DCIT, New Delhi v. M/s. Agarwal Metal Works Ltd., New Delhi

ITA 593/DEL/2012 | 2008-2009
Pronouncement Date: 11-10-2013 | Result: Dismissed

Appeal Details

RSA Number 59320114 RSA 2012
Assessee PAN AABCA4897R
Bench Delhi
Appeal Number ITA 593/DEL/2012
Duration Of Justice 1 year(s) 8 month(s) 7 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Agarwal Metal Works Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 11-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 11-10-2013
Date Of Final Hearing 10-10-2013
Next Hearing Date 10-10-2013
Assessment Year 2008-2009
Appeal Filed On 03-02-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R. S. SYAL ACCOUNTANT MEMBER AND SMT. DIVA SINGH JUDICIAL MEMBER I.T.A .NO.-593/DEL/2012 (ASSESSMENT YEAR-2008-09) DY. CIT VS. M/S AGARWAL METAL CIRCLE-1(1) WORKS LTD. B-214 2 ND NEW DELHI. FLOOR R.G. COMPLEX PLOT NO.2 D.B. GUPTA ROAD MOTIA KHAN NEW DELHI. PAN: AABCA4897R (APPELLANT) (RESPONDENT) REVENUE BY:- SMT. ANURADHA MISRA CIT. DR. ASSESSEE BY:- SH. VED JAIN & SMT. RANO JAIN CAS. ORDER PER R. S. SYAL AM. THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE CIT (A) ON 03.11.2011 IN RELATION TO THE ASS ESSMENT YEAR 2008-09. 2 2. FIRST GROUND OF THE APPEAL IS AGAINST THE DELETI ON OF ADDITION OF RS.17 55 103/- ON ACCOUNT OF BONUS PAID TO THE DIRECTORS OF THE COMPANY. BRIEFLY STATED THE FACTS OF THIS GROUND THAT THE ASSESSEE PAID SUCH AMOUNT AS BONUS TO ITS DIRECTORS. THE AO OBSERVED THAT THESE DIRECTORS WERE HOLDING M ORE THAN 50% OF THE ASSESSEE COMPANYS SHAREHOLDING. IT WAS NOTED THAT ASSESSEE EARNED PROFIT OF RS.3.74 CRORES BUT PROPOS ED DIVIDEND ONLY TO THE TUNE OF RS.31.25 LACS. IN THIS BACKGRO UND THE AO OPINED THAT THE ASSESSEE GAVE DIVIDEND TO THE DIREC TOR SHARE- HOLDERS IN THE GARB OF BONUS. HE MADE THE ADDITION FOR THIS SUM WHICH CAME TO BE DELETED BY THE LD. CIT (A). 3. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD IT IS PRIMARILY NOTICE D THAT THE AOS OBSERVATION ABOUT THESE DIRECTORS HOLDING 50% OF THE SHARE CAPITAL IS INCORRECT. IT HAS BEEN TAKEN NOTE OF BY THE LD. CIT (A) THAT THE SHARE HOLDING OF THESE THREE DIREC TORS WORKS 3 OUT TO AROUND 8% ON A CONSOLIDATED BASIS WITH NO SE PARATE SHAREHOLDING EXCEEDING 3%. IT IS FURTHER RELEVANT T O NOTE THAT THE ASSESSEE PAID REMUNERATION OF RS.1.06 CRORES TO THESE DIRECTORS WHO WERE PAID BONUS OF RS.17.55 LACS IN ADDITION TO THAT. THE AO HAS ALLOWED DEDUCTION ON ACCOUNT OF REMUNERATION PAID TO THE DIRECTORS WITHOUT ANY HITC H. FURTHER THE ASSESSEE COMPANY PAID BONUS TO ALL EMPLOYEES IN CLUDING DIRECTORS. IT IS PARAMOUNT TO RECORD THAT THE DIREC TORS ALONE WERE NOT CHOSEN FOR PREFERENTIAL TREATMENT WITH REG ARD