Anagram Capital Ltd., Ahmedabad v. The ACIT.,Circle-3,, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND N.S. SAINI A M) ITA NO.1801/AHD/2008 A. Y.: 2005-06 ANAGRAM CAPITAL LTD. (FORMERLY KNOWN AS ANAGRAM SECURITIES LTD.) ANAGRAM HOUSE NR. COMMERCE SIX ROADS NAVRANGPURA AHMEDABAD VS THE A. C. I. T. CIRCLE-3 AHMEDABAD PA NO. AABCA 2916 K (APPELLANT) (RESPONDENT) APPELLANT BY SHRI VARTIK R. CHOKSI AR RESPONDENT BY SHRI G. S. SOURYAWANSI DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-VI I AHMEDABAD DATED 15 TH APRIL 2008 FOR ASSESSMENT YEAR 2005-06 ON THE FO LLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN ALLOWING DEPRECIATION @ 25% ONLY ON VSAT EQUIPMENTS INSTEAD OF THE APPELLANTS CLAIM OF DEPRECIATION @ 60% THEREBY CONFIRMING THE DISALLOWANCE OF RS.21 08 243 MADE BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED IN NOT UPHOLDING THE ASSESSEE S CONTENTION THAT INTEREST U/S 234B U/S 234C AND U/S 234D IS NOT AT ALL LEVIABLE. ITA NO.1801AHD/2008 ANAGRAM CAPITAL LTD. VS ACIT CIR-3 AHMEDABAD 2 2. THE ASSESSEE CLAIMED DEPRECIATION @ 60% ON VSAT EQUIPMENTS PURCHASED DURING THE YEAR AND ALSO VSAT EQUIPMENTS PURCHASED DURING THE EARLIER ASSESSMENT YEARS. THE AO HELD THAT VSAT EQUIPMENTS ARE COMMUNICATION EQUIPMENTS HENCE ENTITLED FOR DEPRECIATION AT NORMAL RATE OF 25% AS AGAINST 60% C LAIMED BY THE ASSESSEE. THE AO DISALLOWED THE DEPRECIATION CLAIME D @ 60% AND ALLOWED DEPRECIATION @ 25%. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE RELIED UPON THE STATEMENT OF FACT AND ADDITION MAY BE DELETED. THE LEARNED CIT(A) HOWEVER NOTED THAT HIS PREDECESSOR IN THE CASE OF THE SAME ASSESSEE FOR AS SESSMENT YEAR 2003-04 VIDE ORDER DATED 10-08-2006 HELD THAT VSAT EQUIPMENTS ARE NOT COMPUTER BUT COMMUNICATION EQUIPMENTS FOR WHICH DEPRECIATION RATE APPLICABLE TO THE MACHINERY SHOULD BE APPLIED. THE LEARNED CIT(A) ALSO NOTED THAT THE FACTS OF THIS CASE ARE S AME AS IS CONSIDERED IN EARLIER YEARS. THE ORDER OF THE AO WA S ACCORDINGLY CONFIRMED AND THE APPEAL OF THE ASSESSEE WAS DISMIS SED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE VERY FAIRLY CONCEDED THAT IN THE PRECEDING ASSESSMENT YEAR 2003-04 THE ASSESS EE DID NOT PREFER ANY APPEAL BEFORE THE TRIBUNAL AGAINST THE O RDER OF THE LEARNED CIT(A) AND AS SUCH THE ORDER OF THE LEARNED CIT(A) IN ASSESSMENT YEAR 2003-04 HAS BECOME FINAL. HE HAS HOWEVER RELI ED UPON THE ORDER OF ITAT MUMBAI SPECIAL BENCH IN THE CASE OF DCIT VS DATACRAFT INDIA LTD. 40 SOT 295 AND REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. ITA NO.1801AHD/2008 ANAGRAM CAPITAL LTD. VS ACIT CIR-3 AHMEDABAD 3 4. ON THE OTHER HAND THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND THE MATERIAL AVAILABLE ON RECORD. THE QUESTION BEFORE THE ITAT S PECIAL BENCH MUMBAI IN THE CASE OF DATACRAFT INDIA LTD. (SUPRA) WAS WHETHER ROUTERS AND SWITCHES CAN BE CLASSIFIED AS COMPUTER ENTITLED TO DEPRECIATION AT 60 PER CENT OR HAVE TO BE CLASSIFIE D AS GENERAL PLANT AND MACHINE ENTITLED TO DEPRECIATION ONLY AT 25 PER CENT. THE SPECIAL BENCH IN VIEW OF THE DECISION MADE IN THE ORDER STA TED THAT IT CAN BE SAID THAT ROUTERS AND SWITCHES CAN BE CLASSIFIED AS COMPUTER HARDWARE WHEN THEY ARE USED ALONG WITH A COMPUTER A ND WHEN THEIR FUNCTIONS ARE INTEGRATED WITH COMPUTER. IN OTHER WO RDS WHEN A DEVICE IS USED AS A PART OF THE COMPUTER IN ITS FUNCTION THEN IT WOULD BE TERMED AS COMPUTER. IT WAS HELD THAT ROUTERS AND SW ITCHES IN THE CIRCUMSTANCES OF THE CASE WERE TO BE INCLUDED IN TH E BLOCK OF COMPUTER ENTITLED TO DEPRECIATION @ 60%. 6. THE ABOVE DECISION IS CLEARLY DISTINGUISHABLE FR OM THE FACTS OF THE ASSESSEES CASE. THE AO HAS GIVEN A SPECIFIC FI NDING THAT VSAT EQUIPMENTS ARE COMMUNICATION EQUIPMENTS USED FOR TR ANSFER OF DATA THROUGH OVER LARGER DISTANCES AND AS SUCH THIS EQUI PMENTS CAN UNDER NO CIRCUMSTANCES BE CATEGORIZED AS COMPUTER AND SOF TWARE. THE AO FURTHER NOTED THAT THE ASSESSEE ALSO AGREED UPON BY THE ORDER OF THE LEARNED CIT(A) IN ITS OWN CASE FOR ASSESSMENT YEAR 2003-04 AND ACCORDINGLY CLAIM OF THE ASSESSEE WAS DISALLOWED. I T WOULD THEREFORE PROVE THAT FACTS OF THE CASE ARE SIMILAR AS WERE CO NSIDERED IN THE ITA NO.1801AHD/2008 ANAGRAM CAPITAL LTD. VS ACIT CIR-3 AHMEDABAD 4 PRECEDING ASSESSMENT YEAR 2003-04. THE SIMILAR FIND ING OF FACTS HAVE REACHED FINALITY IN ASSESSMENT YEAR 2003-04 BECAUSE THE ASSESSEE DID NOT CHALLENGED THE ORDER OF THE LEARNED CIT(A) BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2003-04. SINCE THE FACTS ARE IDE NTICAL AS HAS BEEN CONSIDERED IN THE EARLIER YEAR IN WHICH IT WAS HELD THAT THE VSAT EQUIPMENTS CANNOT BE CATEGORIZED AS COMPUTER SOFTWA RE THERE IS NO MATERIAL ON RECORD TO DISPUTE THE FINDINGS OF THE A UTHORITIES BELOW. NOTHING IS BROUGHT TO OUR NOTICE ON FACTS TO DISTIN GUISH THE FACTS CONSIDERED IN EARLIER YEAR AS NOTED ABOVE. ONLY TH E DECISION OF SPECIAL BENCH ITAT MUMBAI IN THE CASE OF DATACRAFT INDIA LTD. (SUPRA) WAS RELIED UPON WHICH WE FIND IS CLEARLY DI STINGUISHABLE. WE THEREFORE DO NOT FIND ANY MERIT IN THE APPEAL OF T HE ASSESSEE ON GROUND NO.1. 7. CHARGING OF INTEREST IS MANDATORY AND CONSEQUENT IAL AND IS ALSO NOT ARGUED. THE SAME IS ALSO REJECTED. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15-02-2011 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 15-02-2011 LAKSHMIKANT/- ITA NO.1801AHD/2008 ANAGRAM CAPITAL LTD. VS ACIT CIR-3 AHMEDABAD 5 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD