TaxTMI 
TaxTMI 
2019 (1) TMI 464
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....he business of trading in Electronic recharge coupons and collection of payment of postpaid of various telecom operators. It filed its return of income on 26.09.2010 declaring Nil income and declaring current loss of Rs. 28,38,93,095/-. The Assessing Officer during the course of assessment proceedings observed that assessee in its fixed asset schedule has shown addition during the year at Rs. 6,22,20,081/- under the block of assets "POS TERMINALS". The assessee has claimed depreciation to the tune of Rs. 2,98,96,283/- on such POS TERMINALS. The assessee has shown the POS TERMINALS as part of block of computers since they are remote access devices connected to the assessee's server through leased lines. According to the Assessing Officer POS is an electronic device and comes under the category of office equipment and eligible for depreciation @ 15% under the block "plant and machinery" as against 60% depreciation claimed by the assessee treating the same as part of block of computers. He, therefore, asked the assessee to explain as to why the depreciation should not be restricted to @15% under the block plant and machinery. Rejecting the various explanation given by the assessee the....
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....ire manner has been vested with the assessee company on POS terminals; but the same is not the case of the computer, which cannot be controlled by any such manufacturer or producer. h) The POS terminals are used for the exclusive purpose of business of the assessee company; whereas computer can perform different activities. i) A computer is an electronic device that can perform variety of operations according to different set of program. A program is a set of instructions. Whereas POS Terminals works on a defined and pre set program. j) A Computer has a very large memory, it can store a large amount of data in a very small space, the data stored can be retrieved instantly and correctly whenever desired. Whereas POS Terminals have a very-very small memory and cannot store any data on its own. k) As per section 36 Explanation under (xi) 'Computer System1 means a device or collection of devices including input and output support devices and excluding calculates s which are not programmable and capable of being used in conjunction and external files, or more of which contain computer programmes, electronic instructions, input data and output data, th....
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....lowing decisions:- - CIT vs. BSES Rajdhani Powers Ltd. in ITA No. 1266/2010 (Del. HC) -1 TO v. Sami ran Majumdar: 98ITD 119 (Kol) - DCITv. Data craft India Ltd. 133 TTJ 377(Spi Bench). 6.2 Finding on Ground of Appeal No. 4 to 4.11 have considered the submissions made by the appellant and also perused the assessment order passed by the assessing officer. On perusal of the technical specification of POS as filed by the ITA NO. 5466/De!/2013 appellant, it is noticed that POS terminal has a processor, minimum of 256 MB memory and also supports MS-DOS and Microsoft Windows. Further, the POS machines support data sharing through LAN (Ethernet) and also have two USB ports. That being so, I am of the opinion, that the POS terminal is akin to the computer in terms of basic features and can very well be categorized as 'Computers'. I further find support from the decision of the Delhi High Court in the case of BSES Rajdhani Powers Ltd (supra), wherein the Court considered computer accessories and i peripherals such as printers, scanners and server, etc., forming an integral part of the computer system and has allowed depreciation @ 60% on t....
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..... Counsel for the assessee on the other hand strongly supported the order of the CIT(A). Referring to the decision of the Delhi Bench of the Tribunal in the case of M/s. Connaught Plaza Restaurant (P) Ltd, he submitted that the Tribunal has considered the issue and has allowed higher depreciation @ 60% on POS TERMINALS. He submitted that on further appeal by the revenue the Hon'ble Delhi High Court vide ITA No.542/2016 dated 20.09.2016 has upheld the decision of the Tribunal and the ground raised by the revenue has been dismissed. Therefore, this being a covered matter in favour of the assessee by the Jurisdictional High Court the order of the CIT(A) be upheld and the ground raised by the revenue on this issue should be dismissed. 8. We have considered the rival arguments made by both the sides and perused the orders of the authorities below. We find the Hon'ble Delhi High Court in the case of Pr. CIT Vs. Connaught Plaza Restaurant has considered the issue i.e. Higher rate of depreciation on POS TERMINALS and has upheld the decision of the Tribunal where it has been held that assessee is entitled to depreciation @ 60% on POS TERMINALS. The relevant observation of the Hon'ble Hig....
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....pital expenditure as against revenue expenditure claimed by the assessee and allowed deprecation @ 60%. He accordingly made addition of Rs. 7,16,371/- to the total income of the assessee. 13. Before the CIT(A) the assessee submitted that the services provided by Wipro are as under :- - Server Management and Monitoring Services - Backup and Restoration Management and Monitoring - Network Management and Monitoring services - Database Management services - Anti virus Management and Monitoring services - Security Management and Monitoring services - Vendor Management and Monitoring services Similarly the services provided by Interglobe Technologies Private Limited as under :- - Uptime for IT platform - Escalation of customer complaints - Trouble shooting Staff to providing requisite IT support services for efficient and smooth functioning of the business. Better organization of the business : and Efficient utilization of the business resources. 14. It was argued the expenditure was of revenue in nature and was laid down wholly and exclusively for the purpose of its....
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....k of Commerce v. ACIT (2018) 256 Taxman 24 (Del). He submitted that in the later case, the assessee had acquired various categories of software, which were disallowed as capital expenditure. The disallowance was deleted by C1T(A) and was upheld by the ITAT. The High Court dismissed the Revenue's appeal inter-alia observing that the objective of the bank was not to carry on software business, rather, it uses the computer software as a tool to maximize its performance and streamlining its efficiency. The ratio of aforesaid decision is squarely applicable and there is no infirmity in the order of the CIT(A). 20. We have considered the rival arguments and perused the orders of the authorities below. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case considered the legal and professional expenses as capital in nature since according to him such expenses give enduring benefit to the assessee and therefore it is capital in nature. He accordingly rejected the claim of the assessee that such expenditure is revenue in nature and allowed depreciation @ 60%. We find the Ld.CIT (A) allowed the claim of the assessee as revenue ....
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....1,08,949/-. 23.1 Before CIT (A) the assessee made elaborate submissions. The decisions of Hon'ble Delhi High Court in the case of CIT (A) Vs. Salora International Limited reported in 308 ITR 199 and the decision in the case of Pepsico India Holdings India Private Limited were brought to the notice of the CIT(A). 24. Based on the arguments advanced before him, the Ld. CIT(Appeals) decided the issue in favour of the assessee by holding that the expenditure of Rs. 1,71,08,949/- on advertisement is revenue expenditure in nature and is allowable as deduction u/s 37 of the IT Act. 25. Aggrieved with such order of the CIT(A), the revenue is in appeal before the Tribunal. 26. The Ld. DR heavily relied on the order of the Assessing Officer and submitted that Ld. CIT (A) without appreciating the facts properly has treated the expenditure as revenue in nature as against capital expenditure treated by the Assessing Officer. So far as the decisions relied on by Ld. CIT (A) are concerned, she submitted that these decisions are distinguishable and not applicable to the facts of the present case. 27. The Ld. counsel for the assessee on the other hand heavily relied on the order of t....