Dy.CIT, Circle-3(3), Hyderabad V. M/s Visu International Limited, Hyderabad

ITA 621/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7686 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 30-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.488/HYD/13 : ASSESSMENT YEAR 2009 - 10 M/S. VISU INTERNATIONAL LIMITED, HYDERABAD (PAN AABCV 1500 A) V/S. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 3(3), HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.621/HYD/13 : ASSESSMENT YEAR 2009 - 10 DY. COMMISSIONER OF INCOME - TAX, CIRCLE 3(3), HYDERABAD V/S. M/S. VISU INTERNATIONAL LIMITED, HYDERABAD (PAN AABCV 1500 A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.MURALI MOHAN RAO DEPARTMENT BY : SHRI RAJAT MITRA DR DATE OF HEARING 3 . 11 .2014 DATE OF PRONOUNCEMENT 12.11.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : THESE TWO APPEAL S, ONE FILED BY THE ASSESSEE BEING ITA NO. 488/HYD/2013 AND THE OTHER FILED BY THE REVENUE, BEING ITA N O. 621/HYD/2013, ARE CROSS APPEALS, WHI C H ARE DIRECTED A GAIN S T THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD DATED 13.2.2013. I TA NO. 488 AND 621/H YD/20 13 M/S. VISU INTERNATIONAL LIMITED, HYDERABAD 2 2. FIRST , WE SHALL TAKE UP THE APPEAL O F TH E REV ENUE, WHICH INVOLVES A SOLITARY ISSUE RELATING TO THE DELETION BY THE LEARNED CIT(A) OF THE D ISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BELATED PAYMENT OF CONTRIBUTION S TOWARDS EMPLOYEES PROVIDENT FUND AND ESI. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF TRAINING AND SOFTWARE EXPORTS . THE RETURN O F INCOM E FOR THE YEAR UNDER CONSIDERATION WAS F ILED BY IT ON 26.9.2009, DE C L A RIN G A TOTAL INCOME OF RS .69,10,804. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS , IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS COLL E CT E D EMPLOYE E S CONTRIB U TION TOWARDS PROVIDENT FUN D AND ESI AMOUNTING TO R S .9,53,795 AND RS.1 , 06 , 465. THE SAID AMOUNT S , TOTALING TO R S .10,60,260 , W ERE TR E ATED BY THE ASSESSING OFFICER AS THE INCOME O F TH E ASSESSEE UNDER S.2(24)(X) OF THE ACT, AND SIN C E THE S AME WERE NOT PAID BY THE ASSESSEE WITHIN THE DUE DATES MENTIONED IN THE RESPECTIVE A C TS, DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER UNDER S.36(V A ) OF THE ACT. 4. ON APPEAL, THE LEARNED CIT(A) DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER O N THIS ISSUE, RELYING INTER - ALIA ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V/S. SHAKTI BHOG FOODS P. LTD. (ITA NO.2777 TO 2781/DEL / 2010 DATED 28.6.2011), WHEREIN IT WAS HELD RELYING ON THE DECISION OF THE APEX COURT IN THE CAS E OF CIT V/S. VINAY CEMENTS LTD. (213 CTR 268) , THAT THE EMPLOYEES CONTRIBUTION TOWARDS P ROVIDENT FUND AND ESI HAVING BEEN PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION, IT WAS ENTITLED TO CLAI M DEDUCTION FOR THE SAME AS PER S.43B OF THE ACT, READ WITH SECOND PROVISO