DCIT, New Delhi v. M/s. Orient Ceramics and Industries Ltd, New Delhi

ITA 1302/DEL/2009 | 2005-2006
Pronouncement Date: 11-02-2010 | Result: Dismissed

Appeal Details

RSA Number 130220114 RSA 2009
Bench Delhi
Appeal Number ITA 1302/DEL/2009
Duration Of Justice 10 month(s) 5 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Orient Ceramics and Industries Ltd, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 11-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 11-02-2010
Date Of Final Hearing 09-02-2010
Next Hearing Date 09-02-2010
Assessment Year 2005-2006
Appeal Filed On 06-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER I.T.A.NOS.1302 & 4459/DEL/2009 ASSESSMENT YEARS : 2005-06 & 2006-07 DY. COMMISSIONER OF INCOME-TAX M/S. ORIENT CERAMIC S & INDS. LTD. CIRCLE 13(1) NEW DELHI. VS. IRIS HOUSE 16 B USINESS CENTRE NANGAL RAYA NEW DELHI. PAN: AAACOO305P (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. BANIT A DEVI NAOREM SR. DR. RESPONDENT BY : SHRI SALIL AGGARWAL ADVOCATE. O R D E R PER B.P. JAIN ACCOUNTANT MEMBER. BOTH THE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XV I NEW DELHI DATED 02.01.2009 & 22.09.2009 PERTAINING TO THE ASSESSMEN T YEAS 2005-06 AND 2006-07 RESPECTIVELY IN APPEALS AGAINST THE ORDERS UNDER SECTION 143(3)/254/154 OF THE INCOME-TAX ACT (THE ACT). SI NCE IDENTICAL ISSUES ARE INVOLVED BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENC E. 2. FIRST WE WOULD TAKE APPEAL IN ITA NO.1302/DEL/20 09 WHERE GROUND NO.1 RAISED BY REVENUE READS AS UNDER:- 2 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE A DDITION OF DEPRECIATION OF RS.98 53 749/- IGNORING THE FACT TH AT THE ASSESSEE IS ITSELF TREATING THE PAYMENT OF CUSTOM D UTY AS UNASCERTAINED/CONTINGENT LIABILITY AND THE CRYSTALL IZATION OF THIS LIABILITY WAS DEPENDENT ON THE DECISION OF APPELLAT E AUTHORITIES. HENCE UNLESS THE ASSESSEE ACCEPTS THAT THE CUSTOM D UTY PAID IS AN ASCERTAINED/CRYSTALLIZED LIABILITY THE SAME CAN NOT BE ALLOWED TO BE CAPITALIZED BEING UNASCERTAINED/CONTINGENT LI ABILITY AND THE ASSESSEES CLAIM OF DEPRECIATION CANNOT BE ALLO WED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE MANUFACTURING OF GLAZED WHITE COLOURED AND DECORAT E CERAMIC WALL/FLOOR TILES AT SIKANDRABAD DISTRICT BULANDSHAHR UP. TH E COMPANY MADE THE IMPORTS OF CERTAIN EQUIPMENTS UNDER THE INDUSTRIAL POLLUTION PREVENTION PROJECT WITHOUT PAYMENT OF CUSTOM DUTY DURING THE F INANCIAL YEAR 2001-02 RELEVANT TO ASSESSMENT YEAR 2002-03. SUBSEQUENTLY DURING THE IMPUGNED YEAR DUTY EXEMPTION CERTIFICATE WAS DISPUTED BY THE CUSTOM DEPARTMENT AND A SHOW CAUSE NOTICE WAS ISSUED FOR PAYMENT OF PRINC IPAL AMOUNT OF CUSTOM DUTY OF RS.4 25 34 027/-. IN THE BOOKS OF ACCOUNT THE ASSESSEE TREATED THE SAID PAYMENT OF CUSTOM DUTY AS ADVANCE PAYMENT AND BY WAY OF NOTE TO THE ACCOUNTS IN THE ANNUAL REPORT HAS MENTIONED THE SAM E AS CONTINGENT LIABILITY. HOWEVER FOR THE PURPOSE OF COMPUTATION OF TOTAL IN COME THE ASSESSEE CAPITALIZED THE AMOUNT OF RS.4 25 34 027/- AND THE SAID CAPITALIZATION WAS TREATED AS ADDITION TO THE PLANT AND MACHINERY AND ACCORDINGLY THE DEPRECIATION UNDER SECTION 32 AT RS.98 38 748/- WAS CLAIMED AS PER DETAILS AT 3 PAGE 3 OF THE ASSESSING OFFICERS ORDER. AS PER PA RA 2.2 OF THE AOS ORDER TO JUSTIFY THE CLAIM OF DEPRECIATION THE ASSESSEE S UBMITTED THE EXPLANATION VIDE LETTER DATED 1.10.2007 AND CONTENDED THAT BASE D ON SUMMONS ISSUED BY THE CUSTOM DEPARTMENT UNDER SECTION 108 OF THE CUST OMS ACT IT PAID FULL CUSTOM DUTY OF RS.4 25 34 027/- AND THEN FILED THE APPEAL AGAINST THE DEMAND. AS PER ACCOUNTING METHOD CONSISTENTLY FOLL OWED BY THE COMPANY ALL THE EXPENSES INCURRED TO BRING THE ASSETS INTO LOCATION AND CONDITION WERE REQUIRED TO BE CAPITALIZED AND THE DEPRECIATION IS ALLOWABLE ON THE ACTUAL COST OF AN ASSET. THE ASSESSEE ALSO RAISED ALTERNATE CL AIM FOR ALLOWANCE OF THE SAID PAYMENT AS A REVENUE EXPENDITURE UNDER SECTION 43B(A) OF THE ACT BEING THE PAYMENT MADE ON ACTUAL PAYMENT BASIS. THE AO B EING NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE VIDE PARA 2.3 OF HI S ORDER OBSERVED THAT THERE IS NO DISPUTE TO THE FACT THAT THE PAYMENT OF CUSTO M DUTY WAS IN CONNECTION WITH THE ACQUIRING OF CAPITAL ASSETS AND THEREFORE THE SAME CONSTITUTE CAPITAL EXPENDITURE AND REQUIRES TO BE CAPITALIZED BUT THE CAPITALIZATION OF THE EXPENDITURE WOULD BE ADMISSIBLE WHEN THE ASSESSEE C OMPANY WOULD INCUR THE LIABILITY TO PAY SUCH AMOUNT. IN THE PRESENT CASE THE ASSESSEE DID NOT ACCEPT THE LIABILITY OF PAYMENT OF CUSTOM DUTY AND HAS FILED THE APPEAL AGAINST THE ORDER OF THE CUSTOM AUTHORITIES AND THE PAYMENT HAS BEEN MADE UNDER PROTEST AND IN THE BOOKS OF ACCOUNT AN ADVANC E PAYMENT HAS BEEN 4 SHOWN AND BY WAY OF NOTE IT HAS BEEN TREATED AS CO NTINGENT LIABILITY. THE AO ALSO REJECTED THE ALTERNATE CLAIM OF THE ASSESSE E FOR ALLOWING THE CUSTOM PAYMENT AS REVENUE EXPENDITURE UNDER SECTION 37 REA D WITH SECTION 43B OF THE ACT SINCE EXPENDITURE WAS RELATED TO BRING AN A SSET INTO EXISTENCE AND THEREFORE THE SAME CANNOT BE ALLOWED AS REVENUE EX PENDITURE AND THEREFORE THERE IS NO APPLICABILITY OF PROVISIONS OF SECTION 43B OF THE ACT IN CASE OF CAPITAL EXPENDITURE. THEREAFTER DISTINGUISHING THE DECISIONS OF VARIOUS COURTS OF LAW RELIED UPON BY THE ASSESSEE DISALLOW ED THE CAPITALIZATION OF THE PAYMENT OF CUSTOM DUTY AND ACCORDINGLY MADE A D ISALLOWANCE OF DEPRECIATION OF RS.98 53 748/- UNDER SECTION 32 OF THE ACT. 4. BEFORE THE LEARNED CIT(A) THE LEARNED COUNSEL FO R THE ASSESSEE ARGUED AND SUBMITTED THAT THERE IS NO DISPUTE TO THE FACT THAT THE PAYMENT OF CUSTOM DUTY WAS IN CONNECTION WITH ACQUIRING OF CAPITAL AS SETS AND THEREFORE THE SAME CONSTITUTE CAPITAL EXPENDITURE. SAID AMOUNT O F CUSTOM DUTY HAS BEEN PAID AT THE BEHEST OF THE CUSTOMS AUTHORITIES AND N OT BY THE ASSESSEE ON ITS OWN. THEREFORE THERE IS A LIABILITY INCURRED BY T HE ASSESSEE. MOREOVER IT WAS SUBMITTED THAT THERE IS NO PROVISION IN THE CUS TOMS ACT FOR PAYMENT OF ANY SUM WITHOUT INCURRING ANY LIABILITY AND TO THAT EFFECT COPIES OF SUMMONS ISSUED UNDER SECTION 108 OF THE CUSTOMS ACT AND COP IES OF CHALLANS FOR PAYMENT OF SUCH CUSTOMS DUTY WERE PLACED BEFORE THE LEARNED CIT(A). IT 5 WAS FURTHER SUBMITTED THAT THE CONTENTION OF THE AS SESSING OFFICER WOULD HAVE BEEN CORRECT AND JUSTIFIED IF THE ASSESSEE HAD CAPITALIZED THE CUSTOM DUTY IN THE FINANCIAL YEAR 2001-02 RELEVANT TO THE ASSESSMENT YEAR 2002-03 AND NOT IN THE IMPUGNED YEAR. AS REGARDS THE FILIN G OF THE APPEAL FOR DISPUTING THE PAYMENT OF CUSTOM DUTY IT WAS SUBMIT TED THAT THERE IS NO APPEAL FILED BY THE ASSESSEE BEFORE THE CUSTOMS AUT HORITIES UNDER THE CUSTOMS ACT. AS PER PROVISION OF CUSTOMS ACT 1962 FOR CLAIMING ANY REFUND OF ANY MONEY FROM THE CUSTOMS AUTHORITIES T HE APPLICABLE PROVISION ARE OF SECTION 27 OF THE ACT WHICH PROVIDES THAT AN Y PERSON CLAIMING REFUND OF ANY DUTY AND INTEREST IF ANY PAID ON SUCH DUTY HAS TO BE IN PURSUANCE OF AN ORDER OF ASSESSMENT OR BORNE BY HIM. SINCE NO O RDER TO THIS EFFECT HAS BEEN MADE BY THE CUSTOMS AUTHORITIES AND SUMMONS WE RE ISSUED DATED 6.8.2004 AND ACCORDINGLY DUTY WAS PAID AS PER DIREC TION ISSUED AND CHALLANS WERE PLACED BEFORE THE LEARNED CIT(A) IT WAS SUBMI TTED THAT MERE BOOK ENTRIES ARE NOT DECISIVE OF THE INCOME OF THE ASSES SEE. TO THIS EFFECT HE RELIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW. THE L EARNED CIT(A) ACCEPTED THE EXPLANATION OF THE ASSESSEE AND THE CASES OF VA RIOUS COURTS OF LAW RELIED UPON AND WAS OF THE VIEW THAT THE ASSESSEE HAS NOT FILED ANY APPEAL BEFORE THE CUSTOMS AUTHORITIES AS ALLEGED BY THE ASSESSING OFFICER AND IN VIEW OF THE LAW LAID DOWN THE ENTRIES MADE BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT 6 SHOWING THE CUSTOM DUTY PAYMENT AS ADVANCE IS NOT D ECISIVE FACTOR FOR ALLOWING THE DEPRECIATION AND FURTHER HELD THAT THE DEPRECIATION CLAIMED IN THE COMPUTATION OF INCOME IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32 OF THE ACT ON THE CUSTOM DUTY PAID ON ACCOUNT OF PA YMENT MADE BY THE CUSTOMS DEPARTMENT WHICH HAS BEEN RIGHTLY TREATED B Y THE ASSESSEE AS COST OF ACQUISITION. THE ASSESSING OFFICER WAS DIRECTED TO ALLOW DEPRECIATION ACCORDINGLY. 