TaxTMI 
TaxTMI 
2008 (7) TMI 600
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....3. Ground No. (i) of revenue's appeal read as under :- "On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to treat the foreign travel expenditure of Rs. 13,99,568 incurred to acquire enduring benefit in the right of lease licence as revenue expenditure instead of capital expenditure without appreciating the facts in proper perspective." 4. The facts of the case are that the assessee is engaged in providing infrastructure for automation of consumer payment system. The assessee paid Rs. 2,45,46,000 to FBS software Inc. USA towards software upgradation, modification and customization charges. The assessee also incurred travelling expenditure of Rs. 13,99,568. The assessee claimed both expenditure as revenue expenditure of Rs. 13,99,568 in assessment year 1999-2000 and Rs. 2,45,46,000 in assessment year 2001-02 on fulfilment of condition laid down in section 40(a)( i) of the Act on payment of tax. The Assessing Officer treated both expenditure as capital in nature and disallowed both the claims. The CIT(A) allowed the claim of assessee of Rs. 13,99,568 treating it as revenue expenditure in assessment year 1999-2000. ....
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....pport specified in Exhibit 2 to (assist Licensee in the installation, integration, and implementation of the Software) ("Assurance Program") Clause 12.3 - Payment : For the Assurance Program, Customer shall pay the fees specified in Exhibit 2. All sums are exclusive of expenses for materials, travel and lodging. Expenses will be invoiced in arrears to be due 30 days from receipt of the invoice. Travel time will be charged against the person days specified in Exhibit 2 at actual per person not to exceed eight hours per day per person." 4.3 From the above clauses of the agreement, we noticed that the assessee was bearing expenses for making travel and lodging in addition to specified fee. The travelling expenditure by the assessee for the purpose of business therefore same are allowable expenditure. The revenue has failed to establish that the expenditure incurred by the assessee is for the purpose of assets, therefore, the Assessing Officer's view is not acceptable. After considering the totality of the facts of the case, we do not find any error in the order of the CIT(A). The order of CIT(A) is, accordingly, confirmed on this issue. 4.4 As regards the amount of Rs. 2,45,4....
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....e assessee. 6. The common ground raised in both the appeals pertaining to depreciation allowed by the Assessing Officer at the rate of 25 per cent against the claim of assessee at the rate of 60 per cent on computer. 7. Briefly the facts of the case are that the assessee has claimed depreciation at the rate of 60 per cent on POS terminals and ATMs on the ground that these equipments are of the nature of computers. The Assessing Officer did not accept that these equipments are of computer in nature. Therefore, he allowed depreciation at the rate of 25 per cent as against 60 per cent claimed by the assessee for both the years i.e., assessment year 1999-2000 and 2001-02. The CIT(A) in assessment year 1999-2000 accepted the assessee's claim, therefore, the revenue is in appeal raising ground No. 2, which reads as under :- "(ii)On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to allow the depreciation at the rate of 60 per cent instead of 25 per cent without appreciating the fact that the terminals are not computer." 7.1 In assessment year 2001-02, the CIT(A) confirmed the order of the Assessing Officer against....
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.... to the fact that there is no definition of computers given in the Income-tax Act, 1961. There is no prohibition in the Information Technology Act, 2000 to use the definition of computer under the Income-tax Act. Thus, in my view the Assessing Officer's contention that the terminals and related accessories and support equipment used by the appellant for running its business are not computers is not correct. Their functioning are not only akin to the computer but they are inseparable in functioning and functionally dependent on each other. The location of terminals and sizes of its peripherals are immaterial. Basically a computer is an electronic machine that stores information and uses programs to help you find, organize or change the information according to our needs either business or personal. Thus, in my view, the claim of the appellant of depreciation at the rate of 60 per cent on the terminals and related accessories and support equipment is in order. Therefore, the Assessing Officer is directed to allow depreciation at the rate of 60 per cent on the said terminals and related accessories and support equipment. This ground of the appellant is, therefore, allowed." In asse....
