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Indian Bank, Corporate Office Versus The Deputy Commissioner of Income Tax, Corporate Circle II (2) , Chennai. and Vica-Versa

Additional depreciation on ATMs - whether Automated Teller Machines are substantially in the nature of computers - Held that:- Similar issue on identical facts has been decided by the Coordinate Bench of the Tribunal in assessees own case for earlier assessment years, we direct the Assessing Officer to allow depreciation @ 60% to ATMs subject to recomputation of WDV for each assessment year. Accordingly, the ground raised by the assessee is allowed subject to the above for both the assessment ye .....

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I.T.A.Nos.1264 and 1265/Mds/2015, I.T.A.Nos.1910 and 1911/Mds/2015 - Dated:- 22-1-2016 - Shri Chandra Poojari, Accountant Member and Shri Duvvuru RL Reddy, Judicial Member For The Assessee : Shri S. Swaminathan, C.A. For The Department : Shri Debendra N. Kar, CIT ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER: These cross appeals filed by the assessee and the Revenue are directed against the common order of the ld. CIT(Appeals) - 6, Chennai, dated 05.03.2015 relevant to the assessment years 2006-0 .....

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d machinery. 2. Brief facts of the case are that the assessee is a Nationalized Bank and Central Public Sector Undertaking. The assessee, e-filed its return of income for the assessment years 2006-07 and 2008-09 on 31.10.2006 and 28.09.2009, declaring total income of ₹. NIL under the normal provisions of the Income Tax Act and book profit of ₹.404,81,33,910/- for the assessment year 2006-07 and ₹.1220,40,10,460/- for the assessment year 2008-09 under the provisions of section 1 .....

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nd furnished various details called for. After verifying the details filed by the assessee, the Assessing Officer made various additions and completed the assessment under section 143(3) r.w.s. 147 of the Act on 27.02.2014. Similarly, for the assessment year 2008-09, notice under section 148 of the Act was issued on 23.02.2013, the assessee bank electronically uploaded revised return on 28.03.2013. After verifying the details filed by the assessee, the assessment under section 143(3) r.w.s. 147 .....

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ing aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the assessment reopened by the Assessing Officer is without jurisdiction and the order of the Assessing Officer is bad in law. 5. On the other hand, the ld. DR has submitted similar issue has been raised before the Tribunal in assessee s own case for earlier assessment years vide its consolidated order dated 30.11.2015 confirmed the order of the ld. CIT(A) and the same may be followe .....

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he assessment years 2006-07 and 2008-09 also, we confirm the order of the ld. CIT(A) on this issue and accordingly, we dismiss the ground raised by the assessee for both the assessment years. 7. The second common ground raised by the assessee is with regard to confirmation of disallowance of excess depreciation on ATMs. At the time of hearing, the ld. Counsel for the assessee has submitted that similar issue on identical facts has been raised in assessee s own case for earlier assessment years a .....

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egarding allowability of 60% depreciation on the ATMs, the Assessing Officer has observed that the ATMs is different type of machine, different from those of computers and allowed depreciation @ 15% only as applicable to plant and machinery. The ld. CIT(A) has confirmed the order passed by the Assessing Officer. Before us, the ld. DR has placed reliance on the decision in the case of Venture Infortech Global (P) Ltd. v. DCIT (2008) 25 SOT 184 (Mum), wherein the Mumbai Benches of the Tribunal has .....

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are only concerned with the ground regarding assessee's claim of depreciation on LAN, WAN, ATM etc. at 60% as against 25% allowed by the AO. The other grounds of appeal raised by the Revenue in this appeal are not maintainable for want of COD approval, and they have also not been restored back for fresh disposal while recalling the Tribunal's earlier order dated 17.6.2009. 6. In the course of hearing of this appeal, the learned counsel for the assessee relied upon several decisions inclu .....

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e computer system and are entitled to depreciation at the higher rate of 60%. In the present case, we are concerned about the depreciation on LAN, WAN, ATM equipments. During the year under consideration, the assessee has purchased certain equipments in the form of LAN, WAN, ATM etc. apart from computer and other related items. It is not in dispute that LAN, WAN, ATM equipments cannot be used without the computer. In the case of DCIT Vs. Datacraft India Ltd. - (2010) 6 Taxmann.com 85 (Mum.-ITAT) .....

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are an integral part of the computer, they are classified as a computer. 7. Automated Teller Machine or Automatic Teller Machine (ATM) is the computerized telecommunication device that allows bank's customers to access the bank at places other than the normal bank without having to take the trouble to go to the bank in person and collect the cash as is done under the conventional method of withdrawing money from the bank. The ATM machines are computerized machines which not only allow the c .....

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er and all the other computers are connected through local area network equipment and the single processor can be accessed by the other computers and the data stored is used by the other computers. 9. The WAN equipment is called Wide Area Network, meaning, two or more LAN would form a WAN i.e. to cover large geographical area. The computer network is done by use of Wide Area Network equipment. Thus, this is also an integral part of computer hardware. 10. In this connection, a reference is also i .....

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, WAN and ATM would undoubtedly form a part of computer. 11. In the light of the view we have taken above, we direct the AO to allow depreciation at the rate of 60% on LAN, WAN and ATM equipments. We order accordingly. 13. Respectfully following the decision of the Delhi Benches of the Tribunal in the case of DCIT v. Global Trust Bank Limited (supra), we set aside the order passed by the ld. CIT(A) on this issue and direct the Assessing Officer to allow depreciation @ 60% to ATMs. Thus, the grou .....

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10. No other ground has been raised by the assessee and accordingly, both the appeals filed by the assessee are partly allowed. 11. The first ground common ground raised in the appeals of the Revenue for the assessment year 2006-07 and 2008-09 relates to deletion of addition towards depreciation for UPS. With regard to the claim of depreciation @ 60% on UPS, the Assessing Officer has held that it cannot be treated as computers and accordingly restricted the claim of depreciation to 15%. On appe .....

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e India Ltd. v. DCIT 111 TTJ 498. On the other hand, the ld. Counsel for the assessee relied on the decision of the Tribunal dated 30.11.2015 in assessee s own case for earlier assessment years and prayed that the same may be followed. 13. After hearing both sides, we find that similar issue on identical facts has been considered in the Revenue s appeals in I.T.A. No. 2124 & 2125/Mds/2014 for the assessment years 2005-06 and 2007-08 in assessee s own case by the Coordinate Bench of the Tribu .....

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nal in the case of Indian Overseas Bank in I.T.A. No. 99/Mds/2010 dated 19.03.2013, has held that the UPS attached to the computers are part of computer systems and eligible for depreciation @ 60% and directed the Assessing Officer to allow depreciation on UPS @ 60%. With regard to allowability of depreciation @ 60% on UPS, while considering similar issue raised in the case of Indian Overseas Bank (supra), by following the decision of the Hon ble Delhi High Court in the case of Oriental Ceramics .....

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n UPS and partly allow the ground of appeal of the assessee. 21. At the time of hearing, the ld. DR has relied on the decision in the case of Nestle India Ltd. V. DCIT (supra), wherein the Delhi Benches of the Tribunal has decided the issue in favour of the Revenue and rejected the plea of the assessee for claiming depreciation @ 60% on UPS. However, The Delhi Benches of the Tribunal in the case of Neptune Information Solutions Ltd. in I.T.A. No. 962/Del/2006 vide order dated 21.04.2011 has deci .....

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of Indian Overseas Bank v. DCIT in I.T.A. No. 1949/Mds/2012 dated 18.06.2014, has also allowed depreciation on UPS at the rate of 60%. Accordingly, in view of the above decisions of the Coordinate Benches of Tribunal, we are of the firm view that the ld. CIT(Appeals) has rightly directed the Assessing Officer to allow depreciation on UPS @ 60% and we find no infirmity in the order passed by the ld. CIT(Appeals) on this issue. Accordingly, ground raised in both the appeals of the Revenue for the .....

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th the assessment years 2006-07 and 2008-09. 15. The second common ground raised in both the appeals of the Revenue relates to deletion of disallowance made under section 36(1)(viia) of the Act. Similar ground has been raised by the Revenue in its appeal in I.T.A. Nos. 2124/Mds/2014, 2125/Mds/2014 & 2126/Mds/2014 for the assessment years 2005-06, 2007-08 & 2010-11, wherein the Tribunal has observed as under: 29. We have heard both sides, perused the materials on record and gone through t .....

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advances made by the rural branches of the banks computed in the prescribed manner." The statutes clearly contain that the deduction is available on the aggregate average advances made by the rural branches, and not on the incremental advances only. Therefore, the Assessing Officer's interpretation, that the assessee is entitled for deduction only on the incremental average aggregate advances of the rural branches, is not in accordance with the provisions of the Act. For this purpose, .....

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s of section 36(1)(viia) refers to the computation in the prescribed mariner. He has then referred Rule 6ABA of Income Tax Rules, 1962 and submitted that this issue was considered by the Coordinate Bench of this Tribunal in the case of DCIT Vs. City Union Bank Lid, vide order dated 30.10.2009 in I.T.A. No.1485/Mds/2007. 4.1.2 On the other hand, the Learned Departmental Representative has submitted that as per the section 5 of the Income Tax Act, the income is computed for the previous year and, .....

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aggregate average advances made by the rural branches, therefore the said decision is not applicable in the facts of the present case. 4.1.3 We have considered the rival contentions and relevant records. At the outset, we find that the Coordinate Bench of this Tribunal in case of City Union Bank Ltd supra considered and adjudicated this issue in para 8 as under: We have duly consider the rival contentions and the material on record. We have perused Rule 6ABA of the Income Tax Rules, 1962. As pe .....

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ng is as per Rule 6ABA but the Assessing Officer seems to have interpreted the provision not warranted by law. Therefore, we uphold the order of the Commissioner of Income Tax (Appeals) allowing the deduction to the assessee. 4.1.4 By following the principle of consistency, as the issue has already been decided by the Co-ordinate Bench of this Tribunal, we decide this issue on merits in favour of the assessee and against the Revenue. 4.3.4 In view of the above discussion and respectfully followi .....

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