Case Number: ITA 601/DEL/2019
Appellant: Reju Daniel, New Delhi
Respondent: ITO, Ward-39(5), New Delhi
Assessment Year: 2012-13
Date of Order: 2019-07-26
Pronounced On: 2019-07-26
Case Filed On: 2019-01-29
Order Type: Final Tribunal Order
The case of Reju Daniel vs ITO, Ward-39(5), New Delhi, ITA No. 601/DEL/2019, pertains to the assessment year 2012-13. The case was filed on 29th January 2019 and involves a dispute over the depreciation rate applied to LED walls and accessories. The final order was pronounced on 26th July 2019.
Reju Daniel, an individual engaged in the business of renting audio-visual equipment through his proprietorship concern M/s. Dani Multimedia Services, filed his income tax return for the assessment year 2012-13 declaring a total income of Rs. 4,57,180. During the assessment proceedings, the Assessing Officer (AO) observed that the assessee claimed depreciation at 60% on assets such as LED walls, projectors, and accessories, which the AO believed did not qualify for this rate.
The AO confronted Reju Daniel regarding the claimed depreciation, asserting that these assets did not fall under the category of computers or computer software, which are eligible for 60% depreciation. Instead, the AO categorized these assets under general plant and machinery, allowing only 15% depreciation. Consequently, the AO disallowed Rs. 11,85,777 of the claimed depreciation and adjusted the total income accordingly.
Reju Daniel appealed against this decision to the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the AO’s decision. Aggrieved by the CIT(A)’s order, Reju Daniel filed an appeal before the Income Tax Appellate Tribunal (ITAT), contesting the depreciation rate applied to his assets.
The appeal was heard by the ITAT, Delhi Bench ‘SMC’, comprising Sh. R. K. Panda, Accountant Member. The tribunal addressed both appeals for the assessment years 2012-13 and 2013-14 together due to the identical nature of the issues involved.
The appellant’s counsel argued that the LED walls, projectors, and accessories operated through computer software and were integral to the computer system, thereby qualifying for 60% depreciation. The counsel cited various judgments, including the decision of the Delhi Bench in the case of DCIT vs. M/s. Crabtree India Ltd. and the Supreme Court’s ruling in CIT vs. Karnataka Power Corporation, to support the claim that such assets should be treated as part of the computer system.
The ITAT, after considering the arguments and examining the relevant provisions of the Income Tax Rules, concurred with the AO and CIT(A)’s findings. The tribunal observed that while certain assets might interact with computers, they do not necessarily qualify for the higher depreciation rate unless explicitly categorized under the specified heads in the Income Tax Rules.
The tribunal noted that the Income Tax Rules provide distinct depreciation rates for different assets, including specific rates for computers, computer software, and other machinery. The absence of LED walls, projectors, and accessories in these specific categories meant that these assets defaulted to the general plant and machinery category, attracting 15% depreciation.
The tribunal also distinguished the cases cited by the appellant, emphasizing that the decisions relied upon did not directly apply to the nature of the assets in question. Consequently, the tribunal upheld the CIT(A)’s order, confirming the AO’s decision to restrict depreciation to 15%.
In conclusion, the ITAT dismissed the appeals filed by Reju Daniel for the assessment years 2012-13 and 2013-14, affirming the lower authorities’ stance on the applicable depreciation rate. The tribunal’s decision highlights the importance of adhering to the specific classifications within the Income Tax Rules when determining depreciation rates for various assets.
The decision was pronounced in the open court on 26th July 2019.
Members:
R. K. Panda, Accountant Member
Dated: 26th July 2019
Copy forwarded to:
Assistant Registrar
ITAT, New Delhi
Reju Daniel vs ITO, Ward-39(5), New Delhi – Case Filed Due to Depreciation Dispute
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