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....Income-tax Act, 1961. There is no prohibition in the Information Technology Act, 2000 to use the definition of computer under the Income-tax Act. In view of above discussion, CIT(A) allowed depreciation at the rate of 60 per cent on the terminals and related accessories. However, it is seen and as also discussed in the assessment order, various other aspects of the machines appear not to have been taken into account. The Income-tax Act does not anywhere say that the definition of computer given in the Information Technology Act, 2000 should be followed. If the contentions of the appellant were to be accepted, it would mean that any sophisticated machines driven by computer would qualify for depreciation at the rate of 60 per cent. Definition of computer given in Information Technology Act, 2000 is to be looked into the context with which it was introduced and its legal impact. The Information Technology Act was introduced in the emerging scenario of banking, share trading, national and network security, legal sanctity of virtual information, criminal angle and frauds etc. When the computer was introduced qualifying for depreciation at the rate of 60 per cent in the Income-tax Rules....
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....inly for residential purposes except hotels and boarding houses. Similarly, depreciation at the rate of 10 per cent is allowable on buildings other than those used mainly for residential purposes and not covered by sub-items (1) above and (3) below. Depreciation at the rate of 40 per cent is allowable on motor buses, motor lorries and motor taxis used in the business of running them on hire. Depreciation at the rate of 10 per cent is allowable on various items falling in the category of air pollution control equipment, water pollution control equipment etc. Air pollution control equipment, being- (a )Electrostatic precipitation systems; (b )Felt-filter systems; (c )Dust collector systems; (d )Scrubber-counter current/venture/packed bed/cyclonic scrubbers; (e )Ash handling system and evaluation system. Similar is the position in respect of other assets. From the illustration given above, it is clear that wherever the Legislature wanted to allow depreciation at a particular rate on different types of assets falling in the same category, such assets have specifically been stated in the Appendix-I containing the table or rates at which the depreciation is admissible. ....
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....o definition of computers given in the Income-tax Act, 1961. There is no prohibition in the Information Technology Act, 2000 to use the definition of computer under the Income-tax Act. The learned AR distinguished the findings of CIT(A) given in assessment year 2001-02 as under :- Sr. No. Findings of CIT(A) - AY 2001-02 Appellant's submissions thereagainst 1. The CIT(A) has observed that there is no provision under the Income-tax Act which prescribes that the definition of computer given under the Information Technology Act should be followed. Though no definition of computers has been prescribed so far in the context of section 32 of the Income-tax Act, section 36(1)(ix) has provided a definition in the context of expenditure incurred on Y2K compliance. The definition so provided is analogous in material terms, to the definition under the Information Technology Act. Even otherwise, it is noteworthy that Information Technology Act is not a fiscal statute but rather, a comprehensive legislation dealing with the technical and commercial aspects of information technology. 2. The CIT(A) has observed that if the contentions of the appellant were to be accepted, i....
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....vides for various sub-classifications for the main entry. There are no such sub-classifications in the entry of computers. It is submitted that the absence of specific sub-classifications should not come in the way of categorizing Terminals/ATMs within the scope 'Computers' in Appendix-I to the Income-tax Rules in view of functional parity. 5. The CIT(A) has further observed that the rate of 60% cannot be applied to software since no such specific entry has been prescribed therefor. The software in question is basic operating software as mentioned by the Assessing Officer on page 9 of the Assessment Order and hence, is an integral part of the computer hardware. 8.1 The main thrust of the argument of the learned AR is that the technical function of POS terminals and ATMs are that of the functions of the computer. The learned AR tried to demonstrate his contention by pointing out various technical terms of ATMs of which a photocopy has been placed at pages 2 and 3 of paper book. The learned AR submitted that the ITAT Kolkata in the case of ITO v. Samiran Majumdar [2006] 98 ITD 119 held that colour Xerox machine be treated as computer entitle to higher depreciation. The....
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....e down the statutory language which is otherwise unambiguous. If the intendment is not in the words used, it is nowhere else. The need for interpretation arises when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the Legislature. Artificial and unduly latitudinarian rules of construction, which with their general tendency to give the tax payer the breaks' are out of place where the legislation has a fiscal mission." 10.3 It may be noted that individual cases of hardship and injustice do not and cannot have any bearing for rejecting the natural construction by attributing normal meanings to the words used since 'hard cases do not make bad laws'. Thus a fiscal statute shall have to be interpreted on the basis of the language used therein and not de hors the same. No words ought to be added and only the language used ought to be considered so as to ascertain the proper meaning and intent of the legislation: We are to ascribe the natural and ordinary meaning to the words used by the Legislature. 10.4 Considering the above oft cited decision on interpretation of fiscal statutes, we notice that no words are to be added and ....