M/s Crabtree India Limited, Delhi v. DCIT, New Delhi

ITA 3639/DEL/2008 | 2004-2005
Pronouncement Date: 25-02-2010 | Result: Allowed

Appeal Details

RSA Number 363920114 RSA 2008
Bench Delhi
Appeal Number ITA 3639/DEL/2008
Duration Of Justice 1 year(s) 2 month(s) 14 day(s)
Appellant M/s Crabtree India Limited, Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 25-02-2010
Date Of Final Hearing 04-02-2010
Next Hearing Date 04-02-2010
Assessment Year 2004-2005
Appeal Filed On 11-12-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI R.C. SHARMA I.T.A. NOS. 3638 3639/DEL/2008 ASSESSMENT YEARS: 2003-04 & 2004-05 M/S. CRABTREE INDIA LTD. VS. ASSISTANT COMMISSIO NER OF IT 1/7 RAM KISHORE ROAD CIRCLE 3(1) CIVIL LINES DELHI-1100 54 NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VP BANSAL CA RESPONDENT BY: SHRI MANISH GUPT A DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANC E OF THE ASSESSEE AGAINST THE ORDERS OF LEARNED CIT(APPEALS) DATED 08 .09.2008 AND 05.09.20088 PASSED FOR ASSESSMENT YEARS 2003-04 AND 2004-05. 2. IN ASSESSMENT YEAR 2003-04 THE SOLITARY GRIEVAN CE OF THE ASSESSEE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING T HE ADDITION OF RS.4 38 957. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE COMPANY AT THE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF TRADIN G OF ELECTRIC SWITCH WIRES ETC. IT HAS FILED ITS RETURN OF INCOME ON 3 RD NOVEMBER 2003 DECLARING AN 2 INCOME OF RS.1 55 58 980. LEARNED ASSESSING OFFICER HAD ISSUED NOTICE UNDER SEC. 143(2) WHICH DULY SERVED UPON THE ASSESS EE AND IN RESPONSE TO THE NOTICE TAX CONSULTANT OF THE ASSESSEE APPEARED BEF ORE THE ASSESSING OFFICER. ON SCRUTINY OF THE ACCOUNTS ASSESSING OFFICER FOUN D THAT ASSESSEE HAD DEBITED A SUM OF RS.8 77 915 TOWARDS EXPENSES INCUR RED ON EXHIBITION SEMINARS AND CONFERENCES HELD IN HANNOVER DUBAI. H E FOUND THAT TOTAL EXPENSES ON THIS EXHIBITION/CONFERENCE WAS INCURRED AT RS.17 55 831. 50% OF THE ABOVE EXPENSES WAS BORNE BY THE ASSESSEE AND TH E 50% WAS BY THE OTHER GROUP CONCERN. ASSESSING OFFICER ASKED THE ASSESSEE WHY EXPENSES INCURRED ON THE SEMINAR AND CONFERENCE HELD AT DUBAI BE NOT DISALLOWED. IT WAS CONTENDED BY THE ASSESSEE THAT EXPENDITURE INCURRED AT HANNOVER/DUBAI FOR HOLDING EXHIBITION SEMINAR AND CONFERENCES WERE BO RNE BY THE ASSESSEE AND HAVELLS INDIA LTD. EQUALLY. THE CONFERENCES WERE HE LD JOINTLY BY THE ASSESSEE AND HAVELLS INDIA LTD. THE CRABTREE BRAND IS AN INTERNATIONAL BRAND AND WAS PURCHASED BY HAVELLS INDUSTRIES LTD. FROM C RABTREE LTD. UK. THE PARTICIPATION IN THE CONFERENCES WERE FOR THE PURPO SE TO ADVERTISE AND EXPLORE MARKET. ASSESSING OFFICER HAS DISALLOWED 50 % OF THE EXPENSES BORNE BY THE ASSESSEE I.E. 50% OF RS.8 77 915 WHICH COMES TO RS.4 38 957 ON THE GROUND THAT SEMINARS EXHIBITIONS WERE HELD IN THE FOREIGN COUNTRIES NAMELY 3 HANNOVER/DUBAI ETC. THE ASSESSEE COMPANY NEITHER IN THE PAST NOR IN THE CURRENT YEAR HAD MADE ANY EXPORT SALES. THEREFORE IN THE OPINION OF THE ASSESSING OFFICER IT WAS NOT SUPPOSED TO INCUR SUC H EXPENSES. 4. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT EXPENSES INCURRED BY THE ASSESSEE WERE FOR THE PURPOSE OF THE BUSINES S NEEDS AND EXPEDIENCY. ASSESSING OFFICER DID NOT FIND OUT ANY FAULT WITH R EGARD TO THE GENUINENESS OF INCURRENCE OF THE EXPENSES. THE ONLY GRIEVANCE O F THE ASSESSING OFFICER IS THAT CORRESPONDING INCOME HAS NOT RESULTED TO THE A SSESSEE FROM THE INCURRENCE OF SUCH EXPENSES THEREFORE 50% ARE NOT ALLOWABLE. ON THE STRENGTH OF HON'BLE SUPREME COURTS DECISION IN THE CASE OF CIT VS. INDIAN BANK REPORTED IN 56 ITR 77. HE SUBMITTED THAT IF EX PENDITURE IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSIN ESS THEN ITS ALLOWANCE AND DISALLOWANCE WOULD NOT BE DEPENDENT UPON THE RE SULTANT INCOME. IT IS NOT NECESSARY THAT BY SPENDING MONEY INCOME SHOULD BE GENERATED. IF THAT BE SO THEN NO CONCERN WOULD HAVE SUFFERED ANY LOSS FO R BUTTRESSING HIS PROPOSITION HE RELIED UPON THE JUDGMENT OF THE HON 'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DELHI CLOTH & GENERAL MILLS 115 ITR 659. HE ALSO 4 CONTENDED THAT ASSESSING OFFICER HAS NOT ASSIGNED A NY REASON WHY 50% IS TO BE DISALLOWED AND 50% IS TO BE ALLOWED TO THE ASSES SEE. LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE ASSESSING OFFICER. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. SECTION 37 OF THE INCOME-TAX ACT 1961 PROVIDES FOR DEDUCTION OF ALL EXPENDITURE WHOLLY AND EXCLUSIVELY LAID OUT OR EXPENDED FOR THE PURPOSE OF THE BUSINESS. THUS IN ORDER TO CLAI M ALLOWANCE OF EXPENSES UNDER THIS SECTION THE ASSESSEE SHOULD SATISFY THA T EXPENDITURE ARE NOT GOVERNED BY THE PROVISIONS OF SECTIONS 30 TO 36 EX PENDITURES HAVE BEEN LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE B USINESS. THE EXPENDITURE MUST NOT BE PERSONAL IN NATURE AND THE EXPENDITURE MUST NOT BE CAPITAL IN NATURE. IN THE PRESENT CASE THE ONLY REASON ASSIGN ED BY THE ASSESSING OFFICER FOR DISALLOWING THE CLAIM OF THE ASSESSEE IS THAT I T HAD NOT MADE ANY EXPORT SALES EITHER IN THE PAST OR IN THE CURRENT YEAR. IN OUR OPINION THIS CANNOT BE A VALID REASON FOR MAKING THE DISALLOWANCE. ASSESSING OFFICER HAS NOT DOUBTED THE GENUINENESS OF EXPENSES AND THE BUSINESS EXPEDI ENCY FOR INCURRING SUCH EXPENSES. THE TURNOVER OF THE ASSESSEE HAD INCREASE D MANY FOLDS BECAUSE OF THESE CONFERENCES AND ADVERTISEMENTS FROM ASSESSMEN T YEARS 2002-03 TO 2005-06. THE DISALLOWANCE CAN BE MADE IF IT WAS FOU ND THAT EXPENSES WERE 5 NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSIN ESS. BUT NO SUCH CIRCUMSTANCES HAVE BEEN POINTED OUT BY THE ASSESSIN G OFFICER. THEREFORE WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE DISALLOWANCE. 7. IN ASSESSMENT YEAR 2004-05 THE SOLITARY GRIEVAN CE OF THE ASSESSEE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN ALLOWING DEP RECIATION AT THE RATE OF 25% ON VIDEO CONFERENCING EQUIPMENT AS AGAINST 60% CLAIMED BY THE ASSESSEE ON THE GROUND THAT VIDEO CONFERENCING EQUI PMENTS ARE NOT COMPUTERS. THE BRIEF FACTS OF THE CASE ARE THAT THE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER FOUND THA T ASSESSEE HAS MADE ADDITION TO THE EDP INSTALLATION TO THE EXTENT OF R S.59 26 975. IT CLAIMED DEPRECIATION @ 60%. ON PERUSAL OF THE DETAILS OF AD DITION MADE BY THE ASSESSEE IT WAS FOUND BY THE ASSESSING OFFICER THA T ASSESSEE HAS CLAIMED DEPRECIATION @ 60% ON THE VIDEO CONFERENCING EQUIPM ENTS SPEAKERS TV SETS ETC. ALONG WITH THE COMPUTERS AND COMPUTER ACC ESSORIES INCLUDING COMPUTERS PERIPHERALS LIKE PRINTERS. IT WAS CONTEND ED BY THE ASSESSEE THAT EDP INSTALLATION WERE IN THE NATURE OF DATA PROCESS ING AND OTHER RELATED ACTIVITIES. ASSESSING OFFICER DID NOT ACCEPT THE CO NTENTION OF THE ASSESSEE ON THE GROUND THAT COMPUTER IS ONE OF THE EQUIPMENTS I N THE VIDEO CONFERENCING AND DEPRECIATION CANNOT BE CLAIMED ON THE ENTIRE VI DEO CONFERENCING 6 EQUIPMENTS WHICH INCLUDE TV SETS WEB-CAMERA ETC. H E FURTHER OBSERVED THAT IF THE CLAIM OF THE ASSESSEE COMPANY IS ACCEPT ED THEN ALL THE BIG INPUT AND OUTPUT DEVICES PROCESSING UNITS STORAGE UNIT L IKE MRI SCANNING MACHINES COORDINATE MEASURING MACHINE USED IN THE INDUSTRIES FOR WELDING ETC. WILL BE ENTITLED TO 60% DEPRECIATION. ASSESSI NG OFFICER IN THIS WAY DISALLOWED THE CLAIM OF THE ASSESSEE AND GRANTED TH E DEPRECIATION @ 25%. 8. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 9. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING PLACED ON RECORD A NOTE EXHIBITING THE FUNCTIONING OF VIDEO C ONFERENCING MACHINE. HE SUBMITTED THAT THE COMPUTER IS NOT DEFINED IN THE I NCOME-TAX ACT 1961. THE DEFINITION AVAILABLE IN SEC. 2(1)(T) OF THE INFORMA TION TECHNOLOGY ACT 2000 IS RELEVANT FOR UNDERSTANDING THE MEANING OF COMPUT ER. HE PLACED THIS DEFINITION IN HIS NOTE. THE NOTE AS WELL AS THE DEF INITION READS AS UNDER: A VIDEOCONFERENCE (OR VIDEOTELECONFERENCE) IS A SE T OF INTERACTIVE TELECOMMUNICATION TECHNOLOGIES WHICH ALLOW TWO OR-M ORE LOCATIONS TO INTERACT VIA TWO WAY VIDEO AND AUDIO TRANSMISSION SIMULTANEOUSLY . VIDEOCONFERENCING USES TELECOMMUNICATIONS OF AUDIO AND VIDEO TO BRING PEOP LE AT DIFFERENT SITES TOGETHER FOR A MEETING. BESIDES THE AUDIO AND VISUAL TRANSMI SSION OF MEETING ACTIVITIES VIDEOCONFERENCING CAN BE USED TO SHARE DOCUMENTS C OMPUTER DISPLAYED INFORMATION AND WHITEBOARDS. 7 THE CORE TECHNOLOGY USED IN A VIDEOCONFERENCE SYSTE M IS DIGITAL COMPRESSION OF AUDIO AND VIDEO STREAMS IN REAL TIME. THE RESULTING DIGITAL STREAM OF 1 S AND OS IS SUBDIVIDED INTO LABELED PACKETS WHICH ARE THEN TRA NSMITTED 'THROUGH A DIGITAL NETWORK OF SOME KIND (USUALLY ISDN OR IP). THE USE OF AUDIO MODEMS IN TRANSMISSION LINE ALLOW FOR THE USE OF POTS OR THE PLAIN TELEPHONE SYSTEM IN SOME LOW SPEED APPLICATIONS SUCH AS VIDEOTELEPHONY BECAUSE THEY CONVERT THE DIGITAL PULSES TO/ FROM ANALOG WAVES IN THE AUDIO S PECTRUM RANGE. A VIDEO CONFERENCE SYSTEM IS A COMPUTER DEVICE THA T ACCEPTS INFORMATION (IN THE FORM OF DIGITALALIZED DATA) BY WAY OF VIDEO INPUT ( WEBCAM OR VIDEO CAMERA) AND AUDIO INPUT (MICROPHONES) AND PROCESS THE DATA AND TRANSFER THROUGH ANALOG OR DIGITAL TELEPHONE NETWORK OR LAN AND GIVES THE OUTP UT .DATA BY WAY OF VIDEO OUTPUT (MONITOR TELEVISION OR PROJECTOR) AND AUDIO OUTPUT (LOUDSPEAKERS ASSOCIATED WITH DISPLAY DEVICE OR TELEPHONE). A COMPUTER IS A PROGRAMMABLE MACHINE. THE TWO PRINC IPAL CHARACTERISTICS OF A COMPUTER ARE: 1. IT RESPOND TO A SPECIFIC SET OF INSTRUCTIONS IN A WELL DEFINED MANNER. 2. IT CAN EXECUTE A PRERECORDED LIST OF INSTRUCTION S MODEM COMPUTERS ARE ELECTRONIC AND DIGITAL. THE ACT UAL MACHINERY (HARDWARE) INCLUDES WEBCAM SPEAKERS IN ADDITION TO INPUT DEVI CE OUTPUT DEVICE AND CENTRAL PROCESSING UNIT. EVERY COMPUTER IS ALSO REQUIRES A BUS THAT TRANSMITS DATA FROM ONE PART OF THE COMPL.}TER TO ANOTHER. THE VIDEO CONFERENCE SYSTEM IS NOTHING BUT A COMPUT ER DEVICE FOR DATA CAPTURING AND TRANSFER FOR COMMUNICATION PURPOSE. THE VIDEO CONFERENCE SYSTEM IS USEFUL IN THE FOLLOW ING FIELDS: 8 I) IN THE MEDICAL FIELD: THE PATIENTS MAY CONTACT N URSES AND PHYSICIANS IN EMERGENCY OR ROUTINE SITUATIONS. PHYSICIANS AND OTH ER PARAMEDICAL PROFESSIONALS CAN DISCUSS CASES ACROSS LARGE DISTANCE. VIDEOCONFE RENCING SYSTEM CAN BE USED TO TRANSMIT THE DATA ABOUT A PATIENTS. II) DISTANCE EDUCATION: THROUGH VIDEO CONFERENCE EQ UIPMENTS STUDENTS CAN VISIT ANOTHER PART OF WORLD TO SPEAK WITH OTHERS TO LEARN . III) BUSINESS IMPACT: TO ENHANCE CUSTOMER AND SUPP LIER BASE KNOWLEDGE SHARING AND TECHNICAL UPDATION IV) IMPACT ON LAW: VIDEOCONFERENCING HAS ALLOWED T ESTIMONY TO BE USED FOR INDIVIDUALS WHO ARE NOT ABLE TO ATTEND THE PHYSICAL LEGAL SETTINGS. IN INDIA IN MOST RECENT CASE KASAB WAS PRESENTED BEFORE THE COURT TH ROUGH VIDEO CONFERENCE SYSTEM. V) MEDIA RELATIONS: VIDEO PRESS CONFERENCE AT NATIO NAL AND INTERNATIONAL LEVEL. THE VIDEO CONFERENCE SYSTEM HAS BEEN INSTALLED FOR OUR OFFICIAL USE IN ALL OUR BRANCHES AND FACTORIES FOR THE PURPOSE OF COMMUNICA TION. WE ARE MANUFACTURING AND TRADING HIGHLY TECHNICAL ELECTRICAL ITEMS AND B ATH FITTINGS AS PER NATIONAL AND INTERNATIONAL QUALITY STANDARDS. THESE ITEMS ARE MO STLY USED BY THE ELECTRICAL CONSULTANTS AND ARCHITECTS AT VERY SENSITIVE AREAS. OUR PRODUCTS ARE REGULARLY HAVING IMPROVING AND CHANGING NATURE. THE NEW FEATU RES HAVE TO BE COMMUNICATED TO OUR MARKET STAFF AND CUSTOMERS TO E XCHANGE THE TECHNICAL KNOWLEDGE. OVER THE SYSTEM INSTALLED IN OUR FACTOR IES AND OFFICES WE SHARE TECHNICAL DRAWINGS TECHNICAL VIEWS AND DESIGNS WIT H OUR TECHNICIANS ENGINEERS CONSULTANTS ARCHITECTS AND CUSTOMERS. VIDEOCONFERE NCING CAN ENABLE INDIVIDUALS IN FAR AWAY PLACES TO HAVE MEETINGS AND CAN SAVE TI ME AND MONEY THAT USED TO BE SPENT IN TRAVELING. VIDEOCONFERENCE SYSTEM IS BEING A ONLINE NETWORKING WEB 9 SITES IN ORDER TO HELP BUSINESSES FORM PROFITABLE RELATIONSHIP QUICKLY AND EFFICIENTLY WITHOUT LEAVING THEIR PLACE OF WORK. VI DEO CONFERENCING IS ALSO USED TO ENHANCE THE CUSTOMER AND SUPPLIER RELATIONSHIP. THE ASSESSEE COMPANY HAS INVESTED IN VIDEO CONFEREN CING SYSTEMS AND TELEVISION SETS (USED AS DISPLAY MONITORS) AT THE ASSESSEE'S V ARIOUS LOCATIONS AND CHARGED DEPRECIATION UNDER THE HEAD COMPUTERS AT THE RATE O F 60%. DEFINITION OF COMPUTER AS PER SECTION 2(1)(T) OF TH E INFORMATION TECHNOLOGY ACT 2000. DEFINITION A COMPUTER IS DEFINED AS UNDER :- THE EXPRESSION 'COMPUTER' HAS NOT BEEN DEFINED IN T HE ACT. HOWEVER IT HAS BEEN DEFINED BY SECTION 2(1)(T) OF THE INFORMATION TECHN OLOGY ACT 2000. AS PER THE SAID ACT 'COMPUTER' MEANS ANY ELECTRONIC MAGNET OPTICAL OR OTHER HIGH SPEED DATA PROCESSING DEVICE OR SYSTEM WHICH PERFORMS LOG ICAL ARITHMETIC AND MEMORY FUNCTIONS BY MANIPULATION OF ELECTRONICS OR MAGNETI C OR OPTICAL IMPULSES AND INCLUDES ALL INPUT - OUTPUT PROCESSING STORAGE CO MPUTER SOFTWARE OR COMMUNICATION FACILITIES WHICH ARE CONNECTED OR REL ATED TO THE COMPUTER IN A COMPUTER SYSTEM OR COMPUTER NETWORK. 10. ON THE STRENGTH OF ABOVE EXPLANATION HE SUBMIT TED THAT VIDEO CONFERENCING MACHINE IS TO BE EQUATED WITH COMPUTER S AND DEPRECIATION @ 60% BE ALLOWED TO THE ASSESSEE. LEARNED DR ON THE O THER HAND SUBMITTED THAT SPEAKER TV CAMERA ETC. ATTACHED WITH A COMPU TER IF CARRYING OUT VIDEO 10 CONFERENCING CANNOT BE CONSTRUED AS INTEGRAL PART O F THE COMPUTER ENABLING THE ASSESSEE TO CLAIM DEPRECIATION @ 60%. THE COMPU TER IS ONE COMPONENT IN THIS WHOLE PRODUCT. ON THE BASIS OF ONE COMPONEN T THE TOTAL MACHINERY COULD NOT BE CONSTRUED AS COMPUTER. ON THE STRENGTH OF ITATS ORDER IN THE CASE OF CLIMATE SYSTEMS INDIA LTD. RENDERED IN ITA NOS. 1698 & 1684/D/09 HE CONTENDED THAT IT HAS TO BE ASCERTAINED WHETHER EACH ITEM CAN FUNCTION INDEPENDENTLY. IF THAT BE SO THEN RATE OF DEPRECIAT ION AVAILABLE FOR EACH ITEM WOULD BE APPLIED TO SUCH ITEM. THE CAMERA TV ETC. CAN FUNCTION INDEPENDENTLY AND THEREFORE THESE ARE TO BE IDENT IFIED FOR EXCLUDING THEIR VALUES FROM GRANT OF DEPRECIATION @ 60%. THE ITAT I N THE CASE OF CLIMATE SYSTEMS INDIA LTD. HAS SET ASIDE THE ISSUE TO THE A SSESSING OFFICER FOR VERIFYING THE STATUS OF EACH INDIVIDUAL ITEMS AND H OW THEY ARE INTER- CONNECTED OR DEPENDABLE UPON COMPUTER FOR THEIR FUN CTIONING. 11. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH THE RECORD CAREFULLY. THE NOTE EXHIBITING THE FUNCTIONI NG OF A VIDEO CONFERENCING EQUIPMENT PLACE BEFORE US WAS NOT PLACED BEFORE THE ASSESSING OFFICER. ACCORDING TO THIS MATERIAL A VIDEO CONFERENCE SYST EM IS A COMPUTER DEVICE THAT ACCEPT INFORMATION IN THE FORM OF DIGITAL DATA BY WAY OF VIDEO INPUT I.E. WITH THE HELP OF WEB-CAM OR VIDEO CAMERA AND AUDIO INPUT WITH THE HELP OF 11 MICROPHONE. THE SYSTEM THEREAFTER PROCESSED THE DAT A AND TRANSFER THROUGH ANALOGUE OR DIGITAL TELEPHONE NET WORK OR LAN AND D IGITAL GIVES THE OUTPUT DATA BY WAY OF AUDIO VIDEO OUTPUT. IT IS A TECHNIC AL DEVICE WHOSE FUNCTION ARE SIMILAR TO THE COMPUTER BECAUSE BASICALLY COMPU TER ALSO RESPOND TO A SPECIFIC SET OF INSTRUCTIONS IN A WELL DEFINED MANN ER. IT USED TO EXECUTE A PRE- RECORDED LIST OF INSTRUCTIONS. THE ITAT IN THE CASE OF ITO VS. SIMRAN MAJUMDAR CALCUTTA REPORTED IN 98 ITD PAGE 119 HAS CONSIDERED A SOMEWHAT SIMILAR ISSUE WHEREIN DEPRECIATION @ 60% WAS CLAIME D ON PRINTER AND SCANNER. THE ITAT HAS CONSIDERED THE DEFINITION OF COMPUTER SYSTEM PROVIDED IN EXPLANATION (A) TO SUB-SECTION (XI) OF SEC.36(1) OF THE INCOME- TAX ACT 1961. THE ITAT THEREAFTER CONSIDERED THE E XPRESSION COMPUTER CONSTRUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA IN ITS STUDY MATERIAL RELATING TO INFORMATION TECHNOLOGY PAPER. THEREAFTER THE ITAT CONSIDERED THE JUDGMENT OF THE HON'BLE SUPREME COUR T IN THE CASE OF CIT VS. KARNATAKA POWER CORPORATION 247 ITR 268 WHEREIN THE ISSUE BEFORE THE HON'BLE SUPREME COURT WAS WHETHER A BUILDING CAN BE TREATED AS A PLANT. HON'BLE SUPREME COURT HAS HELD THAT IF THE BUILDING HAS BEEN PLANED AND CONSTRUCTED IN A WAY WHICH SERVES AN ASSESSEES SPE CIAL TECHNICAL REQUIREMENT THEN SUCH BUILDING WILL EQUATED TO BE T REATED AS PLANT. ON THE 12 BASIS OF THIS DECISION THE ITAT HAS CONSIDERED PRI NTER AND SCANNER AS INTEGRAL PART OF THE COMPUTER AND ALLOWED DEPRECIAT ION @ 60%. TAKING INTO CONSIDERATION THIS DECISION OF THE ITAT AND THE MAT ERIAL PLACED BEFORE US BY THE ASSESSEE WE DEEM IT APPROPRIATE TO SET ASIDE T HIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION. ASSESSING OFF ICER SHALL CONSIDER EACH ITEM IN DETAIL AND FIND OUT WHICH CAN BE EQUATED AN D CONSTRUED AS COMPUTER FOR THE PURPOSE OF GRANTING DEPRECIATION @ 60%. ASS ESSING OFFICER SHALL PROVIDE DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE NET RESULT THE APPEAL FILED BY THE ASSES SEE FOR THE ASSESSMENT YEAR 2003-04 IS ALLOWED AND THE APPEAL FOR THE ASSE SSMENT YEAR 2004-05 IS ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 25.02.2010 ( R.C. SHARMA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25/02/2010 MOHAN LAL 13 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR