The ACIT, 3(1), Indore V. M/s. Virgo Softech Ltd., Indore

ITA 642/IND/2013

• Counselvise Citation: 64222714 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S SOLANKI
• Keywords: Depreciation; Wrong claim
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.642/IND/2013 A.Y. : 2009-10 ACIT, 3(1), M/S.VIRGO SOFTECH LIMITED, INDORE. VS INDORE. APPELLANT RESPONDENT P.A.N. NO AAACV6553E C.O.NO. 28/IND/2015 (ARISING OUT OF I.T.A.NO.642/IND/2013) A.Y. : 2009-10 M/S.VIRGO SOFTECH LIMITED, ACIT, 3(1), INDORE. INDORE. VS CROSS OBJECTOR RESPONDENT -: 2: - 2 DEPARTMENT BY SHRI R. A. VERMA, SR. DR ASSESSEE BY SHRI S. S. SOLANKI, CA DATE OF HEARING : 23.07.2015 DATE OF PRONOUNCEMENT : 11 .09.2015 O R D E R PER GARASIA, J.M. APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A)-I , INDORE, DATED 26.08.2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE , WHICH READ AS UNDER : - NON DEDUCTION OF TDS ON BROKERAGE :- THE ASSESSEE WAS REQUIRED TO FILE DETAILS OF BROKERAGE AND COMMISSION PAID BY IT DURING THE YEAR AND DETAILS OF TDS DEDUCTED ON SUCH BROKERAGE. THE ASSESSEE FURNISHED THE REQUISITE DETAILS. ON THE PERUSAL OF THOSE DETAILS IT WAS SEEN THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON BROKERAGE PAYMENT TO SHRI VIJAY PATIL OF RS. -: 3: - 3 5,000/-, SHRI DEEPAK MORE OF RS. 5,000/- AND SHRI RAMESH GORE OF RS. 4,000/-, TOTALING TO RS. 14,000/-. ON SPECIFIC ENQUIRY AS TO WHY TDS WAS NOT DEDUCTED ON BROKERAGE PAYMENT THE ASSESSEE SUBMITTED THAT THE DETAILS HAVE ALREADY BEEN FILED BY IT. NO FURTHER DETAIL/EXPLANATION WAS GIVEN BY THE ASSESSEE. THEREFORE, A SUM OF RS. 14,000/- IS BEING DISALLOWED ON ACCOUNT OF NON-DEDUCTION OF TDS ON BROKERAGE U/S 194H R.W.S. 40(A)(IA) AND IS BEING ADDED BACK TO THE ASSESSEE'S INCOME. WRONG CLAIM OF DEPRECIATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO FURNISH DETAILS OF NEW ASSETS PURCHASED DURING THE YEAR. IN RESPONSE TO THE QUERY, THE ASSESSEE SUBMITTED THE DETAILS OF ADDITIONS IN A TABULAR FORM ALONGWITH COPIES OF BILLS IN RESPECT OF ASSETS PURCHASED. ON EXAMINATION OF THE LIST IT WAS SEEN THAT THE -: 4: - 4 ASSESSEE HAS PURCHASED COMPUTERS AND PERIPHERALS WORTH RS. 5,63,26,712/- IN THE MONTH OF SEPTEMBER WHICH WERE CLAIMED TO BE HAVE PUT TO USE FOR PERIOD GREATER THAN 180 DAYS. DETAILS OF COMPUTERS AND PERIPHERALS WHICH WERE PURCHASED BY THE ASSESSEE WERE S UNDER:- 4. 6. 