TMI Blog2020 (6) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... n? - HELD THAT:- The tribunal by placing reliance on the decision of DCIT VS. DATA CRAFT INDIA LTD. [ 2010 (7) TMI 642 - ITAT, MUMBAI ] has held that so long as functions of the computers are performed with other functions and other functions are dependant on the functions of the computer, ATMs are to be treated as computers and are entitled to higher rate of depreciation. It has further been held that computer is integral part of ATM machine and on the basis of information processed by the computer in ATM machine only, the mechanical function of the dispensation of cash or deposit of cash is done. Therefore, it was held that ATMs are computers and are entitled to higher rate of depreciation. Change in method of accounting - HELD THAT:- The Supreme Court in BILAHARI INVESTMENTS (P) LTD. [2008 (2) TMI 23 - SUPREME COURT] has held that in every case of substitution of one method by another method it has been held that burden is on the department to prove that the method in vogue is not correct and distorts the profit of a particular year. From perusal of the order passed by the assessing officer as well Commissioner of Income Tax (Appeals), it is evident that revenue has fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessed under Section 143(1) and was selected for scrutiny and notice under Section 143(2) of the Act was issued. The assessee had taken premises on lease for a period of three years. The assessee claimed expenditure of ₹ 89,23,817/- on account of leasehold improvements as revenue expenditure in the computation of income. The assessing officer by an order dated 31.03.2006 inter alia held that leasehold improvements expenditure is incurred towards purchase of workstations, improvement of interiors and electrical works, fee paid to the architect, cabling work for networking of computers in connection with setting up of office. Thus, the expenditure was incurred to bring into existence an asset or an advantage for enduring benefit of business, his property is computable as capital expenditure. Accordingly, the leasehold improvement for an amount of ₹ 89,23,817/- was disallowed and added back and depreciation towards furniture and fitting at the rate of 15% was allowed. The assessing officer further held that the assessee has changed the revenue recognition method and therefore it is not possible to ascertain true and correct profit of the assessee for the accounting y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs in connection with setting up of office. Therefore, the same cannot be treated as capital asset. It is further submitted that the assessee only derived business advantage on account of expenditure incurred on lease hold property for improvements. In support of aforesaid submission, reliance has been placed on MADRAS AUTO SERVICES (P) LTD. supra. It is also pointed out that reliance placed by the revenue on the decision rendered in DIEBOLD SYSTEMS PVT. LTD., supra is misconceived as the aforesaid decision has been rendered in the context of provisions under the Karnataka Sales Tax Act, 1957. It is also urged that the provisions of Karnataka Sales Tax Act, 1957 and the Income Tax Act, 1961, are not pari materia and therefore, no reliance can be placed on aforesaid decision. Learned counsel has also invited our attention of Appendix 1 to the Income Tax Rules and has pointed out that computer has been included under plant and machinery. In support of aforesaid submission, reliance has been placed on decision in the case of 'CIT VS. SARASWAT INFOTECH LTD.,', ITA NO.1243/2012. It is also argued that the words and expression defined in another statute cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital of the business or part of its circulating capital. 7. The aforesaid principles were referred to with approval in MADRAS AUTO SERVICES (P) LTD., supra on the touchstone of aforesaid well settled legal principle, if the facts of the case in hand is examined, it is evident that the assessee had taken the premises on lease for a period of three years and had incurred expenditure of ₹ 89,23,817/- for improvements in the lease premises. The premises did not belong to the assessee and the expenditure did not bring into existence any capital asset for the assessee. The expenses were incurred for conducting the business of the assessee more profitably and more successfully. The assessee therefore, got the business advantage and therefore, the tribunal has rightly treated the expenses incurred as revenue expenditure incurred for improvement in leasehold property as revenue expenditure. 8. This takes us to the second substantial question of law whether ATMs are computers and are eligible for 60% depreciation. It is pertinent to note that provisions of the Karnataka Sales Tax Act, 1957 and provisions of Income Tax Act, 1961 are not pari materia provisions. The clas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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