TaxTMI 
TaxTMI 
2016 (2) TMI 421
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....one was present in spite of issuance of registered/RPAD notice to the assessee. Thus, I have no option but to proceed ex-parte, qua the assessee, and tend to dispose of the appeal on the basis of material available on record. Shri V.S. Jadhav, ld. DR, was present for the Revenue, who defended the conclusion drawn in the impugned order. 2.1. I have considered the submissions of ld. DR and perused the material available on record. So far as, allowing the depreciation at the rate of 15% in place of 60%, claimed by the assessee, on routers and switches are concerned, as per ground no.3 of the assessee, reliance has been placed upon the decision of Special Bench of the Tribunal in the case of DCIT vs Datacraft India Ltd., which has been followed by the Bangalore Bench of the Tribunal in the case of M/s UAE Exchange and Financial Services Ltd. (supra). It is noted that the assessee is engaged in the business of service provider of HSIA (High Speed Internet Access), IPTV (Internet Protocol Television), VOD (Video on demand), I-media and mobile streaming services for hotel chains including Hilton, Marriot, Hayat, and Oberai etc. to cater the needs of their clients. The assessee claimed ....
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....the previous year. Appendix-I, as applicable to assessment year 2002-03 under consideration, has different blocks of assets. I am concerned with the block of assets of machine and plant or whether such items are integral part of computer or not. General rate of depreciation provided is 25 per cent against item 1 in respect of machine and plant other than those covered by specific sub-items. Sub-item (2B) is "Computers" and the rate of depreciation prescribed is 60 per cent. Sub-item (5) is "Computers including computer software" on which rate of depreciation has been prescribed as 60 per cent. It is only with effect from assessment year 2003-04 that computer software has also been included in the category of computers for the purposes of allowing depreciation at the higher rate of 60 per cent. Thus, whereas up to assessment year 2002-03 only computers were eligible for depreciation at the rate of 60 per cent from assessment year 2003-04, the benefit of such enhanced depreciation rate has been extended also to computer software. Note No. 7 to the Appendix I, as applicable from assessment year 2003-04, defines "Computer software" to mean any computer program recorded on any disc, tap....
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.... 'computer' and that too only for the purposes of clause (xi) of section 36(1), which has force only for one year. As such I am not inclined to adopt this definition of 'computer system' for the purposes of granting depreciation under section 32 of the Act on 'computers'. The Hon'ble Supreme Court, vide its judgment dated 7-5-2010, has held in Jt. CIT v. Saheli Leasing & Industries Ltd. [2010] 191 Taxman 165 that : 'A particular word occurring in one section of the Act, having a particular object cannot carry the same meaning when used in different section of the same Act, which is enacted for different object. In other words, one word occurring in different sections of the Act can have different meaning, if the object of the two sections are different and when both operate in different fields'. In view of the fact that the object of section 36(1)(xi) is quite distinct from that of section 32, I am of the considered opinion that the definition of the term 'computer system' given in the Explanation to section 36(1)(xi) cannot be applied as such (for giving meaning to 'computer') in the context of section 32. 2.6. In some of the ....
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.... Marbles (P.) Ltd. v. ITO [2007] 295 ITR 148holding that the interpretation of any expression used in the context of one statute is not to be automatically imported while interpreting similar expression in another statute. This judgment has been approved by the Hon'ble Supreme Court in ITO v. Arihant Tiles & Marbles (P.) Ltd. [2010] 320 ITR 79. 2.9. From the above, it is evident that the rationale behind the Information Technology Act, 2000 is quite distinct from that of the Income-tax Act, as can be seen from its preamble, which is 'An Act to consolidate and amend the law relating to income-tax and super tax'. Thus it is palpable that both these Acts are not in pari materia. There is significant difference in the scope, purpose and substance of these two statutes. Ex consequenti the definition of 'computer' as given in the Information Technology Act, 2000, cannot be applied in the context of section 32 of the Income-tax Act. However, though the learned Authorised Representative also agreed that the definition in the Information Technology Act cannot be imported, I am of the opinion that a perusal of the objects of that enactment and a perusal of the definiti....
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....respectively, are satisfied. It was noticed that the words 'industrial undertaking' have not been defined in the Act. In this background of facts, the Hon'ble Court posed the question to itself as to whether the assessee has derived profits and gains from an "industrial undertaking" or from the "business of a hotel". After discussing the issue threadbare, it was held that : Industrial undertaking is not given any meaning under the Act, hence it is to be understood as per common parlance language. Taking into this account, apparently, the business of the assessee is that of a hotel, which is a trading activity and not that of an industrial undertaking.' Resultantly the benefit of deduction was denied. 2.12. In Aspinwall & Co. Ltd. v. CIT [2001] 251 ITR 323(SC), their Lordships were concerned with the question of granting investment allowance, for which one of the prerequisite conditions as per section 32A was that the industrial undertaking should be engaged inter alia in the manufacturing. It was noticed that the word "manufacture" was not defined in the Income-tax Act. In such circumstances it was held that : "In the absence of a definition, the word "manufactur....
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....computer cannot be extended to another machine that operates with the assistance of computer. Conversely an item, which is an integral part of the computer, cannot be defined by its operations which it is capable of performing, e.g. : A wire and plug are electrical items in general but cost of a wire, integrally connected to television, may be added to cost of TV whereas a wire and plug attached to the computer system has to be treated as computer. 2.16. Thus in order to determine whether a particular machine can be classified as a computer or not, the predominant function, usage and common parlance understanding, would have to be taken into account. To analyse further, I take the case of a Television, the principal task of which is to deliver visuals accompanied with audio. The signals are received through the relevant networks such as Dish TV, Tata Sky etc. But TV does not become computer for the reason that its principal function cannot be done only with the aid of 'computer functions' notwithstanding the fact that in the entire process of networking or receiving the output from different channels and making it available to the viewers, some sort of computer functions....
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....outer means a device that routes data from one computer to another or from one network to another. Routers provide connectivity inside enterprises, between enterprises and the internet, and inside internet providers. From the above discussion it transpires that the function of a router is to receive the data from one computer and make it available to another computer for viewing or further processing. Apart from facilitating the flow of data between two computers, the routers also help in the transfer of data from network to computer. Thus the essential function of the router in a commercial organization is to facilitate the flow of data from one computer to another for its processing or storage. Switches are shorter version of routers, which perform similar functions as that of routers but within a limited sphere. 2.21. On functioning of a 'Router' I find that there is no dispute on the fact that a "Router" does not perform any logical, arithmetic and intermediary functions on data nor it manipulates or processes data, the way a computer would do. A "Router" does not have a "CPU". It only enables transmission of data and data packages, in a sophisticated manner, to inte....
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....the internet connection. Giving another example, a computer software can be used in many devices including washing machine, televisions, telephone equipment etc. When such software is used in those devices, it integrates with that particular devices. The predominant function of the device determines its classification. Only if the Computer software, resides in a computer, then it become a part and parcel of a computer and, as long as it is as integral part of a computer, it is classified as a 'Computer'. 2.25. No doubt the function of the computer, as one composite unit, is to perform logical, arithmetical or memory functions etc., but it is not only the equipment which performs such functions that can be called as computer; All the input and output devices, as discussed above, which support in the receipt of input and outflow of the output are also part of computer. CPU alone, in my opinion, cannot be considered as synonymous to the expression 'Computer'. The function of CPU is akin to the brain playing a pivotal role in the conduct of the body. As I do not call the brain alone as the body, similarly the CPU alone cannot be described as computer. Thus the comput....