Pankaj Almadi, Gurgaon V. DCIT, Gurgaon

ITA 6083/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4991 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 10-11-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M BARNWAL
• Keywords: Depreciation; Rule of consistency
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E , NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 6083/ DE L/ 2015 ASSESSMENT YEAR : 2011 - 12 SH. PANKAJ ALMADI, C/O - GAA & CO. , CA, SHOP NO. 226, DEEP PLAZA COMPLEX, OPP. DISTT. COURT, GURGAON VS. DCIT, CIRCLE - 1, GURGAON PAN : AEMPA7379A (APPELLANT) (RESPONDENT) APPELLANT BY SH. CHARITRA GUPTA, CA RESPONDENT BY SH. M. BARNWAL, SR.DR DATE OF HEARING 24.08.201 7 DATE OF PRONOUNCEMENT 28.08.2017 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 31/08/2015 OF THE COMMISSIONER OF INCOME - TAX( APPEALS) - 2, GURGAON [ IN SHORT THE CIT - (A)] FOR ASSESSMENT YEAR 2011 - 12 RAISING FOLLOWING GROUNDS: ADDITION OF RS.32,20,772/ - ON BEING DISALLOWANCE OF 20% DEPRECIATION (TOWARDS CONSIDERATION OF DEPRECIATION RATE @ 60% INSTEAD OF 80%) ON ROUTERS AND IT INTELLIGENCE DEVICES. 2 ITA NO . 6083/DEL/2015 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT - A ERRED IN NOT DELETING THE UNLAWFUL ADDITION OF RS.32,20,772/ - MADE ON BASIS OF CONJECTURES AND SURMISES BEING DISALLOWANCE OF 20% DEPRECIATION (TOWARDS CONSIDERATION OF D EPRECIATION RATE @ 60% INSTEAD OF 80%) ON ROUTERS AND IT INTELLIGENCE DEVICES. THAT THE A.O. IS NOT JUSTIFIED IN MAKING ADDITION OF RS.32,20,772/ - TOWARDS CONSIDERATION OF DEPRECIATION RATE @ 60% INSTEAD OF 80%. HOWEVER, THE RATE OF 80% IS CLEARLY STATED I N RULE 5 (RULE DESCRIBING RATE OF DEPRECIATION) . 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HEREIN ABOVE, EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 2. THE FACTS IN BRIEF OF THE CASE ARE THAT DURING RELEVANT PERIOD, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING AND/OR GIVING AWAY ON RENTAL OF INTELLIGENCE AND NETWORKING DEVICES LIKE ROUTERS, BRIDGES, SWITCHED AND FIREWALLS ETC. THE ASSESSEE FILED RETURN OF INCOM E ELECTRONICALLY ON 30/06/201 2 DECLARING TOTAL INCOME OF RS.29,52, 710/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTI CE UNDER SECTION 143(2) OF THE INCOME - T AX ACT, 1961 (IN SHORT THE ACT ) WAS ISSUED AND COMPLIED WITH. ON PERUSAL OF THE TAX AUDIT REPORT IN FORM NO. 3 CD, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CLAIME D DEPRECIATION AMOUNTING TO RS. 1,28,83, 086/ - ON ROUTERS AND IT I NTELLIGE NCE DEVICES AT THE RATE OF 80% . THE ASSESSEE CONTENDED THAT AS PER SUB - CLAUSE (K), THE A PPENDIX - I OF R ULE 5 OF INCOME - T AX R ULES, 1962 (IN SHORT THE RULE ) FOR RELEVANT YEAR, THE ROUTERS, BRIDGES AND OTHER EQUIPMENTS ARE ENTITLED FOR DEPRECIATION AT THE RATE OF 80%. ACCORDING TO THE ASSESSING OFFICER, THE ROUTERS AND SWITCHES IN THE CASE OF THE ASSESSEE WERE NOT E NERGY - SAVING DEVICES PART OF POWER TRANSMISSION SYSTEMS AND THEREFORE , DEPRECIATION ON THE ROUTERS SWITCHES SHOULD HAVE BEEN RESTRICTED TO 60% IN VIEW OF THE DECISION OF THE INCOME TAX APPELLATE TRIBUNAL (IN SHORT THE TRIBUNAL ), 3 ITA NO . 