TO THE PAYMENT OF BONUS. WHEN THE POSITION IS SO THAT ALL THE EMPLOYEES INCLUDING DIRECTOR EMPLOYEES WERE PAID BO NUS WE FAIL TO APPRECIATE AS TO HOW SUCH PAYMENT TO DIRECT ORS ALONE CAN BE PICKED UP FOR DISALLOWANCE. THE LD. CIT (A) HAS RECORDED A CATEGORICAL FINDING THAT THESE DIRECTORS HAD PAID T AX ON THE AFORESAID BONUS ALONG WITH SALARY ON THE MAXIMUM MA RGINAL RATE AND AS SUCH THERE WAS NO LOSS TO THE REVENUE. THE LD. DR COULD NOT REFUTE THIS FINDING GIVEN BY THE LD. FIRS T APPELLATE 4 AUTHORITY. AS SUCH WE ARE OF THE CONSIDERED OPINIO N THAT THE AMOUNT OF BONUS PAID TO THE DIRECTORS IS FULLY DEDU CTIBLE U/S 36(1)(II) OF THE ACT AND THE IMPUGNED ORDER DOES NO T MERIT ANY INTERFERENCE ON THIS COUNT. THIS GROUND IS NOT ALLO WED. 4. THE ONLY OTHER GROUND IS AGAINST THE DELETION OF ADDITION OF RS.190972/- ON ACCOUNT OF EXTRA DEPRECIATION CLA IMED ON COMPUTERS PERIPHERALS. THE ASSESSEE CLAIMED DEPRECI ATION ON COMPUTERS AT THE RATE OF 60% AMOUNTING TO RS.14.33 LACS. ON BEING CALLED UPON TO JUSTIFY THE HIGHER RATE OF DEP RECIATION ON COMPUTER PERIPHERALS THE ASSESSEE RELIED ON CERTAI N DECISIONS AS HAVE BEEN MENTIONED IN THE ASSESSMENT ORDER FOR CANVASSING THE VIEW THAT HIGHER RATE OF DEPRECIATIO N WAS APPLICABLE TO COMPUTER PERIPHERALS AS WELL. NOT CON VINCED THE AO HELD THAT THE DEPRECIATION AT THE HIGHER RATE WA S NOT APPLICABLE TO COMPUTERS PERIPHERALS PRINTERS SCAN NERS AND NT SERVER. HE THEREFORE DISALLOWED THE EXCESS DEPREC IATION BY 5 TREATING SUCH COMPUTER PERIPHERALS AS A NORMAL ITEM OF PLANT AND MACHINERY. THE LD. CIT (A) OVERTURNED THE ASSES SMENT ORDER ON THIS POINT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD IN THE LIGHT OF PRECEDE NTS CITED BEFORE US. THE DELHI BENCH OF THE TRIBUNAL IN EXPEDITORS INTERNATIONAL (INDIA) (P) LTD. VS. ACIT (2008) 118 TTJ (DEL) 652 HAS HELD THAT THE PERIPHERALS SUCH AS PRINTERS SC ANNERS AND NT SERVER ETC. FORM AN INTEGRAL PART OF THE COMPUT ERS AND ARE HENCE ELIGIBLE FOR DEPRECIATION @ OF 60% AS APPLICA BLE TO COMPUTERS. OTHER DECISIONS RELIED ON BY THE LD. AR INCLUDING ITO VS. SAMIRAN MAJUMDAR (2006) 98 ITD 119 (KOL) AL SO FORTIFY THE SAME VIEW. THE LD. DR COULD NOT POINT O UT ANY CONTRARY DECISION. RESPECTFULLY FOLLOWING THE PRECE DENTS WE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. 6 6. IN THE RESULT THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/10/2013. SD/- SD/- ( DIVA SINGH ) (R . S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:11/10/2013 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR DATE INITIAL 1. DRAFT DICTATED ON 10-10-2013 PS 2. DRAFT PLACED BEFORE AUTHOR 10-10-2013 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. *