ESENSE LEARNING P.LTD, MUMBAI V. ACIT 6(2)(2), MUMBAI

ITA 7055/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2269 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 02-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Set aside
• Section: 142(1); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI M. BALAGANESH , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 7055 /MUM/201 6 ( / ASSESSMENT YEAR: 20 1 2 - 13 ) ESSENSE LEARNING PVT. LTD NAVNEET BHAVAN, BHAVANI SHANKAR ROAD, DADAR (W), MUMBAI - 400028 . / VS. ACIT - 6(2)(2) ROOM NO.504, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AACCN7509C ( / APPELLANT ) .. ( / RESPOND ENT ) / DATE OF HEARING : 02 / 0 5 / 201 9 / DATE OF PRONOUNCEMENT : 24 / 06 / 201 9 / O R D E R PE R AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 24 . 0 8 .201 6 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 12 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 12 - 1 3 . 2 . THE ASSESSEE HAS RAI SED THE FOLLOWING GROUNDS: - 1. GROUND NO.1 DEPRECIATION ON COMPUTER PROJECTOR RESTRICTED TO 15% (I) THE HONBLE CIT(A) ERRED IN FACTS AND IN LAW, IN CONFIRMING THE DEPRECIATION ON COMPUTER PROJECTOR AT ASSESSEE BY : SHRI SANJAY PARIKH REVENUE BY: SHRI SACHCHIDANAND DUBE (DR) ITA NO. 7055 / M/201 6 A.Y.20 12 - 13 2 RS.31,19,188/ - @ 15% AS AGAINST DEPRECIATION @ 60% CLAIMED BY YOUR APPELLANT OF RS.1,24,76,754/ - . (II) THE HONBLE CIT(A) FAILED TO APPRECIATE THAT THE PROJECTOR IS AN OUTPUT DEVICE OF COMPUTER SYSTEM AND FALLS WITHIN THE DEFINITION OF COMPUTER AS PER THE INFORMATION TECHNOLOGY ACT, AND HENCE THE DEPRECIATION CLAIMED BY YOUR APPELLANT @ 60% MAY PLEASE BE ALLOWED. (III) YOUR APPELLANT PRAYS THAT THE DISALLOWANCE MADE MAY PLEASE BE DELETED AND THE DEPRECIATION CLAIMED MAY PLEASE BE ALLOWED. 2. GROUND NO.2 DEPRECIATION ON COMPUTER TROLLEYS RESTRICT ED TO 15% (I) THE HONBLE CIT(A) ERRED IN FACTS AND IN LAW, IN CONFIRMING THE DEPRECIATION ON COMPUTER PROJECTOR AT RS.8,78,724/ - @ 15% AS AGAINST DEPRECIATION @ 60% CLAIMED BY ASSESSEE OF RS.35,14,901/ - @ 60%. (II) THE HONBLE CIT(A) FAILED TO APPRECI ATE THAT THE TROLLEYS WERE A PART OF THE KIT TO KEEP THE WHOLE CLASS ROOM TRAINING KIT IN A USER FRIENDLY & SAFE MANNER & HENCE IS AS AN ANCILLARY EQUIPMENT AND DEPRECIATI ON @ 60% MAY PLEASE BY ALLOWED. YOUR APPELLANT PRAYS THAT THE DISALLOWANCE MADE M AY PLEASE BE DELETED AND THE DEPRECIATION CLAIMED MAY PLEASE BE ALLOWED . 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETU RN OF INCOME ON 30 . 09 .201 2 DECLARING NET LOSS TO THE TUNE OF RS.7,22,19,994 / - . THE ASSESSMENT OF THE ASSESSEE WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THE REAFTER, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS . NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PUBLISHERS, CREATORS OF EDUCATIONAL CONTENTS, CD ROM, SET OF DIGITAL CLASSROOM IN SCHOOLS. THE DIGITAL CLASSROOM SET - UP INCLUDES PROVIDING HARDWARE TECHNOLOGY I.E. COMPUTER, PROJECTOR, SPEAKER, POWER BACKUP ETC. AND DIGITAL CONTENT. THE ASSESSEE CLAIMED THE DEPRECIATION @ OF 6 0% OF THE PROJECTORS OF THE ITA NO. 7055 / M/201 6 A.Y.20 12 - 13 3 COMPUTER TROLLY ETC. THE NOTICE WAS GIVEN TO THE ASSESSEE AND AFTER REPLY OF THE ASSESSEE, THE CLAIM OF THE DEPRECIATION WAS ALLOWED TO THE EXTENT OF 15%. THE LOSS OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.( - )6,02,26,251/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO . 1 4. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE RESTRICTION OF THE DEPRECIATION TO THE EXTENT OF 15% UPON THE PROJECTOR AS AGAINST THE DEPRECIATION ALLOWABLE IF ANY @ 60%. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE COMPUTER PROJECTOR IS THE PART AND PARCEL OF THE COMPUTER OPERATING SYSTEM, THEREFORE, THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION @ 60% IN VIEW OF THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS. CACTUS IMAGING INDIA PVT. LTD. (2018) 406 ITR 406 (MAD). HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS STRONGLY RELIE D UPON THE ORDER PASSED BY CIT(A) IN QUESTION. IN THE INSTANT CASE, THE CLAIM OF THE ASSESSEE IS IN CONNECTION WITH THE COMPUTER PROJECTOR. T HE COMPUTER PROJECTOR CANNOT WORK ALONE WITHOUT OPERATING THE COMPUTER SYSTEM. IT IS INTEGRAL PART OF THE COMPUTER, THEREFORE, THIS ITEM IS ENTITLED FOR THE DEPRECIATION @ 60% . I N THIS REGARD , WE ALSO FIND SUPPORT OF LAW SETTLED IN THE CASE OF CIT VS. BSES RAJDHANI POWERS LTD. 1266 (DELHI) OF 2010 DATED 31.08.2010 AND DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS . CACTUS IMAGING INDIA PVT. LTD. (2018) 406 ITR 406 (MAD). TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES MENTIONED ABOVE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND ITA NO. 7055 / M/201 6 A.Y.20 12 - 13 4 ALLOWED THE DEPRECIATION @ 60% UPON THE COMPUTER PROJECTOR. ACCORDINGLY , THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO. 2 5. UNDER THIS ISSUE THE ASSESSEE HAS CLAIMED THE DEPRECIATION ON COMPUTER TROLLEYS RESTRICTED @ 15%. COMPUTER TROLLEYS ARE MADE FROM WOOD AND OTHER THINGS USE D FOR PUTTING THE COMPUTERS ON IT. IT IS LIKE THE TABLE WHICH IS USED TO PUT THE COMPUTERS AND OTHERS ITEMS ABOVE FOR WORKING . IT CANNOT BE TREATED AS PART AND PARCEL OF THE COMPUTER OPERATING SYSTEM. HOWEVER, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE IS ENTITLED TO CLAIM THE DEP RECIATION @ 60% ON THE COMPUTER TROLLEYS BUT HE NOWHERE FURNISHES ANY EVIDENCE IN SUPPORT OF HIS CLAIM THAT COMPUTER TROLLEYS IS LIABLE TO BE CONSIDERED AS THE PART AND PARCEL OF THE COMPUTER SYSTEM. NO LAW SETTLED BY A NY AUTHORITY PRODUCED BEFORE US IN SUPPORT OF HIS CLAIM. TAKING INTO ACCOUNT ALL THE CIRCUMSTANCES MENTIONED ABOVE, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY RESTRICTED THE DEPRECIATION TO THE EXTENT OF 15 % OF THE VALUE OF COMPUTERS TROLLEY. ACCORDIN GLY, WE CONFIRMED THE FINDING OF THE CIT(A) ON THIS ISSUE AND DECIDE THE ISSUE IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE . 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 24 /06 /2019 . SD/ - SD / - ( M.BALAGANESH ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 24 /06 /2019 V IJAY ITA NO. 7055 / M/201 6 A.Y.20 12 - 13 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) , / ITAT, MUMBAI