DCIT, New Delhi V. M/s. Win Medicare Ltd., New Delhi

ITA 603/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3812 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 07-06-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 08-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEELA CHOPRA
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I: NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER ITA NOS. 603 & 604/DEL/2010 ASSESSMENT YEARS: 2000-01 & 2001-02 DCIT, CIRCLE 18(1), ROOM NO. 211A, C.R. BLDG., NEW DELHI. VS. WIN MEDICARE LTD., 1400, HEMKUNT TOWER, 98, NEHRU PLACE, NEW DELHI. AAACW0631J (APPELLANT) (RESPONDENT) APPELLANT BY : MS. SHEELA CHOPRA, SR. D R RESPONDENT BY: SALIL KAPOOR, ADV. O R D E R PER I.P. BANSAL, J.M. THESE APPEALS ARE FILED BY THE REVENUE. THEY ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF CIT(A) DATED 30.11.0 9 FOR ASSESSMENT YEARS 2000-01 & 2001-02. GROUNDS OF APPEAL READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN ALLOWING 100% DEPRECIATION ON WOODEN P ARTITIONS AND WORKSTATIONS TREATING THE SAME AS TEMPORARY STRUCTU RES AS AGAINST FURNITURE & FIXTURE TREATED BY THE AO, ELIGIBLE FOR DEPRECIATION @ 10% UNDER THE INCOME TAX RULES, 1962. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE WOODEN PART ITIONS AND WOKS STATIONS ERECTED BY THE ASSESSEE WERE OF PERMANENT NATURE AND BY THEIR NATURE QUALIFY AS FURNITURE & FIXTURE AND NOT AS TEMPORARY STRUCTURES. 2 ITA NOS. 603 & 604/DEL/2010 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS ERRED IN ALLOWING 100% DEPRECIATIONS ON WOODEN PART ITIONS AND WORKSTATIONS BY (MIS) PLACING RELIANCE ON THE JUDGM ENT OF HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. PRINT S YSTEMS AND PRODUCTS, 285 ITR 337, IGNORING THE FACT THAT IN TH E INSTANT CASE THE VERY FACT OF NATURE OF ASSET IS IN DISPUTE. 2. SINCE IDENTICAL ISSUES ARE INVOLVED IN BOTH THES E APPEALS, THESE WERE HEARD TOGETHER AND FOR THE SAKE OF CONVENIENCE THEY ARE DISPOSED OFF BY THIS CONSOLIDATED ORDER. 3. AS POINTED OUT EARLIER THAT IDENTICAL ISSUES ARE INVOLVED IN BOTH THE APPEALS, THEREFORE, FOR THE SAKE OF CONVENIENCE, TH E FACTS RELATING TO A.Y. 2000-01 WILL BE DISCUSSED AND DECISION TAKEN ON THE BASIS OF THOSE FACTS WILL BE APPLICABLE TO OTHER YEAR ALSO. THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF PHARMA CEUTICAL PRODUCTS. IT INCURRED AN EXPENDITURE OF RS. 28,49,717.80 ON ALTERATION/CHANGES/MAINTENANCE IN ITS EXISTING OFFI CE STRUCTURE SUCH AS WOODEN-PARTITIONS AND WORKSTATIONS. ACCORDING TO A SSESSEE, THESE ALTERATIONS/CHANGES/MAINTENANCE WAS DONE FOR BETTER AND MORE EFFICIENT WORKING OF THE OFFICE STAFF AND THE SAID AMOUNT WAS INCURRED IN REPLACING THE OLD WOODEN CABINS AND OTHER WOODEN STRUCTURE FO R OPTIMUM UTILIZATION OF THE SPACE. SINCE THE ASSETS WERE US ED FOR LESS THAN 180 DAYS THE ASSESSEE CLAIMED 50% DEPRECIATION AMOUNTIN G TO RS. 14,24,859/-. HOWEVER, THE AO TREATED THE SAME AS FURNITURE AND FIXTURE AND ALLOWED DEPRECIATION @ 5%. AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE CIT(A). LD. CIT(A) HAS GIVEN A FINDING THAT THERE IS NO DISPUTE 3 ITA NOS. 603 & 604/DEL/2010 REGARDING THE NATURE OF EXPENDITURE WHICH ARE IN TH E SHAPE OF WOODEN PARTITION AND WORKSTATIONS AND ACCORDING TO LD. CIT (A) THE QUESTION WHICH COULD ARISE FOR ADJUDICATION WILL ONLY BE WHETHER W OODEN PARTITION AND WORKSTATIONS ARE CONSIDERED TO BE WOODEN STRUCTURE OR SHOULD BE CONSIDERED AS FURNITURE AND FIXTURE. HE HAS ALSO GIVEN A FINDING THAT THE PREMISES ARE ON LEASE AND ARE NOT OWNED BY THE ASSE SSEE. THE ASSESSEE HAS INCURRED SUCH EXPENDITURE IN AY 2000-0 1, 01-02 & 02-03 AND, THEREFORE, THESE EXPENDITURES ARE RECURRING EX PENDITURE INCURRED BY THE ASSESSEE ON TEMPORARY ASSETS ACCORDING TO THE C HANGING NEEDS OF OFFICE BUILDING AND SUCH EXPENDITURE CANNOT BE TREA TED AS PART OF FURNITURE AND FIXTURE AND HENCE ARE IN THE NATURE O F TEMPORARY ERECTIONS ELIGIBLE FOR DEPRECIATION @ 100%. FOR HOLDING SO L D. CIT(A) HAS ALSO RELIED UPON THE DECISION OF MADRAS HIGH COURT IN TH E CASE OF CIT VS. PRINT SYSTEM & PRODUCTS 285 ITR 337, WHEREIN THE EX PENDITURE INCURRED ON TEMPORARY PARTITION, FALSE CEILING, PAINTING AND WALLS ETC. WERE HELD TO BE ELIGIBLE FOR DEPRECIATION @ 100%. THE DEPARTMEN T IS AGGRIEVED BY SUCH FINDINGS OF LD. CIT(A). 4. AFTER NARRATING THE FACTS, LD. DR RELYING UPON T HE GROUNDS OF APPEAL SUBMITTED THAT THE WOODEN PARTITION AND WORK STATIONS COULD NOT BE TREATED AS TEMPORARY STRUCTURES AND THESE WERE I N THE NATURE OF FURNITURE AND FIXTURE. THUS, IT WAS CONTENDED BY L D. DR THAT AO WAS RIGHT IN ALLOWING DEPRECIATION @ 10%. IT WAS SUBMITTED TH AT WOODEN PARTITIONS AND WORKSTATIONS ERECTED BY THE ASSESSEE WERE OF PE RMANENT NATURE AND THEY CANNOT BE CALLED AS TEMPORARY STRUCTURE. IT WAS SUBMITTED THAT 4 ITA NOS. 603 & 604/DEL/2010 THE DECISION RELIED UPON BY LD. CIT(A) IN THE CASE OF PRINT SYSTEMS (SUPRA) IS NOT APPLICABLE AS THE NATURE OF ASSET IT SELF IS IN DISPUTE. THUS, IT WAS PLEADED BY LD. DR THAT THE ORDER OF CIT(A) O N THIS ISSUE SHOULD BE SET ASIDE AND THAT OF AO BE RESTORED. 5. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. AR TH AT THE VERY NATURE OF THE ASSET WAS TEMPORARY STRUCTURE AND ACCORDING TO APPENDIX 1 OF I.T. RULES, 1962 ITEM NO. 4 (PURELY TEMPORARY ERECTIONS SUCH AS WOODEN STRUCTURE), ARE ELIGIBLE @ 100%. HE SUBMITTED THAT THE ANNEXURE HAS BEEN REPRODUCED IN THE ORDER OF CIT(A) IN PARA 2.4. HE SUBMITTED THAT THE CASE LAW RELIED UPON BY LD. CIT(A) CLEARLY SUPP ORTS THE CASE OF THE ASSESSEE AND THUS, HE PLEADED THAT ORDER OF CIT(A) SHOULD BE UPHELD. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THE NATURE OF ALTERATION/CHANGES/MAINTENANCE MADE BY THE ASSESSEE IS IN THE NATURE OF WOODEN PARTITION AND WORKSTATION AND IS MADE IN THE PREMISES WHICH WAS NOT OWNED BY THE ASSESSEE. THESE MODIFICATIONS ARE STATED TO BE MADE FOR THE OPTIMUM UTILIZATION OF THE SPACE AND F OR BETTER AND MORE EFFICIENT WORKING OF THE OFFICE STAFF. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SUGGEST THAT SUCH STATEMENT OF THE ASSESS EE IS INCORRECT. IF IT IS SO, THE WORK DONE BY THE ASSESSEE WILL FALL UNDE R ITEM NO. 4 WHICH DESCRIBE THE RATE OF DEPRECIATION OF 100% IN RESPEC T OF PURELY TEMPORARY ERECTION SUCH AS WOODEN STRUCTURE. IN THIS VIEW O F THE SITUATION, WE DO 5 ITA NOS. 603 & 604/DEL/2010 NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) VIDE WHICH THE NECESSARY RELIEF HAS BEEN GIVEN TO THE ASSESSEE, WE DECLINE T O INTERFERE. 7. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11.6.2010 (G.E. VEERABHADRAPPA) VICE PRESIDENT (I.P. BANSAL) JUDICIAL MEMBER DATED: 11.6.2010 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR