SH. DEVINDER SINGH WALIA,NEW DELHI vs. ITO, NEW DELHI

6. That, the same has been accepted by the Income Tax Appellate Tribunal- Kolkata in the case of Income Tax Officer Vs Mr. Samiran Majumdar on 1 August 2005 Equivalent citations: 2006 280 ITR 74 Kol, (2006) 101 TTJ kol 501 This appeal preferred by the revenue is directed against the order passed by the Ld. CrT(a) dated 25-01-2005 for the asstt. Year 2001-02, that on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in fact and in law in deleting the disallowance of Rs. 3,70,628/- made on account of depreciation photocopiers.

7. That the term computer has not been defined under the Act, However, the computer system has been defined under explanation (a) to sub-section (xi) of section 36(1) of the I.T.Act which reads as under:

I.T.A .No.-5836/Del/2015 Devinder Singh Walia vs ITO Page 2 of 3 "computer systems" means a device or collection of devices including input and output support devices and excluding calculators which are onto programmable and capable of being used in conjunction with external files, or more of which contain computer programs , electronic instructions, input data and output data, that performs functions including, but not limited to, logic, arithmetic, data storage and retrieval, communication and control.

on or before the hearing.

10. That the assessee is filing the present appeal within the prescribed period of limitation.” Ld.AR at the time of hearing submitted that he would not wish to press Ground No.3 2. raised in the present appeal. Inviting attention to the assessment order passed u/s 143(3) dated 29.12.2011, it was submitted that the AO had granted depreciation @ 60% on photocopier amounting to Rs.19,80,856/-. However, vide order dated 21.08.2014 passed u/s 154, he partially withdrew the depreciation and restricted it to the extent @ 15% amounting to Rs.4,95,214/- thereby making an addition of Rs.14,85,642/-. Referring to the said order it was submitted that he issued a show-cause notice to the assessee requiring the assessee to explain why the so-called excess depreciation should not be withdrawn and without considering the reply and without refuting the facts placed on record in support of its claim the AO restricted the depreciation by an order u/s 154 which originally stood allowed by an order u/s 143(3). Referring to the order u/s 154 it was submitted that the following reply of the assessee had been extracted by the AO himself in his order:- “We have charged the depreciation @ 60% instead of 15% as, these are the Printer, Scanner, Fax, Xerox (Photocopiers) which comes under the category of Computer Systems, basically these are multifunctional machines attached with computers and work with computers, in other words these are the machines works on the basis of the software which are to be loaded on the computer hard-discs or on storage devices and provides interface with computer, as well as, these devices also have data memory and storage for functioning, henceforth comes under computer systems.”

2.1. Inviting attention to the impugned order, it was submitted that the CIT(A) in para 5.6 after holding the issue to be debatable failed to grant necessary relief. It was his submission that the legal position as to whether photocopier machine is a multi-functional computer is well-settled and thus higher depreciation was permissible. Even otherwise, if it was to be considered to be a simple photocopier then he should have looked into the facts and seen that it had multi-functional capability and even otherwise the issue since was held to be debatable then it was beyond the purview of Section 154.

I.T.A .No.-5836/Del/2015 Devinder Singh Walia vs ITO Page 3 of 3 4. I have heard the rival submissions and perused the material available on record. I find that the Ld.CIT(A) after considering the facts having held that the issue was debatable was required to hold that the AO erred in withdrawing the claim by an order u/s 154 on an issue which was debatable. Even otherwise on merits it is seen that before the CIT(A) vide Ground No.4 the assessee had faulted the AO in treating the computer based multi- functional photocopier as an ordinary photocopier. As far as the facts are concerned, there is no doubt that it has been the constant claim of the assessee that it was not a plain and simple photocopier but a multi-functional photocopier having the facility to functioning as a printer, scanner, fax and zerox machine. Accordingly, admittedly it was entitled to a higher depreciation. Thus, I find that the AO in the facts of the present case was incorrect in withdrawing the higher depreciation in the manner it has been done. The decision of the Apex Court in the case of ITO vs Volkart Brothers [1971] 82 ITR 50 (SC) fully supports the decision taken. The said order was pronounced on the date of hearing itself in the open Court.