THERETO. I TA NO. 488 AND 621/H YD/20 13 M/S. VISU INTERNATIONAL LIMITED, HYDERABAD 3 5. AT THE TIM E O F H E ARING BEFORE US, THE LEARNED REPR E SENT A TIVES OF BOTH THE SI D ES H A VE AGREED THAT THE ISSUE INVOLVED IN TH E APPEAL O F THE R E VENUE IS SQUARELY COVER E D BY THE VARIOUS DECI S I O N S O F THE TRIBUNAL AS WELL AS HIGH COURTS. IN ONE SUCH DECISIONS RECENTLY RENDERED ON O C TOB E R 14, 2014 IN THE CA S E OF CIT V/S. GHATGE PATIL TRA N S PO R T LTD. ( INCOME TAX APPEAL NO.1002 OF 2012), HON'BLE BOMBAY HIGH COU R T, AFTER TAKING INTO CON S I D ERATION THE P R O VI SION S OF S.2(24)(X) READ WITH S .36(1)(VA) AND S.43B , HELD T HAT EVEN E MPLOYEES CON T RIBUTION TO P ROVIDENT FUN D ETC. IS ALLOWABLE AS DEDUCTION, I F THE SAME IS DEPO S I T ED BEFORE THE DUE DATE OF FILIN G OF THE RETURN OF INCOME FOR THE RELEVANT YEAR. RESPECTFULLY FOLLO W IN G THE SAID DECISION OF THE HON'BLE BOMBAY HIGH COURT, WE UPHOLD THE IMPU G N E D ORDER OF THE LEARNED CIT(A) ALLOWING THE DEDU C TION CLAIMED BY TH E ASSESSEE ON ACCOUNT OF PAYMENT OF E MPLOYEES CON T RIBU T ION TOWARDS P ROVIDEN T FUN D AND ESI MADE BY THE ASSESSEE, AFTER THE DUE D A TES PRESCRIBED IN THE RESPECTIVE ST AT UTES, BUT BEFORE THE DUE DATE OF FILING OF THE RETURN O F INCOME FOR THE YE A R UNDER CONSIDERATION AND DISMISS THE APPEAL OF THE REVENUE . 6. NOW, W E SHALL TAKE UP THE APPEAL O F TH E ASSESSEE, GROUND NO.1 OF WHICH IS GENE R AL IN NATURE SEEKING NO SP E CIFIC ADJU D I C ATION. 7. GROUNDS NO S . 2 AND 3 OF THE ASSESSEES APPEAL INVOLVE A COMMON ISSUE R E L A TING TO DISALLOWANCE OF R S .2,48,175 MADE BY TH E ASSESSING OFFICER AND CON F IRM E D BY THE LEARNED CIT(A) UNDER S.40(A)(IA) OF THE ACT. 8. IN THE P ROFIT AND L OSS ACCOUNT FIL E D ALONGWITH ITS RETURN OF INCOME, TH E ASSESSEE HAD DEBI T ED A SUM OF RS . 2,48,175 ON ACCOUNT OF AU D IT FEE. ACCOR D ING TO THE ASSE SSING OFFICER, THE ASSESSEE WAS LIABLE TO DEDU C T TAX AT SOURCE FROM THE P A YM E NT MADE ON ACCOUNT OF AUDIT I TA NO. 488 AND 621/H YD/20 13 M/S. VISU INTERNATIONAL LIMITED, HYDERABAD 4 FEE UNDER S.194J AND SIN C E NO SUCH TAX WAS DEDU C TED BY IT, HE INVOKED THE P R OVIS I ON S OF S.40(A)(IA) AND MADE DISALLO W ANCE ON ACCOUNT OF AUDIT FEE. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE FOR THE SAME REASONS, AS GIVEN BY THE ASSESSING OFFICER. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE COMP AN Y HAS NOT BEEN TREATED AS THE ASSESSEE IN DEFAULT UNDER S.201(1) OF TH E ACT FOR ITS FAILURE TO DEDU C T TAX AT SOU R CE FROM THE P A YM E N T MADE ON ACCOUNT OF AUDIT FEE AND THEREFORE, NO DISALLOWANCE CAN B E MADE ON ACCOUNT OF AUDIT FEE, AS PER THE SECOND PROVISO TO S.40(A)(IA). ALTHOUGH T HE LEARNED DEPARTMENTAL REPRESENTATIVE HAS CONTENDED THAT THE SAID SECOND PROVISO HAS BEEN IN SE RTED IN TH E STATUTE BY THE FIN A N C E AC T, 2012 WITH E FF ECT FROM 1.4.2013, IT IS NOTED, THE SAME HAS BEEN TR E ATED AS RETROSP EC TIVELY APPLI C A B LE F R OM 1.4.2005 BY THE COORDINATE BENCH (BANGALORE) OF THIS TRIBUNAL IN TH E CA S E OF G.SHANKAR V/S.ACIT(ITA NO.1832/BANG/2013 FOR ASSESSMENT YEAR 2005 - 06). WE , THEREFORE , RESTORE THIS I S SUE TO THE FIL E O F TH E ASSESSING OFFICER FOR THE LIMI T ED PU R PO S E OF VERIFYING AS TO WH E TH E R THE ASSESSEE COMP A NY I S TREATED AS AN ASSESSEE IN DEFAULT UNDER S.201(1) OF THE AC T FOR ITS FAILURE TO DEDU C T TAX AT SOU R CE FROM THE PAYMENT MA DE ON ACCOUNT OF AUDIT FEE. IF IT IS FOUND O N SUCH VERIFICATION THAT NO ORDER UNDER S.201(1) IS PASSED TO THIS EFFECT, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE DISALLOWANCE MADE UNDER S.40(A)(IA) ON ACCOUNT OF AUDIT FEE. GRO U NDS NO.2 AND 3 OF THE A SSESSEES APPEAL ARE ACCORDINGLY TR E ATED AS ALLOWED FOR STATISTICAL PURPOSES. 10. THE ISSUE INVOLVED IN G R OUN D S NO.4 TO 7 OF TH E ASSESSEES APPEAL INVOL V E A COMMON ISSUE REL A TING TO THE DISALLOWANCE MADE BY I TA NO. 488 AND 621/H YD/20 13 M/S. VISU INTERNATIONAL LIMITED, HYDERABAD 5 TH E ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF DEPRECIATION ON XEROX COPIERS, LCD TV, COLOUR COPIER AND LCD SCREENS. 11. WHILE EXAMININ G THE CLAIM O F TH E ASSESSEE FOR DEPRECIATION, IT WAS FOUND BY TH E ASSESSING OFFICER DURING TH E COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAS CL A IM E D DEPRECIATION AT HIGHER RATE O F 60% ON XEROX COPIER S , SAMSUNG L CD TV , COLOUR COPIER AND LCD PROJECT SCREENS OF THE TOTAL VALUE OF R S .56,83,960, TR E ATIN G THE SAME AS FALLING IN THE CATEGORY OF COMPUTER. ACCOR D ING TO THE ASSESSING OFFICER, TH E SE I T EM S WERE NOT IN THE NATURE OF COMPU TE R BUT WERE IN THE NATURE OF OFFICE EQUIPM E N T FALLING IN THE BLOCK OF P L ANT AND MACHINERY. HE ACCORDINGLY ALLOWED DEPRECIATION TH E REON AT TH E RATE O F 15% AS AGAI NST 60% CLAIMED BY TH E ASSESSEE WHICH RE S ULTED IN A DISALLOWANCE OF R S . 1 5,57,78 2 . 12. BEFORE THE LEARNED CIT(A), RELIANCE WAS PL A CED BY TH E ASSESSEE ON THE DECISION OF THE KOLKATA BENCH O F THE TRIBUNAL IN THE CA S E OF ITO V/S. SAMIRAN MAJUMDAR (101 TTJ KOL 501) IN SUPPO R T OF I T S CASE THAT THE ITEMS IN Q U E STION BEIN G IN THE NATURE OF COMP U T E R WERE ELIGIBLE FOR DEPRECIATION AT HIGHER RATE OF 60%. THE LEARNED CIT(A), HO W E V ER, FOUN D TH A T THE DECISION IN TH E CASE OF SAMIRAN MAJUMDAR (SUPRA) WAS R ENDERED BY THE TRIBUNAL IN THE CONTEXT OF ASSESSEES CLAIM FOR DEPRECIATION ON P R IN T ERS AND SCANNERS AND SIN C E THE SAID DEVICES WERE NECESSARILY USED AS INTEGRAL PART O F CO M PU TE RS, T H E Y WE RE HELD BY THE TRIBUNAL TO BE ELIGIBLE FOR DEPR EC IATION AT HI G H E R RA TE OF 60%. HE HELD THAT THE ITEMS IN QUESTION INVOLVED IN TH E CASE OF THE ASSESSEE , ON THE OTHER HAND, WERE NEITHER COMPUTER IN TH E MSELVES NOR WE RE INPUT AND OUTPUT DEVICES CONN E CTED OR TO RELATED TO A COMPUTER. ACCOR D INGLY, RELYING ON TH E DECISION OF THE SP E CIAL B ENCH OF I T AT IN TH E CA S E OF CIT V/S. DATACRAFT INDIA L TD. I TA NO. 488 AND 621/H YD/20 13 M/S. VISU INTERNATIONAL LIMITED, HYDERABAD 6 (2011) 9 ITR (TRIB) 712 (MUM)(SB), HE CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, BY ALLO W IN G DEPRECIATION ON THE S A ID ITEMS AT TH E RATE OF 15% AS AGAINST 60 % CLAIMED BY TH E ASSESSEE . 13. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS HELD BY THE DELHI B ENCH O F THE TRIBUNAL IN THE CASE OF ASSTT. CIT V/S. AMADEUS I NDIA (P)LTD. (79 ITD 407) , CITED BY THE LE ARNED COUNSEL FOR THE ASSESSEE , THE TERM COMPUTER SHOULD BE INTERPRETED LIBERALLY, BROADLY AND IN CON S ONANCE WITH THE INTENT OF THE LEGISLATION AND WORKING OF TH E ENTIRE SYSTEM AS A WHOLE. I N TH E CA S E OF ITO V/S. SAMIRAN MAJUMDAR (SUPRA), A R E FERENCE W AS MADE BY THE T RIBUNAL TO E XPLANATION (A) TO SUB - S EC T ION (XI) OF S.36(1) OF TH E INCOME TAX ACT,1961, WHEREIN THE COMPU T ER SYSTEM HAS BEEN DEFINED AS FOLLOWS - COMPUTER SYSTEM MEANS A DEVICE OR COLLECTION OF D EVICES IN C LU D IN G INPUT AND OUTPUT SUPPORT DEVICES AND E X CLU D IN G CALCULATORS WHICH ARE NO T PROGRAMMABL E AND CAPABLE OF B E IN G U S ED IN CONJUNCTION WITH EXTERNAL FILES, OR MORE OF WHICH CONTAIN COMPU TE R PROGRAMMES, ELECTRONIC INST R U CT IONS, INPUT DATA AND OUTPUT DATA, THAT PERFORMS FUN CT IONS IN CLU D IN G , BUT NOT LIMITED TO, LOGIC, ARITHMETIC, DATA STORAGE AND RETRIEVAL, C OMMUNI CA T I ON AND CONTROL IN TH E SAID CASE OF SAMIRAN M AJUMDAR (SUPRA), IT WAS REPO R TED BY TH E I NSPECTOR OF INCOM E T AX DEP A RT M ENT, AFTER V E RIFYING THE FUNCTION OF TH E P R IN T ER AND THE SCANNER , THAT THEY RAN WITH THE H E LP OF CO M PU TE R AND WERE EXTERNAL DEVICES ATTACHED TO THE COMPU TE R WITH THE HELP OF CA B LES. ON THE BASIS OF THIS REPORT OF THE I NSPE C TOR, THE TRIBUNAL HELD THAT THE PRIN T ER AND SCA N NER WERE INTEGRAL PART OF T HE CO M PU T ER SYSTEM, AS THEY COULD NO T BE USED WITHOUT THE COMPUTER AND ACCORDINGLY DEP R ECIATION AT HIGHER RATE AS APPLICABLE TO THE COMPU T ER I TA NO. 488 AND 621/H YD/20 13 M/S. VISU INTERNATIONAL LIMITED, HYDERABAD 7 WAS ALLOWED BY THE TR IBUNAL ON PRIN T ER AND SCANNER. IN TH E C AS E OF ACIT V/S. GE CAPITAL BUSIN E SS P ROCESS MANAGEMEN T S E RVICES PVT. LTD. (ITA NO.2887/DEL/2011 FOR ASSESSMENT YEAR 2007 - 08 DATED 13.4.2012 ) IT WAS HELD BY THE D ELHI BENCH O F THE TRIBUNAL THAT COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS PRINTER AND SCANNERS, SERV ER S ETC. FORM AN INTEGRAL PART OF THE CO M PU T ER SYSTEM, AS THE SAME C ANNOT BE USED WITHOUT THE COMPUTER AN D CONSEQUENTLY DEPRE C IATION AT HIGHER RATE O F 60% I S ALLOWABLE ON SUCH COMPU TE R ACCESSORIES AND PERIPHERALS. 14. IT IS MANIFEST FROM THE VARIOUS JUDICIAL PRONOUN C EME N TS CITED BY THE LEARNE D COUN S EL F O R THE ASSESSEE, AS DISCUSSED ABOVE, THAT IF ANY AS S ETS ARE FOUND TO B E INTEGRAL PARTS O F THE COMPU TE R OR COMPU TE R SYSTEM, THE SAME ARE ENTITLED FOR DEPR EC IATION AT HI G H ER RATE, AS APPLI C ABL E TO THE COMPU T ER . IT , HOW E VER, DEPENDS ON THE FACT S OF EACH CASE AS TO WH E TH E R A PARTICULAR ITEM OR ASSET FORMS INTEGRAL PART OF THE COMPU TE R OR COMP UTER SYSTEM AND THIS ISSUE IS REQUIRED TO BE DECIDED AFTER TAKING INTO CON S I D ERATION THE EXACT USAGE OR APPLICATION FOR SUCH ITEMS OR ASSETS KEEPING IN VIEW THE NATURE OF THE BUSINESS OF THE ASSESSEE AS WELL AS T H E FUNCTIONS TO WHICH THE SAID AS S ETS/ITEMS ARE PUT TO USE . IN THIS R E GARD, THE LEARNED COUN S EL F OR THE ASSESSEE HAS FILED A WRITTEN NOTE EXPLAINING THE USAGE OR APPLICATION OF THE RELE V ANT ITEMS/AS S ETS IN SUPPORT OF ITS CA S E THAT THEY FORM AN INTEGRAL PART OF THE COMPU TE R/CO M PU TE R S YS TEMS USED BY TH E ASSESSEE. THE SAME IS REPRO D U C ED BELOW. I TA NO. 488 AND 621/H YD/20 13 M/S. VISU INTERNATIONAL LIMITED, HYDERABAD 8 . I TA NO. 488 AND 621/H YD/20 13 M/S. VISU INTERNATIONAL LIMITED, HYDERABAD 9 I TA NO. 488 AND 621/H YD/20 13 M/S. VISU INTERNATIONAL LIMITED, HYDERABAD 10 . 15. AFTER GOING THROUGH THE CONTENTS OF TH E ABOVE NOTE FILED BY THE ASSESSEE EXPL A INING THE USAGE OR APPLI CA T I ON O F THE REL E VANT ITEMS/AS S ETS AS WELL AS TH E ORDERS OF THE AUTHORITI E S BELOW, WE FIND THAT THE SUB M I S SION S EXP L AINING THE USAGE OR APPLI C A T ION OF THE CONCERNED ITEMS/ASSETS ARE BEING MADE BY TH E ASSESSEE FOR THE FIRST TIME BEFORE THE T R IBUNAL, AND NO SUCH EX PLANATION WAS OFFERED EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LEARNED CIT(A). WE TH E R E FORE, CON S I D ER IT FAIR AND P R OP E R AND IN TH E INTERESTS OF JUSTICE TO RESTORE THIS ISSUE TO TH E FILE O F THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH, AF T ER TAKING INTO CON S ID E RATION THE EXPLAN A TION OFFERED BY TH E ASSESSEE RE G ARDING THE USAGE OR APPLI C A T ION OF THE CONCERNED ITEMS/AS S ETS IN THE LIGHT OF THE JUDICIAL PRONOUNCEME NTS DI S CUSSED ABO V E. GROUN D S NO.4 TO 7 OF THE ASSESSEES APPEAL ARE AC C OR D INGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 16. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THE APPEAL O F TH E ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPO SES. ORDER PRONOUNCED IN THE COURT ON 12 TH NOVEMBER, 2014 SD/ - SD/ - ( SAKTIJIT DEY ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 12 TH NOVEMBER 2014 I TA NO. 488 AND 621/H YD/20 13 M/S. VISU INTERNATIONAL LIMITED, HYDERABAD 11 COPY FORWARDED TO: 1. M/S. VISU INTERNATIONAL LIMITED, C/O. M/S.P.MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 6755/2/3, 1ST FLOOR, SOMAJIGUDA, HYDERABAD - 82 2 . DY, COMMISSIONER OF INCOME - TAX CIRCLE 3 (3), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD 4. COMMISSIONER OF INCOME - TAX III HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S