×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
07-01-2019, Oxigen Services India, Section 36, 260A, 37(1), Tribunal Delhi
This appeal filed by the revenue is directed against the order dated 09.03.2015 passed by the CIT (A)-7, New Delhi to A. Y. 2009-10.
2. Ground of appeal No.1 by the revenue reads as under :-
“1. On the facts and under the circumstances of the case, the Ld. CIT (A) has erred in deleting the disallowance of depreciation of Rs.2,24,22,212/- claimed by assessee company at a higher rate of 60% on POS terminals by assessee company without appreciating the facts that Explanation (xi) to section 36 clearly defines the meaning of computer and the POS Terminals are not covered under the block of assets within the definition of the term “computer”.
3. Facts of the case, in brief, are that the assessee is a company and is engaged in the 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 Assessing Officer restricted the depreciation to 15% as against 60% claimed by the assessee and made addition of Rs.2,24,22,212/-. The reasons for treating the same as plant and machinery by the Assessing Officer are as under :-
4.5 The POS Terminal is a computer in itself and is eligible for depreciation @ 60% is not acceptable in view of the following:
a) POS terminal is clearly distinguishable from computer, as POS Terminal is not having CPU, Hard Disc, Mother Board, Monitor and other important ingredients attached to it.
b) Computer is a device having Input device, Processing the data under various software’s and hardware inside it, and giving output and most importantly perform various activities and works on various software in one time .But POS is simply an electronic device, works on only one specific preloaded software.
(c) Compute! can perform on multiple software and can, be uploaded different data and software, whereas POS Terminal works on one software and cannot be uploaded with multiple software
d) As given by the assessee in its reply itself that The POS Terminal can be used only in conjunction with the server of the company. It has no alternate utility. It works as a terminal to the central host server of the company and needs to be connected to the host server for enabling transactions' Whereas computer can perform in multiple applicability without any restrictions and the scope of functioning is much wider.
e) The life span of computer is very short, reason being the depreciation is al owed @60% Whereas the life span and utility of POS Terminals are long and the usage is unspecified years.
f) The POS Terminal works on a specified usage like 'the company retailer enters the products details, quantity, customer mobile no etc through the keyboard, which the POS send the Host after validating the Retailer, It then receives back an encrypted response from the Host (Usually with pin for the service requested, for successful transactions), which it prints for the retailer/Customer's reference.". Whereas Computer works on multi functions and there is no specified software installed, but works on multiple software's
g) More Importantly, the exclusive rights to use such technology(including any process) or other know how or to