Income Tax Appellate Tribunal - Mumbai
Saraswat Inotech Ltd , Mumbai vs Department Of Income Tax on 8 January, 2014
`आयकर अपील य अ धकरण "ई" यायपीठ मंब
ु ई म।
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "E", MUMBAI
ी आर. सी. षमा, लेखा सद य एवं ी ववेक वमा, या यक सद य के सम ।
BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER
AND SHRI VIVEK VARMA, JUDICIAL MEMBER
आयकर अपील सं. : 6722/मम
ु /2012
नधारण वष A.Y. 2009-10
ITA No. : 6722/Mum/2012
(Assessment year: 2009-10)
Dy. Commissioner of Income Vs M/s Saraswat Infotech Ltd.,
Tax -10(3), Plot No. 85,
Room no. 451, 4th Floor, Madhushree,
Aayakar Bhavan, Sector -7, Vashi,
Maharshi Karve Road, Navi Mumbai -400 703
Mumbai -400 020 PAN: AADCS 4082 C
अपीलाथ (Appellant) यथ (Respondent)
Appellant by : Shri M L Perumal
Respondent by : Shri M C Naniwadekar
सनवाई
ु क तार ख /Date of Hearing : 08-01-2014
घोषणा क तार ख /Date of Pronouncement : __ -01-2014
आ दे श
ORDER
ववेक वमा, या स:
PER VIVEK VARMA, JM:
The instant appeal is filed by the department against the order of CIT(A) 21, Mumbai, dated 17.07.2012, wherein, the following grounds have been taken:
"1. Whether on the facts and circumstances of the case, Ld. CIT(A) was right in holding that depreciation on UPS is allowable @ 60% ignoring the fact that UPS is an electrical appliance for temporary supply of electricity therefore is in nature of plant and machinery and therefore depreciation should be provided @ 15%?
2. Whether on the facts and circumstances of the case, Ld. CIT(A) was right in holding that depreciation on ATM is allowable @ 60% ignoring the fact that ATM is a cash dispensing machine with a projector and therefore is in nature of plant and machinery and therefore depreciation should be provided @ 15%.
3. Whether on the facts and circumstances of the case, Ld. CIT(A) was right in holding that depreciation on purchase of software is to be allowed ignoring the fact that assessee has failed to prove that the ATM s was put to use in the current year".
2 M/s Saraswat Infotech Ltd.
ITA No. 6722/Mum/20122. At the time of hearing AR submitted that the three grounds impugned in the appeal are covered by the decision of the coordinate Bench at Mumbai, in the case of the assessee in ITA no. 3606/Mum/2011 in assessment year 2008-09.
3. The AR, further submitted that the three grounds were agitated by the department in appeal to the Hon'ble Bombay High Court u/s 260A, wherein, Hon'ble Bombay High Court dismissed the appeal filed by the department. The AR placed both these orders before us.
4. On going through the orders as submitted by the AR, we think it appropriate to reproduce the order of the Hon'ble Bombay High Court, to put the objections of the Department to rest. The order of the Hon'ble Bombay High Court in ITA(L) No. 1243 of 2012 reads as under:
"In this appeal by the revenue for assessment year 2008-09, following questions of law have been raised for consideration of this court.
a) Whether on the facts and circumstances of the case the ITAT was right in holding that depreciation on UPS is allowable @ 60% ignoring the fact that UPS is an electrical appliance for temporary supply of electricity therefore is in nature of plant and machinery and therefore, depreciation should be provided @ 15%?
b) Whether on the facts and circumstances of the case the ITAT was right in holding that depreciation on ATM is allowable @ 60% ignoring the fact that ATM is a cash dispensing machine with a projector and therefore is in nature of plant and machinery and therefore depreciation should be provided @ 15%?
c) Whether on the facts and circumstances of the case the ITAT was right in holding that depreciation on purchase of software is to be allowed ignoring the fact that assessee has failed to prove that assessee has physically received the licence by 31/3/2008?
2) The respondent assessee is a subsidiary of Saraswat Co. op. Bank Limited and provides software development, information technology and enable services to its holding company i.e. Saraswat Bank. During the course of the year, the respondent assessee had purchased certain capital assets such as UPS, ATM Machines and Licence to inter alia provide technology services to its holding' company. The respondent assessee claimed depreciation on UPS and ATM machines under the block of computers @ 60% while depreciation was claimed on software @ 30% (50% or 60%) in view of use only for a part of the year.
3) The Assessing officer was of the view that the UPS and ATMs would not fall under the category of computers and being part of plant and machinery/office equipment would be eligible for depreciation only at 15%. Similarly, he disallowed the claim for depreciation on software licence on the ground that the same was not put to use in the previous year to the assessment year 2008-09.
Consequently the excess claim of depreciation made by the respondent assessee was disallowed.
4) In appeal the CIT (Appeals) upheld the findings of the Assessing officer.
5) In second appeal, the Tribunal by its order dated 14/3/2012 held that UPS is an integral part of the computer system and regulate the flow of the power to 3 M/s Saraswat Infotech Ltd.
ITA No. 6722/Mum/2012avoid any kind of damage to the computer network due to fluctuation in power supply which could lead to loss of valuable data. The Tribunal relied upon the decision of the Delhi High Court dated 20/1/2011 in the matter of CIT vs Orient Ceramics and Industries Ltd. in which UPS was held to be the part of the computer system and depreciation at 60% was allowed. Similarly, so far as ATMs are concerned, the Tribunal on finding of fact concluded that ATM cannot function without the help of computer and would be a part of the computer used in the banking industry. Reliance was placed by the Tribunal upon the decision of the Delhi Bench of Tribunal in the matter of DCIT v. Global Trust Bank (ITA No.4741D/09) wherein t has been held that ATM was a computer equipment and depreciation © 60% was allowed. So far as the use of software is concerned, the Tribunal records a fact that the evidence of the use of the software on 31/3/2008 was produced before the Tribunal. Thus, the Tribunal held that depreciation @ 30% on software was rightly claimed.
6) We note that the Tribunal has arrived at a finding of fact on all the three questions. The revenue has not been able to show that the above finding of fact is perverse. Thus, we do not see any reason to entertain question (i), (ii) and (iii) above.
7) Accordingly, the appeal is dismissed with no order as to costs".
5. Since the questions referred to in the appeal before the Hon'ble Bombay High Court and in the impugned appeal are verbatim and identical, and since the CIT(A) has followed the order of the ITAT (where one of us was party), it is not necessary to go into further details and/ or legal issues.
6. The grounds as in the appeal filed by the department deserve to be rejected.
7. In the result, the appeal filed by the department is dismissed.
Order pronounced in the open Court on 15th January, 2014.
Sd/- Sd/-
(आर. सी. षमा) ( ववेक वमा)
लेखा सद य याईक सद य
(R. C. SHARMA) (VIVEK VARMA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Date: 15th January, 2014
त/Copy to:-
1) अपीलाथ /The Appellant.
2) यथ /The Respondent.
3) The CIT (A)-21, Mumbai.
4) The CIT-10, Mumbai,
4 M/s Saraswat Infotech Ltd.
ITA No. 6722/Mum/2012
5) वभागीय त न ध "ई" , आयकर अपील य अ धकरण, मंब
ु ई/
The D.R. "E" Bench, Mumbai.
6) गाड फाईल
Copy to Guard File.
आदे शानसार
ु /By Order
/ / True Copy / /
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, मंबु ई
Dy./Asstt. Registrar
I.T.A.T., Mumbai
*च हान व. न.स
*Chavan, Sr. PS