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Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
ORDER PER ANADEE NATH MISSHRA, AM: (A) This appeal by Revenue is filed against the order of Learned
Commissioner of Income Tax (Appeals)-22, New Delhi [Ld. CIT(A)”, for short], dated 15.10.2019 for Assessment Year 2015-16.
Grounds taken in this appeal of Assessee are as under:
“1. Whether the Ld. CIT(A) has erred in law and on the facts and in the circumstances of the case in deleting the addition of Rs.3,60,53,156/- DCIT vs. M/s. Oxygen Services (India) Pvt. Ltd. made by the Assessing Officer on account of disallowance of depreciation claimed at a higher rate of 60% on POS Terminals by the assessee despite the fact that ‘POS Terminal’ does not come under the purview of ‘Computer Software’ which has been defined as ‘any computer program recorded on any disc, tape, perforated media or other information storage device’ in Note 7 to New Appendix 1 of the Income Tax Rules,1962.
2. The appellant craves to add, alter, amend or withdraw any/all of the ground(s) of appeal at any time during the appeal.” (B) The Assessment Order u/s 143(3) of the Income Tax Act (“the Act” for short) was passed by the Assessing Officer (“AO” for short) on 13.11.2017 wherein, inter alia, addition of Rs.3,60,53,156/- was made on account of disallowance out of the assessee’s claim of depreciation on POS Terminal. The assessee had claimed depreciation at the rate of 60%, whereas the AO allowed depreciation at the rate of 15%. The asessee’s claim of depreciation at the rate of 60% was based on the assessee’s contention that POS Terminal is ‘Computer’ and is eligible for depreciation at the rate of 60%. However, the AO did not accept the assessee’s contention that POS Terminal is a Computer held that the same was “Plant and Machinery”.
(B.1) Aggrieved, the assessee filed appeal before the Ld. CIT(A).
Vide impugned appellate order dated 15.10.2019, the Ld. CIT(A) deleted the aforesaid addition of Rs.3,60,53,156/-. In doing so, the Page 2 of 10
DCIT vs. M/s. Oxygen Services (India) Pvt. Ltd.
Ld. CIT(A) followed his own order in assessee’s own case for Assessment Year(s) 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 and 2016-17. Further, the Ld. CIT(A) also followed the order of Income Tax Appellate Tribunal (“ITAT” for short) in the assessee’s own case for Assessment Year(s) 2008-09, 2009-10 and 2010-11. The relevant portion of the order of the Ld. CIT(A) is reproduced as under:
“5. Ground of Appeal No.1 pertains to the disallowance of depreciation amounting to Rs.3,60,53,156/- by applying the rate of depreciation @ 15% rather than @ 60% on Point of Sales (“POS”) terminals by treating them as normal plant and machinery rather than computers as claimed by the Appellant.
5.1 I have carefully considered the assessment order, the submissions of the Ld. AR. The AO made disallowance of Rs.3,60,53,156/- by re- classifying the POS terminals from the block of ‘computers’ to the block of ‘plant and machinery’ and thereby restricting the claim for depreciation on POS terminals to 15% instead of 60% as claimed by the Appellant. In appeal the Ld. AR has made an elaborate submissions and also submitted that the issue is already covered issued and that for the assessment year(s) 2007-08, 2008-09, 2009-10, 2010-11 and 2011-12, 2012-13 2013- 14, 2014-15 and 2016-17, the depreciation on POS terminals has been allowed at the rate of 60% by the CIT(A) in the Appellant’s own case.
5.2 Further, the Appellant submitted that for the assessment year(s) 2008-09, 2009-10 and 2010-11 the Hon’ble ITAT in the Appellant’s own case has confirmed that the depreciation on POS terminals has to be allowed at the rate of 60%.
5.3 The facts of the case are in the year under consideration is identical to the facts of the case of the earlier years. Therefore, respectfully following the decision of the Hon’ble ITAT and CIT(A) in respect of earlier years, it is Page 3 of 10
DCIT vs. M/s. Oxygen Services (India) Pvt. Ltd. held that the depreciation on POS terminals has to be allowed at the rate of 60%. Therefore, the addition of Rs.3,60,53,156/- made by the AO by reducing the rate of depreciation allowable on the POS terminals is deleted. Therefore, this ground of appeal is allowed.”
(B.1.1) The present appeal before us has been filed by Revenue against the aforesaid impugned appellant order dated 15.10.2019 of the Ld. CIT(A). In the course of appellate proceedings in ITAT, the assessee’s side filed copies of orders passed by Co-ordinate Bench of ITAT: order dated 07.01.2019 in for Assessment Year 2009-10; order dated 30.09.2021 in ITA No.5467/Del/2016 for Asst. Year 2007-08; and also order dated 15.02.2019 in ITA No.3765 and 3766/Del/2015 for Assessment Year(s) 2008-09 and 2010-11; these orders having been passed by Co-ordinate Benches of the ITAT, Delhi in the assessee’s own case.
Further, the Ld. Counsel for the assessee also submitted a brief synopsis, relevant portion of which is reproduced as under:
“1. In supplement to oral submissions being made, the assessee respectfully submits a brief synopsis as under. The Assessee also relied upon the order of Ld. CIT(A) and assessee’s written submissions before Ld. CIT(A) as quoted in his order at Page No.4 to 5.
At the outset, the assessee would like to submit that the issue involved in present departmental appeal is squarely covered in assessee’s favour as stated below: (i) Issue of disallowance of Rs 3,60,53,156/- being alleged excess depreciation claimed @ 60% on POS terminals as in Ground No. 1 Page 4 of 10
DCIT vs. M/s. Oxygen Services (India) Pvt. Ltd. is directly covered in assessee’s favour by the order of Jurisdictional High Court of Delhi in its own case in AY 2009-10 as further explained herein below.
GROUND No. 1 - Disallowance of Depreciation on POS terminals: FACTS AND SUBMISSIONS 3. Vide this ground, the department has disputed the correctness of the order of the Ld. CIT(A) whereby the Ld. CIT(A) has deleted the disallowance of Rs 3,60,53,156/- being alleged excess depreciation claimed by the assessee at the rate of 60% on POS terminals treating them as computers whereas in view of the Ld. AO the same does not fall in the definition of computers given in Explanation to section 36(1 )(xi). In view of the Ld. AO, such POS terminals are office equipments which falls under the block of “Plant & Machinery”.
3.1 It is submitted that the said issue of Depreciation on POS Terminals @ 60% was first allowed by the Hon’ble ITAT, Delhi in its own case in AY 2009-10. Copy of the said order is enclosed as Annexure-A.
3.2 Against the said order of Hon’ble ITAT, Delhi in AY 2009-10, department had filed the appeal before the Hon’ble Delhi High Court which was dismissed by Hon’ble Delhi High Court.
3.3 Both Hon’ble ITAT and Hon’ble Delhi High Court has allowed the relief to the assessee respectfully following the earlier decision of Hon’ble Delhi High Court in the case of Principal Commissioner of Income Tax-2 v. Connaught Plaza Restaurant (P) Ltd.).
Extracts from the order of Hon’ble ITAT Delhi and Hon’ble Delhi High Court in AY 2009-10
3.4 Hon’ble ITAT while dismissing the departmental appeal in AY 2009-10, vide para 8 & 9 held as under. Copy of said Hon’ble ITAT order dated 07.01.2019 in in AY 2009-10 is enclosed as Annexure-A above
“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 High Court reads as under:- Page 5 of 10
DCIT vs. M/s. Oxygen Services (India) Pvt. Ltd.
“The revenue’s appeal urges that a substantial question of law arises i.e. whether P.O.S. terminal, is a computer or alternatively falls within the classification of computer peripherals and accessories for the purpose of depreciation. This court notices that for the relevant assessment year i.e. A. Y. 2008-09 even though the Assessing Officer held that the equipment was neither computer not it could be computer accessories, the CIT(A) overturned that decision and held that the assessee was entitled to 60% depreciation. The CIT(A) was of the opinion that the equipment was akin to a computer. That determination has been concurred to the ITAT. Given these circumstances, this court is of the opinion that no question of law, much less a substantial one arises for determination under section 260A.
The appeal is therefore dismissed.”
Since the issue has been decided in favour of the assessee by the decision of the jurisdictional High Court cited (supra), therefore, the order of the CIT(A) on this issue is upheld and the ground raised
by the revenue is dismissed.” 3.5 Against the said order of Hon’ble ITAT Delhi in favour of the assessee, Revenue further filed its appeal before Hon’ble Delhi High Court which too was dismissed by the Hon’ble Delhi High Court. Relevant extract of the Order of Hon’ble Delhi High Court dated 09.07.2019 in is as under:
2. Two questions are sought to be urged by the Revenue. The first concerns the ITAT upholding the order of the Commissioner of Income Tax (Appeals) [„CIT(A)"] deleting the disallowance of depreciation claimed at a higher rate of 60% on point of service (POS) terminals by the Assessee.
As far as this question is concerned, the issue stands decided against the Revenue by the decision of this Court dated 20th September, 2016 in (Principal Commissioner of Income Tax-2 v. Connaught Plaza Restaurant (P) Ltd.). Consequently, no question is framed in this regard. ………………………………… 5. The appeal is accordingly dismissed. ”
DCIT vs. M/s. Oxygen Services (India) Pvt. Ltd.
Copy of the order of Hon’ble Delhi High Court in in AY 2009-10 is enclosed as Annexure-B above. 3.6 As seen from the above, Hon’ble Delhi High Court following its earlier decision in PCIT vs Connaught Plaza Restaurannt (P) Ltd - ITA No.542/2016 on similar issue has dismissed the departmental appeal and held the issue in favour of the assessee. Thus the said issue is no more res integra and has been decided in favour of the assessee.
Please note that the assessee has no knowledge about the fact that whether the department has further filed the appeal before the Hon’ble Supreme Court or not against the order of Hon’ble Delhi High Court.
3.7 Just for complete overview of the matter, it is also mentioned that the same view has been taken by the Hon’ble ITAT, Delhi in the assessee’s own case in the appeals of AY 2008-09, AY 2010-11 and AY 2007-08 which were heard after the order of AY 2009-10 wherein also the departmental appeal on the issue of alleged excess claim of depreciation @60% on POS terminals has been dismissed and issue has been held in favour of the assessee respectfully following the decision of Jurisidctional Delhi High Court in PCIT vs Connaught Plaza Restaurannt (P) Ltd (supra). Copies of the order of the Hon’ble ITAT in AY 2008-09, AY 2010-11 and AY 2007-08 are enclosed Annexure-C, Annexure-D and Annexure-E respectively.
3.8 The facts in the present year under appeal and departmental grounds therein are similar to facts and departmental grounds AY 2007-08, 2008-09, 2009-10 and AY 2010-11.
3.9 In view of the above, the matter is squarely covered by the Judicial Precedents of Jurisdictional High Court in assessee’s own case and other cases and also covered by the orders of Hon’ble ITAT in its own case, therefore the relief allowed by the Ld. CIT(A) in this year also deserves to be sustained and the appeal of the department deserves to be dismissed.”
(B.2) At the time of hearing before us, the representatives of both sides (Ld. Authorized Representative for assessee as well as the Ld. Senior Departmental Representative for Revenue) were in DCIT vs. M/s. Oxygen Services (India) Pvt. Ltd. agreement that the issue in dispute regarding the aforesaid disallowance of depreciation, amounting to Rs.3,60,53,156/- is squarely covered in assessee’s favour by judicial precedents of the Hon’ble Jurisdictional High Court, and also by orders of Co- ordinate Benches of ITAT in assessee’s own case vide aforesaid orders dated 07.01.2019, 30.09.2021 and 15.02.2019 of ITAT; and aforesaid order dated 09.07.2019 passed by Hon’ble Jurisdictional High Court in assessee’s own case in in the case of Principal Commissioner of Income Tax vs. Oxygen Services India (B.2.1) We have heard both sides. We have perused the materials on record. Both sides are in agreement that the issue in dispute in the present appeal before us regarding disallowance of depreciation amounting to Rs.3,60,53,156/- is squarely covered by aforesaid order dated 09.07.2019 of Hon’ble Jurisdictional High Court in assessee’s own case, and aforesaid orders of Co-ordinate Bench of ITAT, Delhi, dated 07.01.2019, 30.09.2021 and 15.02.2019 in assesssee’s own case. Neither side has brought any material to our attention to persuade us to take a different view
DCIT vs. M/s. Oxygen Services (India) Pvt. Ltd. from the view taken by the Ld. CIT(A) in the impugned appellate order dated 15.10.2019 and the view taken by the Co-ordinate Benches of ITAT Delhi in aforesaid orders dated 07.01.2019, 30.09.2021 and 15.02.2019 and the view taken by the Hon’ble Jurisdictional High Court in the aforesaid order dated 09.07.2019.
In view of the foregoing; and respectfully following the aforesaid orders of the Hon’ble Jurisdictional High Court and Co-ordinate Benches of the ITAT, Delhi; we decline to interfere with the impugned appellate order dated 15.10.2019 of the Ld. CIT(A).
Accordingly, the present appeal filed by the Revenue is dismissed.
(C) In the result, this appeal filed by the Revenue is dismissed.
This order was already pronounced orally on 16th June, 2022 in Open Court, in the presence of representatives of both sides, after conclusion of the hearing. Now this order in writing is signed today on 20.06.2022.