TMI Blog2010 (2) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue is dismissed. Expenditure incurred on glow sign boards - capital or revenue in nature - Whether it does not bring into existence an asset or advantage of enduring benefit, which is attributable to the capital? - HELD THAT:- As arguments made by assessee have been found to be convincing that the glow sign board requires frequent replacement and expenditure does not bring into existence an asset of enduring in nature. The judgment of Liberty Group Marketing Division [ 2008 (4) TMI 219 - PUNJAB AND HARYANA HIGH COURT] supports such views that expenditure incurred on glow sign boards does not bring into existence any asset or advantage for the enduring benefit of the business and such asset is not of enduring nature and therefore, such expenditure has to be treated as revenue in nature Thus ground No. 2 of the Revenue is dismissed. Excess depreciation claim on UPS - @ 60% or 25% - whether UPS integral part of computer - HELD THAT:- The learned CIT (A) has relied upon the decision in the case of Expeditors International (India) P. Ltd. v. Addl. CIT [ 2008 (8) TMI 399 - ITAT DELHI-F] , wherein it has been held that the UPS is an integral part of the computer and is el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f note to the accounts in the annual report has mentioned the same as contingent liability. However, for the purpose of computation of total income, the assessee capitalised the amount of Rs. 4,25,34,027 and the said capitalisation was treated as addition to the plant and machinery and accordingly the depreciation under section 32 at Rs. 98,38,748 was claimed as per the details at page 3 of the Assessing Officer's order. As per paragraph 2.2 of the Assessing Officer's order, to justify the claim of depreciation the assessee submitted the explanation vide letter dated October 1, 2007 and contended that based on summons issued by the Customs Department under section 108 of the Customs Act, it paid full customs duty of Rs. 4,25,34,027 and then filed the appeal against the demand. As per accounting method consistently followed by the company all the expenses incurred to bring the assets into location and condition were required to be capitalised and the depreciation is allowable on the actual cost of an asset. The assessee also raised an alternate claim for allowance of the said payment as a revenue expenditure under section 43B(a) of the Act being the payment made on actual payment ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had capitalised the customs duty in the financial year 2001-02 relevant to the assessment year 2002-03 and not in the impugned year. As regards the filing of the appeal for disputing the payment of customs duty, it was submitted that there is no appeal filed by the assessee before the customs authorities under the Customs Act. As per the provisions of the Customs Act, 1962 for claiming any refund of any money from the customs authorities, the applicable provision of section 27 of the Customs Act which provides that any person claiming refund of any duty and interest, if any, paid on such duty, has to be in pursuance of an order of assessment or borne by him. Since no order to this effect has been made by the customs authorities and summons were issued dated August 6, 2004 and accordingly duty was paid as per direction issued and challans were placed before the learned Commissioner of Income-tax (Appeals), it was submitted that mere book entries are not decisive of the income of the assessee. To this effect he relied upon the decisions of various courts of law. The learned Commissioner of Income-tax (Appeals) accepted the explanation of the assessee and the cases of variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92 ITR 221 (Delhi) which has been affirmed by the hon'ble Supreme Court reported in CIT v. Bharat Carbon and Ribbon Mfg. Co. P. Ltd. [1999] 239 ITR 505. It was also argued by Shri Salil Aggarwal that there is no appeal filed by the assessee before the customs authorities and it has wrongly been mentioned by the assessee before the Assessing Officer that the appeal has been filed before the customs authorities. This fact was brought to the notice of the learned Commissioner of Income-tax (Appeals) also. Shri Salil Aggarwal further relied upon the submissions and arguments made before the learned Commissioner of Income-tax (Appeals) and supported the order of the learned Commissioner of Income-tax (Appeals) with regard to allowing the claim of the assessee. At the outset we are convinced with the arguments made by Shri Salil Aggarwal, advocate, that mere book entries are not decisive of any income. The question is whether a receipt of money is taxable or not, whether certain deductions from that receipt are permissible in law or not, the question has to be decided according to the principles of law and not in accordance with the book entries for the accounting practice since the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Commissioner of Income-tax (Appeals) has ignored the fact that till the assessment year 2004-05, the assessee has itself capitalised the expenditure incurred on glow sign boards by treating the same as capital in nature. Since the changes were not mandated as per the fresh guidelines prescribed by the Institute of Chartered Accountants of India (ICAI) or Registrar of Companies, therefore, without having any basis, the assessee cannot be allowed to change the accounting treatment of particular item from capital to revenue in nature." The brief facts of the case as appearing vide paragraphs 3.1, 3.2 and 3.3 of the Assessing Officer's order are as under: "3.1 In the notes to the accounts item 15 in the schedules forming part of accounts it was mentioned ₹ 15. There has been change in accounting policy regarding the expenses incurred on glow sign boards, from being capitalised during the earlier years to being changed to the Revenue in the current year is lower by Rs. 19,15,436.' Vide order sheet dated July 17, 2007 and August 30, 2007, the assessee-company was asked that why the expenditure on glow sign boards be not disallowed as revenue expenditure and treated as cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on glow sign boards does not bring into existence an asset or advantage for the enduring benefit of the business and allowed the claim of the assessee. We have heard the rival contentions and perused the facts of the case. The learned Departmental representative relying upon the order of the Assessing Officer argued that the assessee had been capitalising such expenditure before the impugned year and all of a sudden a turn has been taken and the change in accounting policy was made to claim it as revenue expenditure, which cannot be allowed. Learned counsel for the assessee Shri Salil Aggarwal on the other hand, relied upon the order of the learned Commissioner of Income-tax (Appeals) and the decision of the hon'ble Punjab and Haryana High Court in the case of Liberty Group Marketing Division [2009] 315 ITR 125 and argued that no asset of enduring nature comes into existence and such expenses are of regular in nature and the life of the glow sign board is short which requires replacement. The arguments made by learned counsel for the assessee have been found to be convincing that the glow sign board requires frequent replacement and expenditure does not bring into exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal, Delhi Bench "F" in the case of Expeditors International (India) P. Ltd. v. Addl. CIT dated August 29, 2008 reported in [2010] 2 ITR (Trib) 153 ; [2008] 118 TTJ 652, wherein it has been held that the UPS is an integral part of the computer and is eligible for depreciation. Therefore depreciation at the rate of 60 percent is allowed to the assessee. The learned Departmental representative supported the order of the Assessing Officer whereas learned counsel for the assessee relied upon the decision of the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) has relied upon the decision of the Income-tax Appellate Tribunal, Delhi Bench in the case of Expeditors International (India) P. Ltd. v. Addl. CIT dated August 29, 2008 reported in [2010] 2 ITR (Trib) 153 ; [2008] 118 TTJ 652 and being the decision of the co-ordinate Bench, we find no infirmity in the order of the learned Commissioner of Income-tax (Appeals) and moreover, no contrary decision has been brought on record by the learned Departmental representative. Thus, ground No. 3 of the Revenue is dismissed. In the result, the appeal is dismissed. I. T. A. No. 4459/Del/2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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