY WHICH HAS BEEN ADOPTED BY TH E ASSESSING OFFICER AND UPHELD BY THE CIT(A). I, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSE SSEE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN VIEW OF THE ABOVE DISCUSSION THE ORDER OF THE CIT(A) IS UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE ARE D ISMISSED. ITA NO.602/DEL/2019 (A. Y. 2013-14) 10. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THAT THE IMPUGNED ORDER IS AGAINST FACTS AND BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND LEGAL POSITION, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.11,41,177/- ON ACCOUNT OF DEPRECIATION ON LED WALL, PAGE | 7 PROJECTOR AND ACCESSORIES ETC. ALLOWED BY THE AO @ 1 5% AS AGAINST CLAIMED @ 60% AS APPLICABLE TO COMPUTERS. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AMEND OR VARY THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 11. AFTER HEARING BOTH THE SIDES I FIND THE GROUNDS RAISED BY THE ASSESSEE ARE IDENTICAL TO THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.601/DEL/2019. I HAVE ALREADY DECIDED THE ISS UE AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN DISMISSED. FOLLOWING SIMILAR REASONINGS, THE GROUNDS RAISED BY THE ASSES SEE ARE DISMISSED. 12. IN THE RESULT, BOTH THESE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.07.2019. SD/- (R.K PANDA) ACCOUNTANT MEMBER *NEHA* DATE:- 26.07.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI PAGE | 8 DATE OF DICTATION 09.07.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 26.07.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER