DCIT, New Delhi V. M/s. Connaught Plaza Restaurants Pvt. Ltd., New Delhi

ITA 6441/DEL/2013

• Counselvise Citation: 644120114 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 14-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

ITA NO S . 6441 & 6442/ DEL/ 2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. N OS. 6441 & 6442/DEL/2013 A.Y RS. : 2007 - 08 & 2009 - 10 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 3(1), NEW DELHI VS. M/S CANNAUGHT PLAZA RESTAURANTS PVT. LTD., 13 - A, JOR BAGH MARKET, NEW DELHI 110 013 (PAN: AAACC1201E) (APPELLANT) (RESPONDENT) DEPARTMENT BY : S HRI J.P. CHANDRAKAR, SR. DR ASSESSEE BY : SH. ROHIT GAR G , CA DATE OF HEARING : 14 - 8 - 201 5 DATE OF ORDER : 04 - 9 - 201 5 ORDER PER H.S. SIDHU : J M REVENUE HAS FILED TH ESE A PPEAL S AGAINST THE RESPECTIVE IMPUGNED O RDER S BOTH DATED 30 . 9 .2013 PASSED BY THE LD. CIT(A) - V, NEW DELHI RELEVANT TO ASSESSMENT YEAR S 200 7 - 0 8 & 2009 - 10 . SINCE THE ISSUES INVOLVED IN BOTH THE APPEALS ARE COMMON AND IDENTICAL, HENCE, THESE APPEALS ARE BEING CONSOLIDATED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE, BY DEALING WITH ITA NO. 6441/DEL/2013 (AY 2007 - 08). 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN ITA NO. 6441/DEL/2013 (AY 2007 - 08) : - ITA NO S . 6441 & 6442/ DEL/ 2013 2 1. WHETHER THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN HOLDING THAT POINT OF SALES (POS) SYSTEMS ARE COMPUTERS AND ALLOWING DEPRECIATION @60% THEREON IGNORING THE FACT THAT EVERY ELECTRONIC ITEM HAVING MEMORY AND STORAGE CANNOT BE COVERED UNDER THE DE FINITION OF COMPUTERS ELIGIBLE FOR DEDUCTION OF DEPRECATION @ 60%. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSEE STATED THAT THE ISSUE IN DISPUTE HAS ALREADY BEEN DECIDED BY THE HON BLE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 31.8.2010 IN ITA NO. 1266/2010 IN THE CASE OF COMMISSIONER OF INCOME TAX VS. BSES RAJDHA NI POWERS LTD. HE HAS ALSO FILED A COPY OF THE AFORESAID ORDER DATED 31.8.2010 PASSED BY THE HON BLE HIGH COURT OF DELHI AND REQUESTED THAT APPEAL FILED BY THE REVENUE MAY BE DISMISSED. 3.1 ON THE CONTRARY, LD. DR RELIED UPON THE ORDER PASSED BY THE ASSES SING OFFICER. 4. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RELEVANT RECORDS, ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH THE ORDER DATED 31.8.2010 PASSED BY THE HON BLE HIGH COURT OF DELHI IN ITA NO. 1266/2010 IN THE CASE OF CI T VS. BSES RAJDHANI POWERS LTD.. ITA NO S . 6441 & 6442/ DEL/ 2013 3 5. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ON 30.1 2 .200 9 AND FINDING OF THE ASSESSING OFFICER ON THE ISSUE IN DISPUTE AT PAGE NO. 7 IS AS UNDER: - 3. DEPRECIATI ON ON P.O.S. MACHINES : ON PERUSAL OF INFORMATION FURNISHED IN ANNEXURE 3A - 1 OF CLAUSE 14 FORMING PART OF FORM NO.3CD, IT IS NOTICED. THAT ASSESSEE COMPANY HAS MADE ADDITION TO FIXED ASSETS UNDER THE HEAD 'COMPUTER' W . R . T . 'P.O.S.' MACHINES AMOUNTING TO RS. 1 ,62,22,194/ - (RS . 57,24,048/ - ADDITIONS MADE AND PUT TO USE FOR MORE TH A N 180 DAYS AN D RS. 1,04,98,146/ - LESS TH A N 180 DAYS) AND CLAIMED DEPRECIATION @ 60% ON P.O.S. AS THE DEPRECIATION RATES MENTIONED IN APPENDIX I [RULE 5] OF I. T. RULES, ONLY COMPUTERS AND COMPUTER SOFTWARE WILL BE ENTITLED FOR DEPRECIATION @ 60%. SINCE AS PER THE I. T. RULES, ONLY THE COMPUTERS AND COMPUTER SOFTWARE ARE ELIGIBLE FOR DEPRECIATION @ 60%, THE SAME CANNOT BE EXTENDED TO COMPUTER ACCESSORIES AND PERIP HERALS. 'POS' MACHINES ON WHICH THE ASSESSEE WAS CLAIMING DEPRECIATION CANNOT BE CALLED AS EVEN COMPUTER ACCESSORIES OR PERIPHERALS. THEY ARE THE MACHINES WHICH WERE RUNNING WITH THE AID OF THE COMPUTER. THE DEPRECIATION RATES ARE VERY SPECIFIC TO THOSE IT EMS MENTIONED IN THE DEPRECIATION TABLE AND NO LIBERAL INTERPRETATION CAN BE MADE ,IN THIS REGARD. IF THE ASSESSEE COMPANY'S SUBMISSIONS ARE ACCEPTED THEN BY THAT JUSTIFICATION, ALL THE BIG INPUT AND OUTPUT DEVISES, PROCESSING UNITS, STORAGE UNITS LIKE MRI SCANNING MACHINES, COORDINATE MEASURING MACHINES USED IN THE INDUSTRIES FOR WELDING ETC WILL BE ENTITLED TO 60% DEPRECIATION. IN THAT WAY, IT CAN BE EXTENDED TO ANY ITA NO S . 6441 & 6442/ DEL/ 2013 4 MACHINERY WHERE THE COMPUTER IS USED FULLY OR PARTIALLY. HENCE THE I. T. RULES SPECIFICALLY PROVIDED THE DEPRECIATION @ 60% ONLY ON COMPUTERS AND COMPUTER SOFTWARES. IN VIEW OF THE ABOVE FACTS AND INTERPRETATIONS, THE ASSESSEE COMPANY'S CLAIM OF DEPRECIATION @60% IS DISALLOWED ON POS MACHINES AND THE SAME IS ALLOWED @15% TREATING THE SAME AS N ORMAL PLANT AND MACHINERY. THE EXCESS DEPRECIATION AMOUNTING TO RS.49,37,903/ - IS DISALLOWED. 6. AGGRIEVED BY THE AFORESAID ORDER OF THE ASSESSING OFFICER DATED 30 . 1 2 .200 9 , ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPU GNED ORDER DATED 30 . 9 .2013 HAD DECIDED THE ISSUE IN DISPUTE IN FAVOR OF THE ASSESSEE BY RESPECTFULLY FOLLOWING THE ORDER DATED 31.8.2010 OF THE HON BLE JURISDICTIONAL HIGH COURT PASSED IN ITA NO. 1266/2010 IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RA JDHANI POWERS LTD. THE FINDING OF THE LD. FIRST APPELLATE AUTHORITY VIDE PARA N O . 7.2 AT PAGES 13 & 1 4 ARE REPRODUCED BELOW: - I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND ALSO PERUSED THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. O N PERUSAL OF THE TECHNICAL SPECIFICATION OF 'POS FILED, BY THE APPELLANT, IT IS NOTICED THAT POS TERMINAL HAS A PROCESSOR, MINIMUM OF 256 MB MEMORY AND ALSO SUPPORTS MS - DOS AND MICROSOFT WINDOWS. FURTHER, THE POS MACHINES SUPPORT DATA SHARING THROUGH LAN ( ETHEMET) AND ALSO HAVE TWO USB PORTS. THAT BEING SO, I AM OF THE OPINION, THAT THE PAS TERMINAL IS AKIN TO THE COMPUTER IN TERMS OF BASIC ITA NO S . 6441 & 6442/ DEL/ 2013 5 FEATURES AND CAN VERY WELL BE CATEGORIZED AS 'COMPUTERS'. I FURTHER FIND SUPPORT FROM THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF BSES RAJDHANI POWERS LTD (SUPRA), WHEREIN THE COURT CONSIDERED COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS PRINTERS, SCANNERS AND SERVER, ETC., FORMING AN INTEGRAL PART OF THE COMPUTER SYSTEM AND ALLOWED DEPRECIATION @ 60% ON THE SAM E. THE PRESENT CASE, IN MY VIEW, STANDS ON MUCH BETTER FOOTING INASMUCH AS THE PAS IN ITSELF FUNCTIONS LIKE A COMPUTER AS AGAINST ANY PERIPHERAL DEVICES. THIS APART, THE AFORESAID ISSUE HAS RECENTLY BEEN DECIDED BY ME VIDE ORDER DATED 25. 0 7.2013 IN DECI DING THE APPEAL OF THE APPELLANT FOR THE ASSESSMENT YEAR 2003 - 04 IN APPEAL NO. 199/09 - 10 AND ALSO VIDE ORDER DATED 29.8.2013 FOR THE ASSESSMENT YEAR 2004 - 05. THIS GROUND OF APPEAL IS ACCORDINGLY DECIDED IN FAVOUR OF THE APPELLANT IN THE AFORESAID TERMS A ND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION @60% ON SUCH POS. 7. KEEPING IN VIEW THE AFORESAID FINDING GIVEN BY THE LD. FIRST APPELLATE AUTHORITY, IN WHICH HE HAS RESPECTFULLY FOLLOWED THE ORDER DATED 31.8.2010 OF THE HON BLE HIGH COURT OF DELHI PASSED IN ITA NO. 1266/2010 IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RAJDHANI POWERS LTD. , WHEREIN ISSUE IN DISPUTE HAS BEEN DECIDED IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE , NO INTERFERENCE IS CALLED FOR IN THE VALID AND REASONED ORDER PASSED BY THE LD. FIRST APPELLATE ITA NO S . 6441 & 6442/ DEL/ 2013 6 AUTHORITY . HENCE, WE AFFIRM THE ORDER OF THE LD.CIT(A) AND DISMISS THE PRESENT APPEAL FILED BY THE REVENUE. 8 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 04 / 9 /20 1 5 . SD/ - SD/ - [ N.K. SAINI ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 04 / 9 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES