M/s. Serenity Work Space, Hyderabad v. The ITO, Ward - 6(3), Hyderabad

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A' HYDERABAD BEFORE SHRI N.R.S. GANESAN JM AND SHRI AKBER BASHA AM I.T.A. NO. 1386/HYD/2010 (ASSESSMENT YEAR 2007-08) M/S. SERENITY WORK SPACE HYDERABAD PAN: ABHFS1245D VS. THE INCOME TAX OFFICER WARD 6(3) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI RAMDEV BHUTADA RESPONDENT BY: SHRI B.V. PRASAD REDDY O R D E R PER NRS GANESAN JM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-IV HYDERABAD DATED 15.8.2010 AND PER TAINS TO ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE PAID ONLY A SUM OF RS. 500 TOWARDS TRIBUNAL FEE. A DEFECT MEMO WAS ISSUED TO THE ASSE SSEE INDICATING TO PAY THE BALANCE AMOUNT OF RS.9 500. HOWEVER THE ASSESSEE FILED AN EXPLANATION BY A LETTER DATED 15. 12.2010 CLAIMING THAT THE ASSESSED INCOME IS AT LOSS. THER EFORE AS PER CLAUSE (A) OF SUB-SECTION (6) OF SECTION 253 OF THE INCOME-TAX ACT 1961 THE FEE PAYABLE IS ONLY RS.500 AS HELD BY THE BOMBAY HIGH COURT IN GILBS COMPUTER LTD. VS. ITAT & ORS. (2009) 317 ITR 159. 3. WE HAVE CAREFULLY GONE THROUGH THE JUDGEMENT OF BOMBAY HIGH COURT IN THE CASE OF GILBS COMPUTER LTD . (SUPRA) I.T.A. NO. 1386/HYD/2010 M/S. SERENITY WORK SPACE ==================== 2 AND THE ORDER OF THE ASSESSING OFFICER. AS RIGHTLY POINTED OUT BY THE ASSESSEE THE ASSESSING OFFICER AFTER ALLOWING D EPRECIATION OF RS.3 81 832 COMPUTED THE NEGATIVE INCOME OF RS.2 5 67 168. THEREFORE AS HELD BY THE BOMBAY HIGH COURT THE AS SESSEE CAN BE SAID TO HAVE BEEN ASSESSED AT 'NIL' INCOME. THE BOMBAY HIGH COURT WHILE INTERPRETING SECTION 253(6) OF THE ACT FOUND THAT THE USE OF WORD 'MORE THAN' WOULD INDICATE A POSITI VE INCOME IN EXCESS OF RS.2 LAKHS. SINCE THE INCOME IS ADMITTED LY COMPUTED IN A NEGATIVE FIGURE IT WOULD BE COVERED BY CLAUSE (D) OF SUB- SECTION (6) OF SECTION 253 AND THEREFORE THE FEE PAYABLE WOULD BE RS.500 AS HELD BY THE BOMBAY HIGH COURT. 4. NOW COMING TO THE MERIT OF THE APPEAL THE ONLY ISSUE ARISING FOR CONSIDERATION IS DEPRECIATION ON ROUTER S AND SWITCHES. SHRI RAMDEV BHUTADA THE LEARNED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT ROUTERS AND SWITCHES FORM P ART OF THE COMPUTER. THEREFORE THE ASSESSEE IS ENTITLED FOR DEPRECIATION @ 60%. HOWEVER THE ASSESSING OFFICER ALLOWED THE CLAIM ONLY AT 15%. THE LEARNED REPRESENTATIVE FOR THE ASSESSE E PLACED HIS RELIANCE ON THE DECISION OF THE SPECIAL BENCH OF TH IS TRIBUNAL IN DCIT VS. DATACRAFT (INDIA) LTD. (2010) 133 TTJ 377 (SB). 5. ON THE CONTRARY SHRI B.V. PRASAD REDDY THE LEA RNED DR SUBMITTED THAT THE ASSESSEE INSTALLED NETWORKING SY STEM AND CLAIMED DEPRECIATION @ 60% TREATING THE SAME AS COM PUTER. ACCORDING TO THE LEARNED DR ALL RESIDENTIAL PREMISE S CONSTRUCTED I.T.A. NO. 1386/HYD/2010 M/S. SERENITY WORK SPACE ==================== 3 RECENTLY HAVE NETWORKING FACILITY. THEREFORE ROUT ERS AND SWITCHES THAT WERE CONNECTED WITH COMPUTER CANNOT B E CONSIDERED TO BE PART OF THE COMPUTER FOR THE PURPO SE OF GRANTING DEPRECIATION. REFERRING TO THE ORDER OF T HE CIT(A) THE LEARNED DR POINTED OUT THAT THE ASSESSEE HAS NOT PU RCHASED ANY MONITOR AND CPU. THEREFORE IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THE ASSESSEE HAS PURCHASED TH E MONITOR AND CPU DEPRECIATION CANNOT BE GRANTED ON THE ROUT ERS AND SWITCHES ALONE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDERS OF THE LOWER AUTHORITI ES. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT P URCHASED THE MONITOR AND CPU. IN THE ABSENCE OF ANY MONITOR AND CPU THE VARIOUS COMPONENTS PURCHASED BY THE ASSESSEE CA N BE TREATED AS ONLY ATTACHMENTS TO COMPUTER. THE ASSES SING OFFICER ALSO FOUND THAT THE ASSESSEE IS ENTITLED FOR DEPREC IATION AS CLAIMED PROVIDED THE ASSESSEE HAS ALSO PURCHASED MO NITOR AND CPU ALONG WITH OTHER PERIPHERALS/ATTACHMENTS. THIS FACTUAL SITUATION IS NOT DISPUTED BY THE ASSESSEE. ROUTERS AND SWITCHES CAN FORM PART OF COMPUTER AS FOUND BY THE SPECIAL B ENCH OF THIS TRIBUNAL IN DATACRAFT (INDIA) LTD. (SUPRA) PROVIDED THE ASSESSEE PURCHASED MONITOR AND CPU ALSO. IN THIS CASE THE A SSESSEE HAS NOT CLAIMED ANY DEPRECIATION ON MONITOR AND CPU . THE ASSESSEE IS CLAIMING DEPRECIATION ONLY ON THE NETWO RKING I.T.A. NO. 1386/HYD/2010 M/S. SERENITY WORK SPACE ==================== 4 SYSTEM. UNLESS THE ENTIRE SYSTEM OF COMPUTER TOGET HER WITH MONITOR AND CPU IS INSTALLED THE ASSESSEE MAY NOT B E ABLE TO CLAIM ANY DEPRECIATION ONLY ON ROUTERS AND SWITCHES . IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE ASSESSEE H AS A COMPLETE SET OF COMPUTER WE DO NOT FIND ANY INFIRM ITY IN THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY THE S AME IS CONFIRMED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4TH FEBRUARY 2011. SD/- (AKBER BASHA) ACCOUNTANT MEMBER SD/- (N.R.S. GANESAN) JUDICIAL MEMBER HYDERABAD DATED 4TH FEBRUARY 2011 TPRAO COPY FORWARDED TO: 1. M/S. SERENITY WORK SPACE C/O. M/S. R.D. BHUTADA & CO. CHARTERED ACCOUNTANTS 15-8-499 FEELKHANA HYDERAB AD- 500 012. 2. THE INCOME TAX OFFICER WARD NO. 6(3) HYDERABAD . 4. THE CIT(A)-IV HYDERABAD 5 THE CIT-III HYDERABAD 6. THE DR A BENCH ITAT HYDERABAD