6083/DEL/2015 MUMBAI BENCH IN THE CASE OF M/S DATA CRAFT INDIA LTD . VS. DEPUTY COMMISSIONER OF INCOME TAX (6 TAXMANN.COM 85) (2010). THE LEARNED CIT - ( A ) UPHELD THE FINDING OF THE ASSESSING OFFICER. AGGRIEVED , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. BEFORE US , THE LEARNE D COUNSEL FILED A PAPER BOOK CONTAINING PAGES 1 TO 21. THE LEARNED COUNSEL SUBMITTED THAT ROUTERS ETC . ARE ENERGY - SAVING DEVICES AND IN SUPPORT OF THAT HE REFERRED TO PAGE 13 TO 21 OF THE PAPER BOOK WHICH ARE PAGES DOWNLOADED FROM THE WEBSITE OF THE CISCO COMPANY. THE LEARNE D COUNSEL SUBMITTED THAT IN ASSESSMENT YEAR 2012 - 13, THE LD. CIT - ( A ) HAS ACCEPTED T HE CONTENTION OF THE ASSESSEE AND ALLOWED THE DEPRECIATION AT THE RATE OF 80% AND , THUS , RULE OF CONSISTENCY SHOULD BE APPLIED AND DEPRECIATION AT THE RATE OF 80% SHOULD BE ALLOWED TO THE ASSESSEE IN THE YEAR UNDER CONSIDERATION ALSO. 4. THE LD. S ENIOR DR , ON THE OTHER HAND , RE LIED ON THE ORDER OF THE LEARNED CIT - ( A ) AND SUBMITTED THAT THE ASSESSEE DO NOT QUALIFY FOR CLAIM OF DEDUCTION AT THE RATE OF 80% AS LAID DOWN IN SUB - CLAUSE (K) OF APPENDIX - I OF RULE - 5 OF INCOME TAX R ULES. 5. WE HAVE HEARD THE RIVA L SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE DEPRECIATION U/S 32 OF THE ACT ON VARIOUS ASSETS OR BLOCK OF ASSETS IS ALLOWED ON THE RATES AS PRESCRIBED IN RULE 5 OF THE RULES . THE R ULE 5 HAS SPECIFIED RATE OF DEPRECIATION ON DIFFERENT ASSET S / BLOCK OF ASSETS IN APPENDIX - I. THE SAID RULE READS AS UNDER: 5. (1) SUBJECT TO THE PROVISIONS OF SUB - RULE (2), THE ALLOWANCE UNDER CLAUSE (II) OF SUB - SECTION (1) OF SECTION 32 IN RESPECT OF DEPRECIATION OF ANY BLOCK OF ASSETS SHALL BE CALCULATED AT THE PERCENTAGES SPECIFIED IN THE SECOND COLUMN OF THE TABLE IN APPENDIX I TO THESE RULES ON THE WRITTEN DOWN VALUE OF SUCH BLOCK OF ASSETS AS ARE USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION OF THE ASSESSEE AT ANY TIME DURING THE PREVIOUS YEAR: 4 ITA NO . 6083/DEL/2015 [PR OVIDED THAT IN CASE OF A DOMESTIC COMPANY WHICH HAS EXERCISED OPTION UNDER SUB - SECTION (4) OF SECTION 115BA, THE ALLOWANCE UNDER CLAUSE (II) OF SUB - SECTION (1) OF SECTION 32 IN RESPECT OF DEPRECIATION OF ANY BLOCK OF ASSETS ENTITLED TO MORE THAN FORTY PER CENT SHALL BE RESTRICTED TO FORTY PER CENT ON THE WRITTEN DOWN VALUE OF SUCH BLOCK OF ASSETS. ] 6. TABLE OF RATES AT WHICH DEPRECIATION IS ADMISSIBLE IS SPECIFIED IN A PPENDIX - I, WHICH IS EFFECTIVE FROM ASSESSMENT YEAR 2006 - 07. UNDER THE HEAD PLANT AND MACHINERY , THERE IS A N ENTRY OF ENERGY - SAVING DEVICES AT CLAUSE (IX). UNDER THIS CLAUSE , SUB - CLAUSE E(K) HAS SPE CIFIED RATE OF DEPRECIATION OF 80% ON R OUTERS/BRIDGES AND OTHER EQUIPMENTS FOR POWER TRANSMISSION SYSTEMS. FOR VERIFICATION, IT IS IMPORTANT T O REPRODUCE THE RELEVANT PART OF THE APPENDIX - I AS UNDER : BLOCK OF ASSETS DEPRECIATION ALLOWANCE AS PERCENTAGE OF WRITTEN DOWN VALUE PART - A TANGIBLE ASSETS I. BUILDING .. II. FURNITURE AND FITTINGS III. MACHINERY AND PLANT ( 1 ) MACHINERY AND PLANT OTHER THAN THOSE COVERED BY SOME ITEMS (2), (3) AND (8) BELOW 15% ( 2 ) MOTOR CARS , OTHER THAN THOSE USING THE BUSINESS OF RUNNING THEM ON HIRE, ACQUIRED OR PUT TO USE AFTER FIRST DAY OF APRIL 1990 15% ( 3 ) ( 4 ) TO (7) (8) (I) TO (VI II) . (IX) ENERGY - SAVING DEVICES BEING - A . SPECIALISED BOILERS AND FURNACES B . INSTRUMENTATION MONITORING SYSTEM FOR 5 ITA NO . 6083/DEL/2015 MONITORING ENERGY FLOWS C . WASTE HEAT RECOVERY EQUIPMENT D . COGENERATION SYSTEMS E . ELECTRICAL EQUIPMENTS: ( A ) TO (J) . (K) REMOTE TERMINAL UNITS/INTELLIGENCE, ELECTRONIC DEVICES, COMPUTER HARDWARE/SOFTWARE, ROUTER/BRIDGES, THE REQUIRED EQUIPMENT AND ASSOCIATED COMMUNICATION SYSTEM FOR SUPERVISORY CONTROL AND DATA ACQUISITION SYSTEMS, ENERGY MANAGEMENT SYSTEMS AND DIS TRIBUTION MANAGEMENT SYSTEM FOR POWER TRANSMISSION SYSTEMS. 80 % 7. IT IS EVIDENT FROM THE ABOVE SUB ITEMS (8)( IX)(E)(K) THAT THE ASSET QUALIFYING FOR 80% DEPRECIATION SHOULD BE ENERGY - SAVING DEVICE FOR POWER TRANSMISSION SYSTEM. THE ASSESSEE IS ENGAGED IN TRADING AND LEASING OF ROUTERS, BRIDGES ETC. WE FIND THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE TO SUP PORT THAT THE ROUTERS, AND OTHER EQUIPMENTS ARE PART OF POWER TRANSMISSION SYSTEM BEFORE THE LOWER AUTHORITIES. BEFORE US ALSO NO DOCUMENTARY EVIDENCE IN SUPPORT IN CLAIM OF THE REQUIREMENT OF THE SAID ASSET BEING PART OF POWER TRANSMISSION SYSTEM HAS BEEN PRODUCED. IN VIEW OF THE FAILURE ON THE PART OF THE ASSESSEE TO PRODUCE DOCUMENTARY EVIDENCE IN SUPPORT ITS CLAIM OF DEPRECIATION AT THE RATE OF 80% ON ROUTERS BRIDGES ETC . , WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT - ( A ) . THE CONTENTION OF THE A SSESSEE TO FOLLOW THE ORDER OF THE LD. CIT - ( A ) IN SUBSEQUENT YEAR IN VIEW OF THE RULE OF CONSISTENCY ALSO CANNOT BE ACCEPTED AS WE ARE REQUIRED TO ADJUDICATE THE ISSUE IN VIEW OF THE FACTS BEFORE US AND THE DECISION OF THE 6 ITA NO . 6083/DEL/2015 LD. CIT - ( A ) IN SUBSEQUENT YEAR IS NOT BINDING ON US. ACCORDINGLY, WE DISMISS THE GROUND NO.1 OF THE APPEAL. 8. THE GROUND NO. 2 OF THE APPEAL BEING GENERAL IN NATURE WE ARE NOT REQUIRED TO ADJUDICATE UPON. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 2 8 T H AUGUST , 201 7 . S D / - S D / - ( BHAVNESH SAINI ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 8 T H AUGUST , 201 7 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI