LANDMARAK LTD, MUMBAI V. ACIT 10(1), MUMBAI

ITA 6526/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70669 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 27-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MADHUK
• Keywords: Depreciation
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.6526/MUM/2011 (ASSESSMENT YEAR: 2008-09) M/S. LANDMARK LIMITED A C I T - 10(1) TRENT HOUSE, G-BLOCK AAYAKAR BHAVAN, M.K. ROAD PLOT NO. C-60, B.K.C. VS. MUMBAI 400020 BANDRA (E), MUMBAI PAN - AABCL1748E APPELLANT RESPONDENT APPELLANT BY: SHRI NITESH JOSHI RESPONDENT BY: SHRI S.K. MADHUK DATE OF HEARING: 20.08.2013 DATE OF PRONOUNCEMENT: 20.08.2013 O R D E R PER D. MANMOHAN, V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE ASSE SSEE AND IT PERTAINS TO A.Y. 2008-09. 2. THE FOLLOWING GROUNDS WERE URGED BEFORE US: - 1) THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A )] ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER THAT SCAN NER, SCANNER CARD AND CARD PRINTER WOULD FALL UNDER THE BLOCK OF OFFICE EQUIPMENT/PLANT & MACHINERY ELIGIBLE FOR DEPRECIATI ON @15% AND NOT UNDER THE BLOCK OF COMPUTERS ELIGIBLE FOR DEPRE CIATION @60%. 2) THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE U/S 14A TOWARDS ADMINISTRATIVE EXPENSES OF RS.121,566/- TO EARN EXE MPT INCOME AT 0.5% OF THE AVERAGE INVESTMENTS OF RS.2,43,13,345/- IGNORING THE FACT THAT THE APPELLANT ON THEIR OWN HAVE OFFERED R S.15,250/- IN RELATION TO DIVIDEND INCOME OF RS.53,400/-. 3. THE FACTS CONCERNING GROUND NO. 1 ARE AS FOLLOWS. T HE ASSESSEE PURCHASED SCANNER, SCANNER CARD AND CARD PRINTER ON WHICH IT CLAIMED DEPRECIATION @60%, WHICH IS THE RATE APPLICABLE TO COMPUTER AND ITS ACCESSORIES. THE AO AS WELL AS THE CIT(A) WERE OF T HE OPINION THAT COMPUTER ITA NO.6526/MUM/2011 M/S. LANDMARK LIMITED 2 CAN BE OPERATED WITHOUT THESE ACCESSORIES AND HENCE THE AFOREMENTIONED ITEMS CANNOT BE CONSIDERED AS PART OF COMPUTER; THE REFORE, DEPRECIATION WAS ALLOWED @15% ONLY. AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTED OUR ATTENTION TO THE DECISION OF THE ITAT SPECIAL B ENCH, MUMBAI IN THE CASE OF DATACRAFT INDIA LTD. TO SUBMIT THAT THOUGH THE S PECIAL BENCH WAS CONCERNED WITH THE DEPRECIATION ALLOWABLE ON ROUTER S IT TOOK NOTICE OF THE FACT THAT PRINTERS AND SCANNERS WERE HELD TO BE PAR T OF COMPUTER QUALIFYING FOR DEPRECIATION AT THE RATE APPLICABLE TO COMPUTER S, AS HELD IN THE CASE OF SAMIRAN MAJAUMDAR, AND THE VIEW TAKEN THEREIN WAS A PPROVED BY THE SPECIAL BENCH, IMPLYING THEREBY THAT PRINTERS AND S CANNERS DESERVES TO BE TREATED AS PART OF COMPUTERS. HE HAS ALSO REFERRED TO THE LATEST DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. BSES YAMUNA POWERS LTD. 2010-TIOL-636-HC-DEL-IT WHEREIN THE HON'BLE HI GH COURT IN PARA 4 OF ITS JUDGEMENT HELD AS UNDER: - 4. WE ARE IN AGREEMENT WITH THE VIEW OF THE TRIBUN AL THAT COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS, PRINTERS, SCAN NERS AND SERVER, ETC. FORM AN INTEGRAL PART OF THE COMPUTER SYSTEM. IN FACT, THE COMPUTER ACCESSORIES AND PERIPHERALS CANNOT BE USED WITHOUT THE COMPUTER. CONSEQUENTLY, AS THEY ARE THE PART OF THE COMPUTER SYSTEM, THEY ARE ENTITLED TO DEPRECIATION AT THE HIGHER RAT E OF 60%. HE SUBMITTED THAT THERE IS NO CONTRARY DECISION OF THE HIGH COURTS ON THIS ISSUE AND HENCE THE ASSESSEE IS ENTITLED TO DEPRECI ATION @60%. 5. THE LEARNED D.R. WAS UNABLE TO PLACE BEFORE US ANY CONTRARY DECISION ON THIS ISSUE. HAVING REGARD TO THE CIRCUMSTANCES O F THE CASE WE ACCEPT THE PLEA OF THE ASSESSEE AND DIRECT THE AO TO ALLOW DEP RECIATION @60% ON SCANNER, SCANNER CARD AND CARD PRINTER. GROUND NO. 1 IS ACCORDINGLY ALLOWED IN FAVOUR OF THE ASSESSEE. 6. THE NEXT ISSUE IS WITH REGARD TO COMPUTATION OF DIS ALLOWANCE UNDER SECTION 14A OF THE ACT. DURING THE YEAR UNDER CONSI DERATION THE ASSESSEE EARNED DIVIDEND INCOME OF ` 53,400/- WHICH WAS CLAIMED AS EXEMPT FROM TAX. THE ASSESSEE ON ITS OWN HAVE DISALLOWED ` 15,250/- TOWARDS ESTIMATED ADMINISTRATIVE EXPENSES. THE AO WAS, HOWEVER, OF TH E VIEW THAT DISALLOWANCE ITA NO.6526/MUM/2011 M/S. LANDMARK LIMITED 3 HAS TO BE MADE AS PER PROVISIONS OF RULE 8D AND IN HIS OPINION DISALLOWANCE OF INTEREST WORKS OUT TO ` 9,38,040/- AND FURTHER DISALLOWED A SUM OF ` 1,21,566/- TOWARDS OTHER EXPENSES. ON AN APPEAL FIL ED BY THE ASSESSEE THE LEARNED CIT(A) RESTRICTED THE DISALLOWANCE TO ` 1,21,566/-. AGGRIEVED BY THE ORDER OF THE CIT(A) BOTH THE ASSESSEE AS WELL AS TH E REVENUE FILED APPEALS. THE APPEAL FILED BY THE REVENUE WAS DISMISSED BY TH E ITAT A BENCH VIDE ITS ORDER DATED 18.01.2013. UNDER THIS CIRCUMSTANCE THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE IS NOT INTERESTED IN PU RSUING GROUND NO. 2 IN THE APPEAL FILED BY IT. WE, THEREFORE, DISMISS GROU ND NO. 2 OF THE ASSESSEE. 7. IN THE RESULT, AS PRONOUNCED IN THE OPEN COURT, APP EAL FILED BY THE ASSESSEE COMPANY IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH AUGUST, 2013. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 20 TH AUGUST, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 21, MUMBAI 4. THE CIT 10, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.