8. S.NO DATE OF BILL DATE OF CHALLAN ITEM QTY AMOUNT 1 15.09.2008 15.09.2008 IBM SERVER 18 5,803,200 2 15.09.2008 15.09.2008 LENOVO DESKTOP 36 1,198,080 3 15.09.2008 15.09.2008 LENOVO THINKPAD 18 898,560 4 15.09.2008 15.09.2008 PRINTER EPSON 36 292,032 5 15.09.2008 15.09.2008 PRINTER EPSON 18 196,560 6 15.09.2008 15.09.2008 HP SCANNER 36 1,048,320 7 15.09.2008 15.09.2008 UPS 18 5,241,600 GRAND TOTAL 14,678,352 3. S. NO DATE OF BILL DT. OF CHALLAN ITEM QTY QTY QTY QTY AMOUNT 1 30.09.2008 30.09.2008 IBM SERVER 26 8,382,400 2 30.09.2008 30.09.2008 LENOVO DESKTOP 79 2,629,120 3 30.09.2008 30.09.2008 LENOVO LAPTOP 24 1,198,080 4 30.09.2008 30.09.2008 SCANNER 36 1,048,320 GRAND J R OTAL 13,257,920 5. S.NO DATE OF BILL DATE OF CHALLAN ITEM QTY AMOUNT 1 30.09.2008 IBM SERVER 36 13,572,000 2 30.09.2008 IBM DESKTOP 60 1,818,000 3 30.09.2008 PRINTER 60 456,000 4 30.09.2008 PRINTER (SMART CARD) 60 5,880,000 5 30.09.2008 HP SCANNER 60 1,680,000 6 30.09.2008 IBM LAPTOP 35 1,102,500 7 30.09.2008 UPS 10 27,900,000 GRAND \ R OTAL 28,390,440 7. -: 5: - 5 IT WAS OBSERVED THAT THE ASSESSEE HAS RECEIVED POSSESSION OF VARIOUS ITEMS ON 1 5.09.2008 & 30.09.2008. LOOKING AT THE NUMEROUS ITEMS INVOLVED CLAIM THAT THE ASSETS PURCHASED HAVE BEEN PUT TO US E FOR MORE THAN 180 DAYS, A QUERY WAS RAISED ON THE ASSESSEE ON 19.12.2011. IT WOULD BE SEEN THAT THE ASSESSEE HAS STATED THAT THE ABOVE EQUIPMENT HAVE BEEN PURCHASED ON DEMAND FROM THE FIELD AND HAS BEEN DEPLOYED. IT WAS ALSO STATED THAT LAPTOPS HAVE BEEN USED BY THE OPERATORS IN THE FIELD FOR THE REGISTRATION OF PERSONS FOR RATION CARDS. THE ASSESSEE HAS ONLY GIVEN WRITTERN PRESENTATION, HOWEVER, NO CONCRETE EVIDENCE WERE PROVIDED. AS NEW PLACES AND EXPAND CAPACITY OF EXISTING STORAGE. HOWEVER, NO DOCUMENTARY EVIDENCES WERE PROVIDED BY THE ASSESSEE AS TO WHY THE SAME WERE REQUIRED AND WHERE THE COMPUTERS WERE INSTALLED. IT WOULD BE SEEN THAT THE ASSESSEE HAS PURCHASED 175 DESKTOP COMPUTERS, 174 PRINTERS, 80 SERVERS, 77 -: 6: - 6 LAPTOPS, 132 SCANNERS, 28 UPS WITHIN A TIME PERIOD RANGING FROM 2 DAYS TO 15 DAYS AND HAS ALSO CLAIMED THAT THE ABOVE ASSETS HAVE BEEN 'PUT TO USE BY IT. FOR INSTALLING OF THE ABOVE ASSETS, NOT ONLY THE ASSESSEE REQUIRES TO DEPLOY ADDITIONAL PERSON BUT IS ALSO REQUIRED TO ARRANGE FOR FURNITUR E, ELECTRICITY AND OTHER SUPPORT STAFF WHICH CANNOT BE ARRANGE FOR DAYS OR FOR THAT MATTER 15 DAYS. THE ASSESSEE HAS STATED THAT THE DEVICES WHICH HAVE BEEN PURCHASED BY THE ASSESSEE ARE PLUG AND PLAY DEVICES AND CAN BE USED INSTANTLY ON PURCHASE WHICH ON THE FACTS AND CIRCUMSTANCES OF THE CASE IS ALSO WRONG. THE ASSESSEE IS DEALING IN SPECIFIC FIELD FOR WHICH THE SOFTWARE AND SETUP ARE NOT READYMADE. ALL THOSE SOFTWARE REQUIRES SPECIFIC INSTALLATION AND TRAINING. IT CANNOT BE THEREFORE HELD THAT THE ASSESSEE HAS INSTALLED THE SYSTEMS IN A SHORT PERIOD OF TIME. THE ASSESSEE HAS RECEIVED THE DELIVERY OF THE ASSETS AT ITS OFFICE I N DELHI. LOOKING AT THE SCATTERED BUSINESS CENTRES OF -: 7: - 7 THE ASSESSEE IT CANNOT BE SAID THAT THE ASSETS HAVE BEEN PUT TO USE IN FEW DAYS. THE ONUS WAS ON THE ASSESSEE TO PROVIDE DOCUMENTS IN SUPPORT OF ITS CLAIM WHICH HAS NOT BEEN DONE BY THE ASSESSEE. THE ASSESSEE WAS REQUIRED TO SUBSTANTIATE ITS CLAIM THAT THE ASSETS WERE PUT TO USE FOR PERIOD IN EXCESS OF 180 DAYS BY WAY OF DOCUMENTARY EVIDENCE WHICH IT HAS FAILED TO DO. THEREFORE, THE ASSESSEES CLAIM THAT THE ASSETS HAVE BEEN PUT TO USE BEFORE 2ND OCTOBER 2008 AND THEREFORE, ELIGIBLE FOR CLAIM OF DEPRECIATION AT FULL RATE IS NOT ACCEPTABLE. ACCORDINGLY, A SUM OF RS. 1,68,98,014/- [50% OF DEPRECIATION OF RS. 3,37,96,027/- (RS. 5,63,26,712*50%)] CLAIMED BY THE ASSESSEE ON ACCOUNT OF DEPRECIATION IS BEING DISALLOWED AND ADDED BACK TO THE ASSESSEES INCOME. -: 8: - 8 9. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS PARTLY ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER :- 7. IN VIEW OF THE ABOVE AND CONSIDERING THE BILLS AND DETAILS FILED, DISALLOWANCE OF DEPRECIATI ON FOR 6 MONTHS IS RESTRICTED TO THE MACHINES PURCHASED THROUGH TWO BILLS DATED 30.09.2008 WHICH RESULTS INTO DISALLOWANCE OF RS. 1,24,94,509/- AND DEPRECIATION OF RS. 44,03,505/- IS ALLOWED ON THE MACHINES PURCHASED THROUGH ONE BILL OF M/S VISHESH INFOTECHNICS LTD. (30% OF RS. 1.46 CRORES) FOR BILL DATED 15.09.2008. 8. THE ADDITION OF DISALLOWANCE OF RS. 1,24,94,509/- ADMITTED BY APPELLANT AT APPEAL STAGE IS SUSTAINED BASED ON THE FACT THAT SUCH MACHINES (COMPUTERS, LAPTOPS, PRINTERS ETC.) WERE PURCHASED ON LAST DATE OF SEPTEMBER, I.E., 30.09.2008 AND THERE IS NO LIKELIHOOD THAT THEY COULD BE INSTALLED, ELECTRIC POINTS MADE AND -: 9: - 9 MANPOWER IS ENGAGED AND TRAINED, FOR WHICH NO TIME IS AVAILABLE. FOR THIS PURPOSE RELIANCE IS PLACED ON THE CASE OF J.K. TRANSPORT, (MP) 231 ITR 798 IN WHICH INSTALLATION AND USE IS HELD ESSENTIAL FOR CLAIM OF DEPRECIATION. AS A RESULT, THIS GROUND OF APPEAL IS PARTLY ALLOWED TO THE EXTENT OF RS. 44,03,505/- AND BALANCE AMOUNT OF RS. 1,24,94,509/- IS CONFIRMED. 10. THE DEPARTMENT IS IN APPEAL AGAINST THE FINDING OF CIT(A) ON THE GROUND THAT THE ASSESSEE COULD NOT PR OVE THAT THE MACHINERY WAS PUT TO USE AND LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE DEPRECIATION FOR SIX MONTHS. THE DEPAR TMENT IS IN APPEAL AGAINST THEIR FINDING AND THE ASSESSEE IS IN APPEAL AGAINST NOT ALLOWING 100 % DEPRECIATION. 11. THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THA T THE LD. CIT(A) HAS ALLOWED THE DEPRECIATION @ 50%, ON THE GROUND THAT MACHINERY WAS PURCHASED ON 30.09.2008 A ND IF THE LD. CIT(A) HAS HELD THAT DEPRECIATION IS ALLOWE D FOR SIX -: 10: - 10 MONTHS, THE ASSESSEE WILL NOT FILE ANY CLAIM BEFORE ANY FURTHER LEGAL PROCEEDINGS. THE LD. AUTHORIZED REPRESENTATIV E SUBMITTED THAT THE ASSESSEE WAS INSISTED TO WITHDRAW THE CLAI M. NOW COMING TO THE MERIT OF THE CASE, THE ASSESSEE HAS P URCHASED THE COMPUTER, PRINTERS RELATED TO ITEMS ON 4.9.2008 . THE PLANT AND MACHINERY THAT SUCH AS LAP TOP, DESK TOP & PRIN TER ARE OF SUCH NATURE THAT THEY DO NOT REQUIRE ANY INSTALLATI ON. THEY ARE BASICALLY OF PLUG IN PLAY NATURE. THE LD. AUTHORIZ ED REPRESENTATIVE FURTHER SUBMITTED THAT ACCORDING TO THE CUT OFF POINT FOR ALLOWANCE OF DEPRECIATION @ 50% OR 100 % THE DATE IS 2 ND OCTOBER, IT WILL QUALIFY 100 % EXPENDITURE. THE LD . CIT(A) HAS HELD THAT 30 TH SEPTEMBER IS CUT OFF POINT. THE GOODS WERE DISPATCHED ON 25 TH SEPTEMBER, TO 30 TH SEPTEMBER AT VARIOUS SITES OF THE ASSESSEE DIRECTLY. THE INVOICES WERE P REPARED ON 13.9.2008. ALL THE ITEMS WERE USED BY PLUG IN TO PL AY METHOD AND NO INSTALLATION WAS REQUIRED. THE LD. CIT(A) HA S WRONGLY DISALLOWED THE DEPRECATION. 12. THE LD. SENIOR D.R. SUBMITTED THAT THE ASSESSEE HAS PURCHASED THE IBM SERVER, LAP TOPS, PRINTERS, SERVE R AND THE DATE OF PURCHASE IS FROM 30.9.2008 AND AS PER THOSE - -: 11: - 11 PURCHASES DATE, THE ASSESSEE NOT USED THE MACHINERY FOR MORE THAN 80 DAYS IN THE YEAR UNDER CONSIDERATION AND TH E ASSESSEE COULD NOT PRODUCE ANY EVIDENCE BEFORE THE AO. THERE FORE, THE DEPRECIATION CANNOT BE ALLOWED. 13. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. CIT(A) IN HIS ORDER HAS ALLOWE D THE DEPRECIATION @ 50% ON THE GROUND THAT THE DEPRECIAT ION SHOULD BE ALLOWED IF PLANT AND MACHINERY IS USED F OR MORE THAN 180 DAYS IN THE PREVIOUS YEAR. THE LD. CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAS USED THE MACHINERY FOR S IX MONTHS ONLY AS IT WAS PURCHASED ON 15.9.2008 AND 30.09.200 8. THE ASSESSEE HAS PURCHASED THE COMPUTER, PRINTERS AND V ARIOUS COMPUTERS AVAILABLE ITEMS VIDE ORDER DATED 4.9.2008 . THE SUPPLIER VIDE DELIVERY CHALLANS ON 15.9.2008 DESPAT CHED THE MATERIAL TO VARIOUS SITES OF THE ASSESSEE. THE PLAN T AND MACHINERY IS IN THE NATURE OF LAP TOP, DESK TOP FU RNITURES AND THEY DO NOT REQUIRE ANY INSTALLATION TIME, BASICALL Y THEY OF PLUG -: 12: - 12 AND PLAY IN NATURE. THE PROVISO 2 TO SECTION 32(1) PROVIDES FURTHER THAT WHERE AN ASSET REFERRED TO IN CLAUSE ( I) OR CLAUSE (II) [ OR CLAUSE (IIA)] [ OR THE FIRST PROVISO TO C LAUSE (IIA)] AS THE CASE MAY BE, IS ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS OR PROFESSION FOR A PERIOD OF LESS THAN ONE HUNDRED AN D EIGHTY DAYS IN THAT PREVIOUS YEAR, THE DEDUCTION UNDER THI S SUB SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTE D TO FIFTY PERCENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLAUSE (I) OR CLAUSE (II) [ OR C LAUSE (IIA)] AS THE CASE MAY BE. WE HAVE GONE THROUGH THE ORDER O F THE LD. CIT(A). THE CUT OFF DATE FOR ALLOWANCE OF DEPRECI ATION IS 2 ND OCTOBER I.E. IF ASSETS IS PUT TO USE UPTO 2 ND OCTOBER, IT WILL QUALIFY FOR 100 % DEPRECIATION. THE GOODS WERE DISP ATCHED ON 25 TH SEPTEMBER, 30 TH SEPTEMBER, AT VARIOUS SITES OF THE ASSESSEE DIRECTLY. IT WAS ONLY THE INVOICES, WHICH WERE PREPARED ON 30.09.2008 AND THERE WAS NO INSTALLATIO N REQUIRED. WE FIND THAT IN THIS CASE THE ASSESSEE HA S CLAIMED DEPRECIATION ON COMPUTERS AND LAP TOP, SERVERS AND DESK TOPS AND IT IS PURCHASED PRIOR TO 2 ND OCTOBER AND THIS PLANT AND -: 13: - 13 MACHINERY IS READY TO USE ONCE IT IS RECEIVED BY T HE OFFICE. THE OFFICE HAS RECEIVED THIS PLANT AND MACHINERY AND TH EY WERE READY TO USE. THEREFORE, WE ARE OF THE VIEW THAT T HE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE DEPRECIATION @ 50% . THEREFORE, WE ALLOW DEPRECIATION @ 100%. WE FIND FROM THE CIT( A)S ORDER THAT DURING THE COURSE OF HEARING, THE ASSESSEE HAS GIVEN IN WRITING THAT IF THE DEPRECIATION IS CLAIMED FOR SIX MONTHS, HE WILL NOT FILE THE APPEAL BEFORE HIGHER FORUM. IT IS WELL SETTLED LAW THAT NO LEGAL CLAIM CAN BE ALLOWED OR DISALLOW ED ON THE BASIS OF SUB MISSION FOR CLAIM MADE BY THE ASSESSEE . IF IT IS NOT ALLOWED OR DISALLOWED AS PER THE LAW, IT SHOULD NOT BE ALLOWED. IT IS WELL SETTLED LAW THAT THE AO BOUND TO ALLOW T HE CLAIM OF THE ASSESSEE EVEN THAT HE MAY NOT HAVE CLAIMED THE SAME IN THE RETURN. WE ALSO GET SUPPORT FROM THE DECISION O F HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. K. N. OIL INDUSTRIES, 142 ITR 13, WHEREIN IT WAS HELD AS UNDE R :- IT IS ALSO NOT CORRECT TO SAY THAT IF THE ASSESSEE OMITS TO CLAIM A RELIEF ALLOWABLE TO HIM UNDER THE PROVISIONS OF THE INCOME-TAX ACT, HE IS N OT -: 14: - 14 ENTITLED TO GET THAT RELIEF. IT IS THE DUTY OF THE ITO AND OTHER OFFICERS ADMINISTERING THE ACT TO INFORM THE ASSESSEE THAT HE IS ENTITLED TO A PARTICULAR RELIEF IF IT IS APPARENT THAT HE IS SO ENTITLED FROM THE MATERIA L AVAILABLE IN THE PROCEEDINGS OF ASSESSMENT. THIS DUTY HAS BEEN HIGHLIGHTED BY A CIRCULAR ISSUED BY T HE CBR. FOR THESE REASONS, THE GUJARAT HIGH COURT IN CHOKSHI METAL REFINERY VS. CIT, (1977) 107 ITR 63 (GUJ), DISSENTED FROM THE VIEW TAKEN BY THE ALLAHABAD HIGH COURT IN THE AFORESAID CASES AND HELD THAT IF IT IS APPARENT FROM THE RECORD OF ASSESSMENT THAT THE ASSESSEE WAS ENTITLED TO A PARTICULAR RELIEF, THE ITO, CAN RECTIFY THAT MISTA KE UNDER SECTION 154 ALTHOUGH THE SAID RELIEF WAS NOT CLAIMED BY THE ASSESSEE IN THE RETURN. WE RESPECTFULLY AGREE WITH THE VIEW TAKEN BY THE GUJAR AT HIGH COURT. -: 15: - 15 14. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED AND CROSS OBJECTION IS ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 11 TH SEPTEMBER, 2015. CPU* 9