5. WE HAVE HEARD THE PARTIES AT LENGTH AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT THE IMPUGNED PAYMENT OF CUSTOM DUTY IS NOT A LIABILITY INCURRED BY THE ASSESSEE. THE SAID PAYMENT IS AN A DVANCE PAYMENT AS SHOWN IN THE BOOKS OF ACCOUNT AND THE ASSESSEE HAS FILED THE APPEAL BEFORE THE CUSTOMS AUTHORITIES. THE FACTS HAVE BEEN ADMITTED BY THE ASSESSEE VIDE LETTER DATED 1.10.2007. THE LEARNED CIT(A) ON WRONG APPRE CIATION OF FACTS HAS ALLOWED THE APPEAL OF THE ASSESSEE. WHEREAS ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE SHRI SALIL AGGARWAL AT THE OUTSET ARGUED THAT MERE ENTRIES IN THE BOOKS OF ACCOUNT CANNOT BE DECISIVE OF ASCERTAINING OF INCOME. THE ACCOUNTING PRACTICE CANNOT OVER-RIDE ANY PROVIS ION OF THE ACT. WHETHER A PARTICULAR RECEIPT IS AN INCOME OR NOT IS A QUEST ION OF LAW WHICH HAS TO BE 7 DECIDED BY THE COURT ON THE BASIS OF THE PROVISIONS OF THE ACT. HE RELIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW WHICH A RE AS UNDER:- 1. SHOORJI VALLABHDAS & CO. 46 ITR 144 (SC); 2. TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. VS. C IT 227 ITR 172 (SC); 3. KEDARNATH JUTE MANUFACTURING CO. LTD. VS. CIT 82 I TR 363; 4. SUTLEJ COTTON MILLS LTD. VS. CIT 116 ITR 1 (SC). SHRI SALIL AGGARWAL FURTHER ARGUED THAT EVEN THE LI ABILITY DOES NOT BECOME CONTINGENT BECAUSE IT IS CONTESTED IN APPEAL AND THE EXCISE DEPARTMENT RAISED THE DEMAND ASKING THE ASSESSEE TO PAY THE DUTY FOR EARLIER YEARS. HE RELIED UPON THE JUDGMENT IN THE CASE OF CIT VS. BHARAT CARBON & RIBBON MFG. CO. P. LTD. 192 ITR 221 (DEL) WHICH HA S BEEN AFFIRMED BY THE HONBLE SUPREME COURT REPORTED IN 239 ITR 505. IT WAS ALSO ARGUED BY SHRI SALIL AGGARWAL THAT THERE IS NO APPEAL FILED BY THE ASESSEE BEFORE THE CUSTOMS AUTHORITIES AND IT HAS WRONGLY BEEN MENTION ED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE APPEAL HAS BE EN FILED BEFORE THE CUSTOMS AUTHORITIES. THIS FACT WAS BROUGHT TO THE NOTICE OF THE LEARNED CIT(A) ALSO. SHRI SALIL AGGARWAL FURTHER RELIED UP ON THE SUBMISSIONS AND ARGUMENTS MADE BEFORE THE LEARNED CIT(A) AND SUPPOR TED THE ORDER OF THE LEARNED CIT(A) WITH REGARD TO ALLOWING THE CLAIM OF THE ASSESSEE. 6. AT THE OUTSET WE ARE CONVINCED WITH THE ARGUMENT S MADE BY SHRI SALIL AGGARWAL ADVOCATE THAT MERE BOOK ENTRIES ARE NOT DECISIVE OF ANY INCOME. 8 THE QUESTION IS WHETHER A RECEIPT OF MONEY IS TAXAB LE OR NOT WHETHER CERTAIN DEDUCTIONS FROM THAT RECEIPT ARE PERMISSIBL E IN LAW OR NOT THE QUESTION HAS TO BE DECIDED ACCORDING TO THE PRINCIP LES OF LAW AND NOT IN ACCORDANCE WITH THE BOOK ENTRIES FOR THE ACCOUNTING PRACTICE SINCE THE ACCOUNTING PRACTICE CANNOT OVER-RIDE THE PROVISIONS OF THE ACT. THESE VIEWS ARE FORTIFIED BY THE JUDGMENT OF VARIOUS COURTS OF LAW IN THE CASES OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. (SUPR A) KEDARNATH JUTE MANUFACTURING CO. LTD. (SUPRA) SUTLEJ COTTON MILL S LTD. (SUPRA) & SHOORJI VALLABHDAS & CO. (SUPRA). THERE IS NOTHING ON RECO RD PLACED BY THE DEPARTMENTAL REPRESENTATIVE TO ESTABLISH THAT THE A PPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ANY ORDER OF THE CUSTOMS DEPAR TMENT. THE EXPLANATION THEREFORE APPEARS TO BE SATISFACTORY THAT ON THE D IRECTIONS ISSUED BY THE CUSTOMS DEPARTMENT THE PAYMENT OF CUSTOM DUTY HAS BEEN MADE THOUGH THE SAME HAS BEEN SHOWN AS ADVANCE OR A NOTE HAS BEEN A PPENDED IN THE ACCOUNTS FOR CONTINGENT LIABILITY. THEREFORE IN O UR VIEW THE ASSESSEE HAS MADE THE PAYMENT OF CUSTOM DUTY ONLY WHEN THE LIABI LITY HAS ACCRUED ON IT. SINCE THE CUSTOM DUTY HAS BEEN PAID TO ACQUIRE THE PLANT AND MACHINERY AND THEREFORE IT HAS TO BE CAPITALIZED MOREOVER THER E IS NO DISPUTE TO THE FACT THAT SUCH EXPENDITURE CANNOT BE CAPITALIZED AS OBSE RVED BY THE ASSESSING OFFICER IN HIS ORDER IN PARA 2.3. THE OBLIGATION T O PAY THE EXCISE DUTY AROSE 9 DURING THE IMPUGNED YEAR AND THEREFORE THE LIABILI TY TO PAY THE AMOUNT HAD ACCRUED TO THE ASSESSEE DURING THE YEAR ITSELF AND THE SAID LIABILITY CANNOT BE SAID TO BE CONTINGENT AND CANNOT BE SAID TO BE AN A DVANCE PAYMENT. THE ORDER OF THE LEARNED CIT(A) IS A REASONED ORDER WH O HAS RIGHTLY ACCEPTED THE CONTENTION AND EXPLANATION OF THE ASSESSEE AND HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE FOR CAPITALIZATION OF THE PAYMENT O F EXCISE DUTY AMOUNTING TO RS.4 25 34 027/- AND HAS RIGHTLY DIRECTED THE ASSES SING OFFICER TO ALLOW THE DEPRECIATION ON THE SAID AMOUNT. WE FIND NO INFIRM ITY IN THE ORDER OF THE LEARNED CIT(A). THUS GROUND NO.1 OF THE REVENUE IS DISMISSED. 7. GROUND NO.2 OF THE REVENUE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE A DDITION OF RS.25 13 065/- HOLDING THAT EXPENDITURE INCURRED ON GLOW SIGN BOARDS DOES NOT BRING INTO EXISTENCE AN ASSET OR AD VANTAGE OF ENDURING BENEFIT WHICH IS ATTRIBUTABLE TO THE CAPI TAL. LD. CIT(A) HAS IGNORED THE FACT THAT TILL A.Y. 2004-05 THE ASSESSEE HAS ITSELF CAPITALIZED THE EXPENDITURE INCURRED ON GLOW SIGN BOARDS BY TREATING THE SAME AS CAPITAL IN NATURE. SINCE THE CHANGES WERE NOT MANDATED AS PER THE FRESH GUIDELIN ES PRESCRIBED BY THE INSTITUTE OF CHARTERED ACCOUNTANT S OF INDIA (ICAI) OR ROC THEREFORE WITHOUT HAVING ANY BASIS THE ASSESSEE CANNOT BE ALLOWED TO CHANGE THE ACCOUNTING TREATMENT OF PARTICULAR ITEM FROM CAPITAL TO REVENUE IN NATUR E. 8. BRIEF FACTS OF THE CASE AS APPEARING VIDE PARA 3 .1 3.2 AND 3.3 OF THE ASSESSING OFFICERS ORDER ARE AS UNDER:- 3.1 IN THE NOTES TO THE ACCOUNTS ITEM 15 IN THE SC HEDULES FORMING PART OF ACCOUNTS IT WAS MENTIONED 10 15. THERE HAS BEEN CHANGE IN ACCOUNTING POLICY REGARDING THE EXPENSES INCURRED ON GLOW SIGN BOARDS FROM BEING CAPITALIZED DURING THE EARLIER YEARS TO BEING CHANGED TO THE REVENUE IN THE CURRENT YEAR IS LOWER BY RS.19 15 436/-. VIDE ORDER SHEET DATED 17.07.2007 AND 30.08.2007 AS SESSEE COMPANY WAS ASKED THAT WHY THE EXPENDITURE ON GLOW SIGN BOARD BE NOT DISALLOWED AS REVENUE EXPENDITURE AND TREATED AS CAPITAL EXPENDITURE AS PER THE TREATMENT BY ASSESSE E COMPANY IN THE EARLIER YEARS. 3.2 ASSESSEE COMPANY REPLIED VIDE LETTER DATED 20.0 9.2007 AS UNDER: THE ADVERTISEMENT AND SALES PROMOTION EXPENSES INCLUDES RS.30 52 794/- INCURRED FOR GLOW SIGN BOARDS REPAIRED AND INSTALLED DURING THE YEAR. THE INHERENT QUALITY OF THESE BOARDS IS PERISHABLE AS THESE ARE LIABLE TO DIRECTLY HIT BY THE NATURE. TH E OBLIGATION WAS INCURRED & RELATED FOR THE YEAR AND CHARGED TO THE PROFIT AND LOSS ACCOUNT DURING THE YEAR IT IS REVENUE RELATED EXPENSE AND DOES NOT HAVE A LONG LAST BENEFIT. THEREFORE IT IS AN ALLOWABLE BUSINESS EXPENSE. 3.3 REPLY SUBMITTED BY THE ASSESSEE IS CONSIDERED A ND SAME IS NOT ACCEPTABLE AS GLOW SIGN BOARDS ARE MADE OF M ATERIALS LIKE STEEL/ALUMINUM FRAMES AND PLASTIC SHEETS AND D ISPLAY THE INFORMATION FOR LONG PERIODS SUBJECT TO MINOR REPAI RS. CONSIDERING THE USEFUL LIFE OF THE BOARDS ASSESSEE COMPANY WAS RIGHTLY TREATING THE EXPENDITURE AS CAPITAL EXP ENDITURE IN THE EARLIER YEARS. DURING THE YEAR UNDER CONSIDERATION THERE IS NO CHANGE IN CIRCUMSTANCES OR IN THE ACCOUNTING STANDA RDS FOR CHANGING THE TREATMENT OF EXPENDITURE FROM CAPITAL TO REVENUE. ASSESSEE COMPANY CANNOT BE ALLOWED TO CHANGE THE AC COUNTING TREATMENT OF PARTICULAR ITEM WITHOUT ANY BASIS. TH E CONTENTION OF ASSESSEE DOES NOT HOLD ANY MERIT HENCE THE CLAIM OF EXPENDITURE INCURRED ON GLOW SIGN BOARD OF RS.30 52 794/- AS 11 REVENUE EXPENDITURE IS HEREBY REJECTED AND SAME IS TREATED AS CAPITAL EXPENDITURE. OUT OF THIS GLOW SIGN BOARDS OF VALUE OF RS.12 65 040/- WERE PUT TO USE FOR MORE THAN 180 DA YS AND THOSE OF RS.17 87 754/- WERE USED FOR LESS THAN 180 DAYS. ACCORDINGLY ADMISSIBLE DEPRECIATION @ 25% WORKS OU T AT RS.5 39 729/- WHICH IS ALLOWED AND THE REMAINING AM OUNT OF RS.25 13 065/- IS ADDED BACK TO THE TOTAL INCOME OF THE YEAR. ASSESSEE COMPANY HAS FILED INACCURATE PARTICULARS I N THIS REGARD HENCE I AM ALSO SATISFIED THAT ASSESSEE COMPANY HA S CONCEALED THE INCOME BY FILING INACCURATE PARTICULARS. PENAL TY PROCEEDINGS U/S 271(1)(C ) OF THE ACT ARE SEPARATEL Y INITIATED. 9. THE LEARNED CIT(A) FOLLOWING THE DECISION OF HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. LIBERTY G ROUP MARKETING DIVISION (2009) 315 ITR 125 WHERE IT HAS BEEN HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON GLOW SIGN BOARDS DOES N OT BRING INTO EXISTENCE AN ASSET OR ADVANTAGE FOR THE ENDURING BENEFIT OF THE BUSINESS AND ALLOWED THE CLAIM OF THE ASSESSEE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE LEARNED DR RELYING UPON THE ORDER OF THE ASSESS ING OFFICER ARGUED THAT THE ASSESSEE HAD BEEN CAPITALIZING SUCH EXPENDITURE BEFORE THE IMPUGNED YEAR AND ALL OF A SUDDEN A TURN HAS BEEN TAKEN AND THE CHANGE IN ACCOUNTING POLICY WAS MADE TO CLAIM IT AS REVENUE EXPENDITURE WHICH CANNOT BE ALLOWED. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI SALIL AGGARWAL ON THE OTHER HAND RELIED UPON THE ORDER OF THE LEARNED CI T(A) AND THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF LIBERTY GROUP 12 MARKETING DIVISION (SUPRA) AND ARGUED THAT NO ASSET OF ENDURING NATURE COMES INTO EXISTENCE AND SUCH EXPENSES ARE OF REGUL AR IN NATURE AND THE LIFE OF THE GLOW SIGN BOARD IS SHORT WHICH REQUIRES REPL ACEMENT. 11. THE ARGUMENTS MADE BY THE LEARNED COUNSEL FOR T HE ASSESSEE HAVE BEEN FOUND TO BE CONVINCING THAT THE GLOW SIGN-BOAR D REQUIRES FREQUENT REPLACEMENT AND EXPENDITURE DOES NOT BRING INTO EXI STENCE AN ASSET OF ENDURING IN NATURE. JUDGEMENT OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF LIBERTY GROUP MARKETING DIVISION (SUPRA ) SUPPORTS SUCH VIEWS THAT EXPENDITURE INCURRED ON GLOW SIGN-BOARD DOES N OT BRING INTO EXISTENCE ANY ASSET OR ADVANTAGE FOR THE ENDURING BENEFIT OF THE BUSINESS AND SUCH ASSET IS NOT OF ENDURING NATURE AND THEREFORE SUCH EXPENDITURE HAS TO BE TREATED AS OF REVENUE IN NATURE. NO CONTRARY JUDGM ENT HAS BEEN BROUGHT ON RECORD BY THE LEARNED DR. IN THE CIRCUMSTANCES AND FACTS OF THE CASE WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A ) WHICH APPEARS TO BE REASONED ORDER. THUS GROUND NO.2 OF THE REVENUES I S DISMISSED. 12. GROUND NO.3 RAISED BY THE REVENUE READS AS UNDE R:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE A DDITION OF RS.1 470/- BEING EXCESS DEPRECIATION CLAIMED ON UPS @ 60% BY TREATING THE SAME AS COMPUTER INSTEAD OF PLANT & MACHINERY AND UPHOLDING THAT UPS IS AN INTEGRAL PAT OF COMPUT ER AND DEPRECIATION ON THE SAME IS ALLOWABLE @ 60% WHEREAS THE BASIC FUNCTION OF THE UPS IS TO PROVIDE UNINTERRUPTED POW ER SUPPLY TO THE COMPUTER AND BY NO MEANS AS PER SECTION 32 OF THE I.TAX 13 ACT 1961 IT CAN BE TERMED AS PART OF THE BLOCK OF ASSET I.E. COMPUTER. 13. BRIEF FACTS OF THE CASE AS APPEARING IN PARA 4 OF THE ASSESSING OFFICERS ORDER ARE AS UNDER:- DURING THE YEAR ASSESSEE COMPANY HAD SHOWN PURCHAS E OF UPS VALUING RS.4 200/- UNDER THE BLOCK OF COMPUT ERS AND CLAIMED DEPRECIATION OF RS.2 520/- @ 60%. UPS IS A DEVICE WHICH IS USED FOR MAINTAINING STEAD Y SUPPLY OF CURRENT TO ANY MACHINE INCLUDING COMPUTER S. IT IS NOT AN INTEGRAL PART OF COMPUTER SYSTEM AND COMPUTER CA N FUNCTION WITHOUT AID OF UPS AND UPS CAN ALSO BE USED WITH SO ME OTHER APPLIANCES OPERATED ON SUPPLY OF ELECTRICITY. THER EFORE IT DOES NOT QUALIFY AS COMPUTERS AND THEREFORE DEPRECIATION ON UPS IS ALLOWED AT THE NORMAL RATE APPLICABLE TO PLANTS I.E . @ 25% IN PLACE OF 60% CLAIMED BY THE ASSESSEE. THIS RESULT IN DISALLOWANCE OF RS.1 470/-. 14. THE LEARNED CIT(A) AT PAGE 19 OF HIS ORDER RELY ING UPON THE DECISION OF ITAT DELHI BENCH `F IN THE CASE OF EXPEDITORS ( INDIA) P. LTD. VS. DCIT DATED 29.08.2008 REPORTED IN 118 TTJ 652 WHEREIN I T HAS BEEN HELD THAT THE UPS IS AN INTEGRAL PART OF THE COMPUTER AND IS ELIG IBLE FOR DEPRECIATION. THEREFORE DEPRECIATION @ 60% IS ALLOWED TO THE ASSE SSEE. THE LEARNED DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREA S THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE LEARNE D CIT(A). THE LEARNED CIT(A) HAS RELIED UPON THE DECISION OF ITAT DELHI BENCH IN THE CASE OF EXPEDITORS (INDIA) P. LTD. (SUPRA) AND BEING THE DE CISION OF THE COORDINATE BENCH WE FIND NO INFIRMITY IN THE ORDER OF THE LEA RNED CIT(A) AND 14 MOREOVER NO CONTRARY DECISION HAS BEEN BROUGHT ON RECORD BY THE LEARNED DR. THUS GROUND NO.3 OF THE REVENUE IS DISMISSED. 15. IN THE RESULT THE APPEAL IS DISMISSED. ITA NO.4459/DEL/2009 16. GROUND NO.1 OF THE REVENUES APPEAL IS AS UNDER :- THAT THE CIT(A) ERRED IN ALLOWING DEPRECIATION ON THE CAPITALIZATION OF THE CUSTOM DUTY FOR THE MACHINERY IMPORTED WITHOUT APPRECIATING THE FACT THAT THIS IS AN UNASCERTAINED/CONTINGENT LIABILITY. 17. THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 WHERE THE ISSUE HAS COME UP BEFORE US IN ITA NO.1302/DEL/2009 WHERE THE CLAIM O F THE ASSESSEE HAS BEEN ALLOWED BY THE LEARNED CIT(A) AND THE REVENUES APP EAL HAS BEEN DISMISSED BY US HEREINABOVE. 18. BEING IDENTICAL FACTS IN THE PRESENT APPEAL TO THE FACTS IN THE ASSESSEES OWN CASE FOR THE A.Y. 2005-06 IN ITA NO.1302/DEL/20 09 HEREINABOVE WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A ). THUS GROUND NO.1 OF THE REVENUES APPEAL IS DISMISSED. 19. GROUND NO.2 OF THE REVENUES APPEAL IS AS UNDER :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.17 31 014/- AND DIRECTING TO TREAT THE EXPENDITU RE ON GLOW SIGN AS REVENUE EXPENDITURE. 15 20. THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 WHERE THE ISSUE HAS COME UP BEFORE US IN ITA NO.1302/DEL/2009 WHERE THE CLAIM O F THE ASSESSEE HAS BEEN ALLOWED BY THE LEARNED CIT(A) AND THE REVENUES APP EAL HAS BEEN DISMISSED BY US HEREINABOVE. 21. BEING IDENTICAL FACTS IN THE PRESENT APPEAL TO THE FACTS IN THE ASSESSEES OWN CASE FOR THE A.Y. 2005-06 IN ITA NO.1302/DEL/20 09 HEREINABOVE WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A ). ACCORDINGLY APPEAL OF THE REVENUE FOR THIS YEAR IS ALSO DISMISSED. 22. IN THE RESULT BOTH THE APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 11 TH FEBRUARY 2010. SD/ SD/- (A.D. JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH FEBRUARY 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT. 16