2019 (2) TMI 993

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....d the idea and execution of electronic virtual distribution (suing POS/WAB/SMS) of services like prepaid airtime, DTH/broadband payments on behalf of service providers. For the assessment year 2008-09 the assessee filed their return of income on 13/10/2008 declaring a total loss of Rs. 222,451,028/-. By order dated 28/12/2011 under section 143(3) of the Act, Ld. assessing officer assessed the total loss at Rs. 179,732,770/-, by making additions, insofar as this appeal is concerned, on account of the disallowance of Rs. 62,17,290/- on account of legal, professional and consultancy expenses, disallowance of Rs. 52,16,124/-on account of advertisement and marketing expenses, disallowance of depreciation of Rs. 84,10,239/-on POS terminals, disallowance of depreciation of Rs. 74,713/- on UPS and disallowance of Rs. 16,24,375/-under section 14 A of the Act, which the Ld. CIT(A) deleted in appeal. Revenue, therefore, filed this appeal. 3. Insofar as the disallowance on account of legal, professional and consultancy expenses is concerned, the payments of Rs. 29,50,000/-and Rs. 32,67,290/-made to Wipro Ltd and Interglobe technologies weredisallowed on the ground that the same were capital....

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....ts, but he simply relied on the self-serving statement of the assessee, and without a steadying the observations of the auditors in the audit report as they are required to make in para 17 (a) of the audit report as to whether any capital expenditure was debited to the profit and loss account which was not done by either of the authorities. Lastly, she contended that the expenses on account of software have been claimed by the assessee so the onus is on the assessee to satisfy the learned assessing officer as to his claim so that it could be allowed by the learned assessing officer and in the absence of any material whatsoever produced by the assessee the expenditure was rightly treated as capital by the learned assessing officer. 6. Per contra, it is the submission on behalf of the assessee that similar questions have arisen in the case of the assessee for the assessment years 2008-09 to 2010-11 which were disposed of by the Ld. CIT(A) vide orders dated 9/3/2015 and the Revenue preferred appeals against the orders of Ld. CIT(A) for all these years. Ld. AR submitted that appeal relating to the assessment year 2009-10 in ITA No. 3812/Del/ 2015 has been disposed of by a coordinate....

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.... a retail outlets; and such an expenditure is, therefore, not in the nature of capital expenditure. 9. It is the argument of the Ld. DR that the learned assessing officer on verification of payments to the five parties observed that the expenses were broadly in the nature of installation of board, installation of data cables which can by no means considered as revenue expenditure since they gave enduring benefit to the assessee, and, therefore, the said expenditure was rightly treated as capital expenditure by the learned assessing officer to disallow the same. Ld. CIT(A), however, held that the assessee made payments IB & W communication (P) Ltd which is contrary to the facts on record which shows that the payments were made to five parties. Ld. DR further submitted that the discussion made in the impugned order revolves around the advertisement expenses only and in only one paragraph there is discussion about the expenses on glow sign words, which contention the assessee never advanced before the learned assessing officer. She submits that without calling for any comments from the learned assessing officer on this issue, Ld. CIT(A), without giving reasons for resolving the exp....

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....namely, 2009-10. We, accordingly, respectfully following the decisions of the Hon'ble jurisdictional High Court and also the view taken by a coordinate Bench of this Tribunal in assessee's own case for the assessment year 2009-10 hold that the findings of Ld. CIT(A) on this aspect do not suffer any infirmity and no interference by us is warranted. We accordingly dismiss ground No. 2 of revenue's appeal. 13. Third ground in this Revenue's appeal is in relation to the depreciation on POS terminals at 60%. Assessee claimed depreciation on POS terminals at 60% by treating the same as part of block of assets "computers" whereas the learned assessing officer treated the same as part of Plant and Machinery block and allowed depreciation at 15%. Ld. CIT(A) followed the decision of a coordinate Bench of this Tribunal in the case of ACIT vs. M/s Connaught Plaza Restaurants (P) Ltd in ITA No. 5466/Del/2013 and allowed depreciation at 60%. 14. It is the argument of the Ld. DR that the POS terminals are very clearly distinguishable from computers in all sense of terms be it structurally or functionally and learned assessing officer had discussed the difference between these two elabora....

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.... stacking machines, transportation charges, CTP machine, scanner, Cisco router, modem, computerised counting and stacking (F/C), CTP machine (clearing charges), CTP machine (erection) treating it as computers. Ld. assessing officer disallowed the higher claim of depreciation at 60% by holding that the said machinerieswere computerised machines and were not computers classified in the depreciation table. 17. Ld. CIT(A), in the case of M/s Dinamalar (supra), upheld the decision of the learned assessing officer by observing that increasingly organisations are moving towards computerised integrated manufacturing, where more and more computers, robots, and microprocessors are used in conjunction with the machines; that such machines cannot be called as computers even though computer is an integral and a dedicated part of the whole machine; that computer in the machine cannot be used for any other purpose; that for example a computerised numerically controlled lathe machine has a computer and microprocessor to control the movements of the spindle but that cannot make such machine a computer and still does machining, cutting metal and creating shapes in the metal but it is more automat....

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....OS terminals were bought as computers or POS terminals. 20. Per contra it is the submission on behalf of the assessee that all these contentions are considered by the higher forum in a plethora of decisions and while granting relief to the assessee for the assessment year 2009-10 in ITA 3812/Del/ 2015 while upholding the order of Ld. CIT(A), a coordinate Bench of this Tribunal followed the ratio of the Delhi Ld. PCIT vs. Connaught Plaza Restaurants (P) Ltd in ITA No. 542/2016 by order dated 20/9/2016. In view of the binding precedent laid down by the Hon'ble jurisdictional High Court, there is nothing illegality or irregularity in the conclusions reached by the Ld. CIT(A) and grant depreciation at 60% on POS terminals. 21. On a careful reading of the order dated 7/1/2019 in ITA No. 3812/Del/2015 in assessee's own case for the assessment year 2009-10, we find that the Tribunal followed the decision of the Hon'ble Delhi High Court in the case of Connaught Plaza restaurants (supra) wherein the issue of higher rate of depreciation on POS terminals was considered and the decision of the Tribunal granting 60% depreciation thereon was upheld. In the said decision Hon'ble jurisdictio....