Income Tax Appellate Tribunal - Hyderabad
M/S Visu International Limited,, ... vs Department Of Income Tax on 12 November, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'B', HYDERABAD
BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER
AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No.488/Hyd/13 : Assessment year 2009-10
M/s. Visu International Limited, V/s. Dy. Commissioner of Income-tax,
Hyderabad Circle 3(3), Hyderabad
(PAN - AABCV 1500 A)
(Appellant) (Respondent)
ITA No.621/Hyd/13 : Assessment year 2009-10
Dy. Commissioner of Income- V/s. M/s. Visu International Limited,
tax, Circle 3(3), Hyderabad Hyderabad
(PAN - AABCV 1500 A)
(Appellant) (Respondent)
Assessee by : Shri P.Murali Mohan Rao
Department by : Shri Rajat Mitra DR
Date of Hearing 3.11.2014
Date of Pronouncement 12.11.2014
ORDER
Per P.M.Jagtap, Accountant Member :
These two appeals, one filed by the assessee being ITA No.488/Hyd/2013 and the other filed by the Revenue, being ITA No.621/Hyd/2013, are cross appeals, which are directed against the order of the learned Commissioner of Income-tax(Appeals) IV, Hyderabad dated 13.2.2013.
2 ITA No.488 and 621/Hyd/2013M/s. Visu International Limited, Hyderabad
2. First, we shall take up the appeal of the Revenue, which involves a solitary issue relating to the deletion by the learned CIT(A) of the disallowance made by the Assessing Officer on account of belated payment of contributions towards Employees Provident Fund and ESI.
3. The assessee in the present case is a company which is engaged in the business of training and software exports. The return of income for the year under consideration was filed by it on 26.9.2009, declaring a total income of Rs.69,10,804. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee has collected employees contribution towards Provident Fund and ESI amounting to Rs.9,53,795 and Rs.1,06,465. The said amounts, totaling to Rs.10,60,260, were treated by the Assessing Officer as the income of the assessee under S.2(24)(x) of the Act, and since the same were not paid by the assessee within the due dates mentioned in the respective Acts, disallowance was made by the Assessing Officer under S.36(va) of the Act.
4. On appeal, the learned CIT(A) deleted the disallowance made by the Assessing Officer on this issue, relying inter-alia on the decision of the Delhi Bench of the Tribunal in the case of ACIT V/s. Shakti Bhog Foods P. Ltd. (ITA No.2777 to 2781/Del/2010 dated 28.6.2011), wherein it was held relying on the decision of the Apex Court in the case of CIT V/s. Vinay Cements Ltd. (213 CTR 268), that the employees contribution towards Provident Fund and ESI having been paid by the assessee before the due date of filing of the return of income for the year under consideration, it was entitled to claim deduction for the same as per S.43B of the Act, read with second proviso thereto.
3 ITA No.488 and 621/Hyd/2013M/s. Visu International Limited, Hyderabad
5. At the time of hearing before us, the learned representatives of both the sides have agreed that the issue involved in the appeal of the Revenue is squarely covered by the various decisions of the Tribunal as well as High courts. In one such decisions recently rendered on October 14, 2014 in the case of CIT V/s. Ghatge Patil Transport Ltd. (Income Tax Appeal No.1002 of 2012), Hon'ble Bombay High Court, after taking into consideration the provisions of S.2(24)(x) read with S.36(1)(va) and S.43B, held that even employees contribution to Provident Fund etc. is allowable as deduction, if the same is deposited before the due date of filing of the return of income for the relevant year. Respectfully following the said decision of the Hon'ble Bombay High Court, we uphold the impugned order of the learned CIT(A) allowing the deduction claimed by the assessee on account of payment of employees' contribution towards Provident Fund and ESI made by the assessee, after the due dates prescribed in the respective statutes, but before the due date of filing of the return of income for the year under consideration and dismiss the appeal of the Revenue.
6. Now, we shall take up the appeal of the assessee, ground No.1 of which is general in nature seeking no specific adjudication.
7. Grounds Nos. 2 and 3 of the assessee's appeal involve a common issue relating to disallowance of Rs.2,48,175 made by the Assessing Officer and confirmed by the learned CIT(A) under S.40(a)(ia) of the Act.
8. In the Profit and Loss Account filed alongwith its return of income, the assessee had debited a sum of Rs.2,48,175 on account of Audit Fee. According to the Assessing Officer, the assessee was liable to deduct tax at source from the payment made on account of audit 4 ITA No.488 and 621/Hyd/2013 M/s. Visu International Limited, Hyderabad fee under S.194J and since no such tax was deducted by it, he invoked the provisions of S.40(a)(ia) and made disallowance on account of audit fee. On appeal, the learned CIT(A) confirmed the disallowance made by the Assessing Officer on this issue for the same reasons, as given by the Assessing Officer.
9. We have heard the arguments of both the sides and also perused the relevant material on record. The learned counsel for the assessee has contended that the assessee company has not been treated as the assessee in default under S.201(1) of the Act for its failure to deduct tax at source from the payment made on account of audit fee and therefore, no disallowance can be made on account of audit fee, as per the second proviso to S.40(a)(ia). Although the learned Departmental Representative has contended that the said second proviso has been inserted in the statute by the Finance Act, 2012 with effect from 1.4.2013, it is noted, the same has been treated as retrospectively applicable from 1.4.2005 by the coordinate Bench(Bangalore) of this Tribunal in the case of G.Shankar V/s.ACIT(ITA No.1832/Bang/2013 for assessment year 2005-06). We, therefore, restore this issue to the file of the Assessing Officer for the limited purpose of verifying as to whether the assessee company is treated as an assessee in default under S.201(1) of the Act for its failure to deduct tax at source from the payment made on account of audit fee. If it is found on such verification that no order under S.201(1) is passed to this effect, the Assessing Officer is directed to delete the disallowance made under S.40(a)(ia) on account of audit fee. Grounds No.2 and 3 of the assessee's appeal are accordingly treated as allowed for statistical purposes.
10. The issue involved in grounds No.4 to 7 of the assessee's appeal involve a common issue relating to the disallowance made by 5 ITA No.488 and 621/Hyd/2013 M/s. Visu International Limited, Hyderabad the Assessing Officer and confirmed by the learned CIT(A) on account of depreciation on Xerox copiers, LCD TV, colour copier and LCD screens.
11. While examining the claim of the assessee for depreciation, it was found by the Assessing Officer during the course of assessment proceedings that the assessee has claimed depreciation at higher rate of 60% on xerox copiers, Samsung LCD TV, colour copier and LCD project screens of the total value of Rs.56,83,960, treating the same as falling in the category of 'computer'. According to the Assessing Officer, these items were not in the nature of 'computer' but were in the nature of office equipment falling in the block of plant and machinery. He accordingly allowed depreciation thereon at the rate of 15% as against 60% claimed by the assessee which resulted in a disallowance of Rs.15,57,782.
12. Before the learned CIT(A), reliance was placed by the assessee on the decision of the Kolkata Bench of the Tribunal in the case of ITO V/s. Samiran Majumdar (101 TTJ Kol 501) in support of its case that the items in question being in the nature of computer were eligible for depreciation at higher rate of 60%. The learned CIT(A), however, found that the decision in the case of Samiran Majumdar (supra) was rendered by the Tribunal in the context of assessee's claim for depreciation on printers and scanners and since the said devices were necessarily used as integral part of computers, they were held by the Tribunal to be eligible for depreciation at higher rate of 60%. He held that the items in question involved in the case of the assessee, on the other hand, were neither computer in themselves nor were input and output devices connected or to related to a computer. Accordingly, relying on the decision of the Special Bench of ITAT in the case of CIT V/s. Datacraft India Ltd.
6 ITA No.488 and 621/Hyd/2013M/s. Visu International Limited, Hyderabad (2011) 9 ITR (Trib) 712 (Mum)(SB), he confirmed the disallowance made by the Assessing Officer, by allowing depreciation on the said items at the rate of 15% as against 60% claimed by the assessee.
13. We have heard the arguments of both the sides and also perused the relevant material on record. As held by the Delhi Bench of the Tribunal in the case of Asstt. CIT V/s. Amadeus India (P)Ltd. (79 ITD 407), cited by the learned counsel for the assessee, the term 'computer' should be interpreted liberally, broadly and in consonance with the intent of the legislation and working of the entire system as a whole. In the case of ITO V/s. Samiran Majumdar (supra), a reference was made by the Tribunal to Explanation (a) to sub-section
(xi) of S.36(1) of the Income Tax Act,1961, wherein the 'computer system' has been defined as follows-
"'computer system' means a device or collection of devices including input and output support devices and excluding calculators which are not programmable and capable of being used in conjunction with external files, or more of which contain computer programmes, electronic instructions, input data and output data, that performs functions including, but not limited to, logic, arithmetic, data storage and retrieval, communication and control"
In the said case of Samiran Majumdar (supra), it was reported by the Inspector of Income Tax Department, after verifying the function of the printer and the scanner, that they ran with the help of computer and were external devices attached to the computer with the help of cables. On the basis of this report of the Inspector, the Tribunal held that the printer and scanner were integral part of the computer system, as they could not be used without the computer and accordingly depreciation at higher rate as applicable to the computer 7 ITA No.488 and 621/Hyd/2013 M/s. Visu International Limited, Hyderabad was allowed by the Tribunal on printer and scanner. In the case of ACIT V/s. GE Capital Business Process Management Services Pvt. Ltd. (ITA NO.2887/Del/2011 for assessment year 2007-08 dated 13.4.2012) it was held by the Delhi Bench of the Tribunal that computer accessories and peripherals such as printer and scanners, servers etc. form an integral part of the computer system, as the same cannot be used without the computer and consequently depreciation at higher rate of 60% is allowable on such computer accessories and peripherals.
14. It is manifest from the various judicial pronouncements cited by the learned counsel for the assessee, as discussed above, that if any assets are found to be integral parts of the computer or computer system, the same are entitled for depreciation at higher rate, as applicable to the 'computer'. It, however, depends on the facts of each case as to whether a particular item or asset forms integral part of the computer or computer system and this issue is required to be decided after taking into consideration the exact usage or application for such items or assets keeping in view the nature of the business of the assessee as well as the functions to which the said assets/items are put to use. In this regard, the learned counsel for the assessee has filed a written note explaining the usage or application of the relevant items/assets in support of its case that they form an integral part of the computer/computer systems used by the assessee. The same is reproduced below.
8 ITA No.488 and 621/Hyd/2013M/s. Visu International Limited, Hyderabad "....
9 ITA No.488 and 621/Hyd/2013M/s. Visu International Limited, Hyderabad 10 ITA No.488 and 621/Hyd/2013 M/s. Visu International Limited, Hyderabad ...."
15. After going through the contents of the above note filed by the assessee explaining the usage or application of the relevant items/assets as well as the orders of the authorities below, we find that the submissions explaining the usage or application of the concerned items/assets are being made by the assessee for the first time before the Tribunal, and no such explanation was offered either before the Assessing Officer or before the learned CIT(A). We therefore, consider it fair and proper and in the interests of justice to restore this issue to the file of the Assessing Officer for deciding the same afresh, after taking into consideration the explanation offered by the assessee regarding the usage or application of the concerned items/assets in the light of the judicial pronouncements discussed above. Grounds No.4 to 7 of the assessee's appeal are accordingly treated as allowed for statistical purposes.
16. In the result, appeal of the Revenue is dismissed and the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the court on 12th November, 2014 Sd/- Sd/-
(Saktijit Dey) (P.M.Jagtap)
Judicial Member Accountant Member
Dt/- 12th November 2014
11 ITA No.488 and 621/Hyd/2013
M/s. Visu International Limited,
Hyderabad
Copy forwarded to:
1. M/s. Visu International Limited, C/o. M/s.P.Murali & Co., Chartered Accountants, 6-3-6755/2/3, 1st Floor, Somajiguda, Hyderabad-82
2. Dy, Commissioner of Income-tax Circle 3(3), Hyderabad
3. Commissioner of Income-tax(Appeals) IV, Hyderabad
4. Commissioner of Income-tax III Hyderabad
5. Departmental Representative ITAT, Hyderabad B.V.S