CINETECH ENTERTAINMENT INDIA PRIVATE LIMITED , MUMBAI V. INCOME TAX OFFICER WARD-16(1)(1), MUMBAI

MA 243/MUM/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0192 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 03-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJEEV KESARWANI
• Keywords: Depreciation; Rectification of order; Opportunity of being heard
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM M .A. NO. 243/MUM/2018 (ARISING OUT OF ITA NO. 4971/MUM/2017 ) ( ASSESSMENT YEAR: 2013 - 14) M/S. CINETECH ENTERTAINMENT INDIA PVT. LTD. 27, FILMLAB, WALL BHATT ROAD, G OREGAON (E), MUMBAI - 400 063 VS. ITO, WARD - 16(1)(1), 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400 020 PAN/GIR NO. AAECC 3526 G ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI RAKESH JOSHI RESPONDENT BY : SHRI RAJEEV KESARWANI DATE OF HEARING : 07.09. 2018 DATE OF PRONOUNCEMENT : 10.09 .2018 ORDER U/S. 254(2) OF THE INCOME TAX ACT, 1961 PER SHAMIM YAHYA, A. M.: BY WAY OF TH IS MISCELLANEOUS APPLICATION THE ASSESSEE SEEKS ORDER U/S. 254(2) OF THE INCOME TAX ACT, 1961 (THE ACT' FOR SHORT) AGAINST THE TRIBUNALS ORDER IN ITA NO . 4 971/MUM/201 7 FOR ASSESSMENT YEARS 20 13 - 14 VIDE ORDER DATED 0 5.02.2018 . 2. IN THE INCOME TAX APPEAL (ITA FOR SHORT) , THE INCOME TAX APPELLATE TRIBUNAL (ITAT FOR SHORT) HAS MENTIONED IN PARA 7 THAT IT HAS HEARD BOTH THE CO UNSEL AND PERUSED THE RECORDS. IN PARA 9 & 10, THE ITAT HAS GIVEN ITS ADJUDICATION AS UNDER: 9. UP ON CAREFUL CONSIDERATION , I NOTE THAT SECTION 32 OF THE ACT WHICH GRANTED DEPRECIATION ALLOWANCE DOES NOT DEFINE THE WORD COMPUTER. HOWEVER, THE ITAT SPECI AL BENCH IN THE CASE OF DATACRAFT INDIA LTD . (SUPRA) HAD THE OCCASION TO CONSIDER THE MEANING OF WORD COMPUTER. AFTER ELABORATELY CONSIDERING THE SPECIAL BENCH HAS EXPOUNDED AS UNDER: 25. THUS IN ORDER TO DETERMINE WHETHER A PARTICULAR MACHINE CAN BE CLA SSIFIED AS A COMPUTER OR NOT, THE PREDOMINANT FUNCTION, USAGE AND COMMON PARLANCE UNDERSTANDING, WOULD HAVE TO BE TAKEN INTO ACCOUNT. TO ANALYSE FURTHER, LET US TAKE THE CASE OF A TELEVISION, THE PRINCIPAL TASK 2 M.A. NO. 243/MUM/2018 M/S. CINETECH ENTERTAINMENT INDIA PVT. LTD. OF WHICH IS TO DELIVER VISUALS ACCOMPANIED WI TH AUDIO. THE SIGNALS ARE RECEIVED THROUGH THE RELEVANT NETWORKS SUCH AS DISH TV, TATA SKY ETC. BUT TV DOES NOT BECOME COMPUTER FOR THE REASON THAT ITS PRINCIPAL FUNCTION CANNOT BE DONE ONLY WITH THE AID OF COMPUTER FUNCTIONS NOTWITHSTANDING THE FACT THA T IN THE ENTIRE PROCESS OF NETWORKING OR RECEIVING THE OUTPUT FROM DIFFERENT CHANNELS AND MAKING IT AVAILABLE TO THE VIEWERS, SOME SORT OF COMPUTER FUNCTIONS ARE NECESSARILY INVOLVED. SIMILARLY TAKE THE CASE OF MOBILE PHONE. ITS PRINCIPAL TASK IS TO RECEIV E AND SEND CALLS. IT IS NOT A STAND - ALONE APPARATUS WHICH CAN OPERATE WITHOUT THE RELEVANT NETWORK, SUCH AS AIRTEL, BSNL, RELIANCE. IT, THEREFORE, FOLLOWS THAT ANY MACHINE OR EQUIPMENT CANNOT BE DESCRIBED AS COMPUTER, IF ITS PRINCIPAL OUTPUT OR FUNCTION IS THE RESULT OF SOME SORT OF COMPUTER FUNCTIONS IN CONJUNCTION WITH SOME NON - COMPUTER FUNCTIONS. IN ORDER TO BE CALLED AS COMPUTER, IT IS SINE QUA NON THAT THE PRINCIPAL OUTPUT/OBJECT/FUNCTION OF SUCH MACHINE SHOULD BE ACHIEVABLE ONLY THROUGH COMPUTER FU NCTIONS. 10. FROM THE ABOVE EXPOSITION IT IS EVIDENT THAT JUST BECAUSE SOME SORT OF COMPUTER FUNCTIONS ARE NECESSAR IL Y INVOLVED , MECHANICAL SYSTEM CANNOT BE SAID TO BE COMPUTER UNLESS ITS PRINCIPAL FUNCTION CANNOT BE DONE WITHOUT THE AID OF COMPUTER FUNCT ION. IN OTHER WORDS, ANY MACHINE OR EQUIPMENT CANNOT BE DESCRIBED AS COMPUTER IF ITS PRINCIPAL OUTPUT OR FUNCTION IS THE RESULT OF SOME SORT OF COMPUTER FUNCTIONS IN CONJUNCTION WITH SOME NON - COMPUTER FUNCTIONS. IT WAS HELD THAT IN ORDER TO BE CALLED AS COMPUTER, IT IS SINE QUA NON THAT THE PRINCIPAL OUTPUT/OBJECT/FUNCTION OF SUCH MACHINE COULD BE ACHIEVED ONLY THROUGH COMPUTER FUNCTIONS. 11. NOW WE EXAMINE THE PRESENT CASE ON THE TOUCH STONE OF THE DEFINITION. IN THE PRESENT CASE, THE CONCERNED MACHIN E IS A FILM PROJECTOR. THIS IS AN OPTICAL INSTRUMENT FOR PROJECTING AN IMAGE UPON A SURFACE. IT IS A DEVICE THAT PROJECTS A BEAM OF LIGHT ON TO A SCREEN FOR VIEWING A PICTURE ALREADY PROGRAMMED, FED AND INPUT. THOUGH SOME ELEMENTS OF COMPUTER FUNCTION ARE NECESSAR IL Y INVOLVED , THE PROJECTOR CANNOT BE SAID TO BE A MACHINE WHOSE PRINCIPAL OUTPUT/OBJECT/FUNCTION IS ACHIEVED ONLY THROUGH COMPUTER FUNCTION. HENCE, I AM OF THE CONSIDERED OPINION THAT THE FILM PROJECTOR IN THIS CASE CANNOT BE SAID TO BE COMPUTER ENTITLED FOR HIGHER RATE OF DEPRECIATION OF 60% APPLICABLE FOR COMPUTATION. THE DECISIONS REFERRED BY THE LD. COUNSEL OF THE ASSESSEE WERE WITH RESPECT TO PRINTER, SCANNER AND ROUTER WHICH ARE ALTOGETHER DIFFERENT ITEMS. IN FACT, THE EXPOSITION FROM SPECIA L BENCH, MUMBAI DECISION IN THE CASE OF DATACRAFT INDIA LTD . (SUPRA) HAD DEFINED THE TERM COMPUTER WHICH HAS CLINCHED THE ISSUE IN FAVOUR OF THE REVENUE. ACCORDINGLY, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE AUTHORITIES BELOW. HENCE, I AFFIRM THE SAME. 3 M.A. NO. 243/MUM/2018 M/S. CINETECH ENTERTAINMENT INDIA PVT. LTD. 3. NOW BY WAY OF THIS MA, THE ASSESSEE STATES AS UNDER: 2. IN THE SAID APPEAL THE ISSUE INVOLVED WAS IN RELATION TO THE APPLICABILITY OF DEPRECIATION RATE U/S 32 OF THE ACT ON FILM PROJECTORS. DURING THE COURSE OF HEARING AUTHORISED REPRESENTATIVE (AR) OF THE APPLICANT FILED PAPER BOOK CONTAINING PAGES 01 - 58. 3. AR OF THE APPELLANT POINTED OUT TO THE HON'BLE BENCH THAT THE SAID PROJECTORS ARE SONY MAKE DIGITAL PROJECTION SYSTEM, WHICH 1 WERE IMPORTED FROM HONG KONG. WHILE IMPORTING ANY MACHINERY, CUSTOM DEPARTMENT CHARGE DUTY AS PER HSN CODE/ ETC CODE OF THE IMPORTED ITEM. IN THE CASE OF APPLICANT, THE SAID PROJECTORS WERE ASSIGNED HSN CODE OF DATA PROCESSING MACHINE, WHICH PROVES THAT THE SAID PROJECTORS ARE COMPUTERS. THE AR INVITED ATTENTION OF THE HON'BLE BENCH TOWARDS PAGE 24 - 35 OF PAPER BOOK, WHICH CONTAINED CUSTOM INVOICE AND DESCRIPTION OF RELEVANT HSN CODE. BEING SATISFIED WITH THE SAID EXPLANATION OF THE AR, HON'BLE BENCH FORMED AN OPINION THAT SINCE THE CUSTOM DEPT. HAS CONSIDERED THE SA ID PROJECTORS AS COMPUTERS, HENCE IT SHOULD ELIGIBLE FOR DEPRECIATION RATE @ 60% APPLICABLE TO COMPUTERS. LD DR ALSO FAIRLY ACCEPTED THIS PROPOSITION, HOWEVER SHE RELIED UPON THE DECISION OF LD CIT(A). 4. THAT, IN DECIDING THE AFORESAID ADDITIONAL GROUND A GAINST THE ASSESSEE, THE HON'BLE BENCH IN ADVERTENTLY HAS NOT CONSIDERED THE SAID PLEA OF THE APPELLANT. SINCE DOCUMENTS AVAILABLE ON RECORD HAS NOT BEEN CONSIDERED, THEREFORE, A MISTAKE APPARENT FROM RECORD HAS CREPT IN. IT IS, THEREFORE, SUBMITTED THAT TH E ORDER MAY KINDLY BE RECTIFIED. 4. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. BEFORE PROCEEDING FURTHER, I MAY GAINFULLY REFER TO THE PROVISIONS OF SECTION 254(2) OF THE ACT: 61 254. (2) THE APPELLATE TRIB UNAL MAY, AT ANY TIME WITHIN 63 [SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER WAS PASSED], WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD 64 , AMEND ANY ORDER P ASSED BY IT UNDER SUB - SECTION (1), AND 64 SHALL MAKE SUCH AMENDMENT 64 IF THE MISTAKE IS BROUGHT TO ITS NOTICE BY THE ASSESSEE OR THE 65 [ASSESSING] OF FICER : PROVIDED THAT AN AMENDMENT WHICH HAS THE EFFECT OF ENHANCING AN ASSESSMENT OR REDUCING A REFUND OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESSEE, SHALL NOT BE MADE UNDER THIS SUB - SECTION UNLESS THE APPELLATE TRIBUNAL HAS GIVEN NOTICE TO THE AS SESSEE OF ITS INTENTION TO DO SO AND HAS ALLOWED THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD : 66 [ PROVIDED FURTHER THAT ANY APPLICATION FILED BY THE ASSESSEE IN THIS SUB - SECTION ON OR AFTER THE 1ST DAY OF OCTOBE R, 1998, SHALL BE ACCOMPANIED BY A FEE OF FIFTY RUPEES.] 4 M.A. NO. 243/MUM/2018 M/S. CINETECH ENTERTAINMENT INDIA PVT. LTD. 5. FURTHER I FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT HAS OCCASION TO CONSIDER SECTION 254(2) OF THE ACT IN THE CASE OF CIT VS. RAMESH ELECTRIC AND TRADING CO. [1993] 203 ITR 497 (BOM). IN TH E SAID ORDER, THE HON'BLE JURISDICTIONAL HIGH COURT HAS REFERRED TO AND DRAWN STRENGTH FROM THE HONBLE APEX COURT DECISION IN THE CASE OF T.S. BALARAM, ITO V. VOLKART BROS. [1971] 82 ITR 50 (SC). THE HON'BLE JURISDICTIONAL HIGH COURT HAS REFERRED TO THE FOLLOWING FROM THE HONBLE APEX COURT DECISION: 'A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FROM THE RECORD.' 6. THEREAFTER AFTER CONSIDERING THE VARIOUS FACTS AND DECISIONS, THE HON'BLE JURIS DICTIONAL HIGH COURT HAS EXPOUNDED AS UNDER: IN OUR VIEW, THE POWER OF RECTIFICATION UNDER SECTION 254(2) OF THE INCOME - TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MISTAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE ESTABLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS, AS HAS BEEN SHOWN IN THE PRESENT CASE. FAILURE BY THE TRIBUNAL TO CONSIDER AN ARGUME NT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. 7. FROM THE ABOVE, IT TRANSPIRES THAT IT IS NOT PERMISSIBLE TO REVIEW THE ORDER OF THE TRIBUNAL U/S. 254(2) OF THE A CT IN THE GARB OF THE RECTIFICATION OF MISTAKE. NOW I PROCEED TO EXAMINE THE PRESENT ISSUE ON THE TOUCH STONE OF THE ABOVE. 8. I FIND THAT THE ITAT HAS PASSED A W ELL REASONED ORDER. IT HAS MENTIONED THAT THE ORDER WAS BEING PASSED AFTER PERUSING THE RECOR DS AND CONSIDERING ALL THE SUBMISSIONS. NOW THE ASSESSEE CONTEST THAT SOME OF THE SUBMISSIONS WERE NOT CONSIDERED. IT IS QUITE 5 M.A. NO. 243/MUM/2018 M/S. CINETECH ENTERTAINMENT INDIA PVT. LTD. DEBATABLE AS TO WHETHER THE ITAT HAD CONSIDERED THESE SUBMISSIONS OR NOT. AS HELD BY THE HONBLE APEX COURT IN THE CASE OF VOLKAR T BROS. (SUPRA) A MISTAKE APPARENT FROM RECORD CANNOT BE SAID TO HAVE ARISEN ON A DEBATABLE POINT. WHAT THE ASSESSEE IS NOW SEEKING BY WAY OF THIS MISCELLANEOUS APPLICATION IS A REVIEW OF THE ORDER OF THE TRIBUNAL U/S. 254(2) OF THE ACT IN THE GARB OF THE RECTIFICATION OF MISTAKE, WHICH IS NOT PERMISSIBLE AS PER THE PROVISIONS OF THE ACT AND CASE LAW. EVEN OTHERWISE IN THE CASE OF HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF RAMESH ELECTRIC AND TRADING CO. (SUPRA) HAS RULED THAT SUCH RECONSIDER ATION IS NOT PERMISSIBLE U/S. 254(2) OF THE ACT. HENCE, THE MA IS LIABLE TO BE DISMISSED AND THE SAME IS DISMISSED ACCORDINGLY. 9 . IN THE RESULT, THE MISCELLANEOUS APPLICATION BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.09.2018 SD/ - (S HAMIM YAHYA) A CCOUNTANT MEMBER MUMBAI ; DATED : 10.09.2018 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI