TaxTMI 
TaxTMI 
2011 (2) TMI 1363
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....With prejudice to ground number 2, the learned CIT(A) has erred in law in restricting the depreciation, under section 32, on the sum of Rs. 8,923,817 at 15 per cent only instead of granting the allowance of the expenditure of Rs. 8,923,817 proportionately over the lease period. 4. On grant of depreciation under section 32 of the Act on the Automated Teller Machines (ATMs) and Encoders, the learned CIT(A) has erred in law and on facts in granting a general depreciation rate of 25% under 'machinery and plant' as against the specific rate of 60% as applicable to the 'computers' under the head 'plant and machinery'. 5. The learned CIT(A) has erred in law and on facts in rejecting the appellant's claim for deduction on account of shortage in stock on physical verification, write offs, etc amounting to Rs. 136,700,515 in computing the income under the head 'profits and gains of business or profession'. 6. Without prejudice to ground number 5 above, the learned CIT(A) has erred in not giving appropriate directions to the assessing officer that the amount of Rs. 136,700,515 should be made part of the opening stock of the immediately succeeding financial year as the same has been conside....
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....and the assessee had to incur this expenditure to make the leased premises workable and fit for continuing the business operations as per the standards of the assessee-company. He placed reliance upon the decision of the Hon'ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd. vs. CIT reported in 225 ITR 802 wherein it has been observed that : "section 37 of the Act enjoins that any expenditure not being expenditure of the nature described in sections 30 to 36 laid out or expended wholly and exclusively for the purpose of the business or profession and if it not capital expenditure has to be allowed as revenue expenditure.' The Hon'ble Supreme Court has also held that : "The question whether a particular expenditure is revenue expenditure incurred for the purpose of business must be determined on a consideration of all the facts and circumstances and by the application of the principles of commercial expediency. The question must be viewed in the particular context of business necessity or expediency. If the outgoing or expenditure is so related to the carrying on, or conduct of the business, that it may be regarded as an integral part of the profit mak....
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....f computer monitor, processor and printer, cash dispenser, a video surveillance system and card reader etc. and therefore, it is not only an electronic device but has certain mechanical functions also. He therefore held that it cannot be classified as a computer and depreciation at the rate of 60% cannot be allowed. As regards, Encoders also he held that Encoders are basically used for encoding cheques whereby the data is entered into the Encoder and therefore cannot be classified as a computer and depreciation has to be restricted at 25% and not 60% as claimed by the assessee. Aggrieved, the assessee preferred an appeal before the CIT(A) who confirmed the order of the AO and the assessee is in second appeal before us. 9. The learned counsel for the assessee submitted that the ATM machines are nothing but computers as they deal with the functions of decoding the information, processing the same and giving the output. He submitted that ATM is a computer terminal activated by a magnetically encoded debit card that allows you to make deposits to and withdrawal from your account, pay bills, transfers money between your accounts at any time. It also allows you to access your financial ....
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....on of cash etc ., and therefore they are nothing but plant and machinery. 10. Having heard both the parties and having gone through the material on record, we find that this issue is more or less covered by the decision of the Special Bench in the case of Datacraft India Ltd. (cited supra) wherein it has been held that as long as the functions of the computer are performed along with other functions and the other functions are dependent upon the functions of the computer it is a computer entitled to the higher rte of depreciation. The Special Bench has also stated that all the input and output devices of the computer such as key board, mouse, monitor, etc are to form part of the block of computers. In the case before us also the ATM machine is doing both the logical, arithmetic and memory functions by manipulations of electronic magnetic or optical impulses giving debit or credit cash and thereafter dispenses the cash and gives a printed receipt. Thus as can be seen, the computer is an intergral part of the ATM machine and on the basis of the information processed by the computer in the ATM machine only, the mechanical functions of the dispensation of cash or deposit of cash is d....
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....cation. The AO was not satisfied with the contention of the assessee and held that the assessee has not been able to furnish any details as to how the shortage has arisen and disallowed the claim of the assessee for shortage of stock and made the addition of Rs. 13,67,00,515/-. Aggrieved by the same, the assessee preferred an appeal before the CIT(A) reiterating the submissions made before the assessing authority and also that the amount of Rs. 8,06,49,024/- representing the liability towards software which was written off and disallowed by the AO has actually been written back to the Profit & Loss account of the financial year 2003-04 and offered to tax in the assessment year 2004-05. The CIT(A) upheld the order of the AO that the onus was on the assessee to establish the claim of damage and write off but however he granted relief of Rs. 8,06,49,024/- in the assessment year 2003-04 after verification of the claim of the assessee that the same has been offered to tax in assessment year 2004-05. Aggrieved, the assessee is in second appeal before us. 12.At the time of hearing, the learned counsel for the assessee submitted that though the assessee is aggrieved by the confirmation of....
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....ucing the details about change in the nature of contract from the contracts entered into in earlier years and the change in method of execution of the contract. He, therefore, rejected the assessee's claim and made addition to the income of the assessee. Aggrieved, the assessee preferred an appeal before the CIT(A) who confirmed the order of the AO and the assessee is in second appeal before us. 16. Learned counsel for the assessee, while reiterating the submissions made by the assessee before the authorities below, submitted that the assessee has an option to change its method of accounting from one system to another and also to adopt another system of accounting with respect to different sources of income provided the AO is able to compute the income of the assessee for the relevant assessment year. For this proposition, he placed reliance upon the decision of the Hon'ble Karnataka High Court in the case of CIT vs. Syndicate Bank (261 ITR 528). He also drew our attention to the purchase order copy for ATM issued by Indian Overseas Bank and also by Punjab National Bank placed at pages 52 to 61 of the paper book and to the relevant clauses at page 53 of the paper book, wherein ter....