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TMI Blog2020 (7) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... est due and penal interest arose out of demand by a Competent authority. 4. CIT(A) ought to have noticed that the amount is penal in nature, as it is for the delayed payment of pole rent since 2002-03, and not compensatory. 5. For these and other grounds that may be advanced at the time of hearing the order of the learned Commissioner of Income-tax(Appeals), Thiruvananthapuram on the above points may be set aside and that of the Assessing Officer restored. 2.1 The assessee has raised the following grounds of appeal in ITA No.662/Coch/2019: The Learned Commissioner of lncorne tax (Appeals), Trivandrum erred in concluding that "the depreciation on Modems is allowable at 60%." CIT(A) ought to have noticed that as per the rate chart under Rule 5 of Income tax Rules, the rate of depreciation at 60% is allowable for computers including computer software. "Computer software" is defined in the ''Rule as "any computer programme recorded on any disc, tape, perforated media or other information storage device''- Ld CIT(A| ought to have noticed that "modem" cannot be considered under this definition but it is only "a device that modulates an analog carrier signal to enco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only compensation for delayed payment of pole rent and liability accrued during the FY 2006-07. The Ld. AR filed copy of letter dated 28.09.2006 received from KSEB as a proof of crystallization of liability of interest. The learned AR further submitted that the assessee was following mercantile system of accounting and therefore, interest liability accrued is deductible expenditure. 7. We have heard the rival submissions and perused the record. The only issue in the appeal is the admissibility of interest paid of Rs. 2,37,71,066 to KSEB towards delayed payment of pole rental charges during the F.Y. 2006-07 corresponding to the A.Y. 2007-08 which was written off. The above amount represents interest for the delayed payment of pole rental charges from the year 2002-03 based on the demand raised by the KSEB. In this demand notice the original demand of Rs. 22.99 crores based on the earlier order of KSEB dated 05/12/2019 was reduced to Rs. 14.35 crores in pursuance of the order of the High Court. The KSEB revised the demand which was accepted by the assessee in the year 2016-17. Thus, the entire dispute was finally settled based on mutual verifications conducted by the parties. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the provisions of the particular statute to verify whether the levy or charge is in the nature of penalty imposed for contravention of law and only in such cases where penalty is levied and prescribed in the statute, the expenditure would become inadmissible u/s. 37(1) of the I.T. Act. Reliance is placed on the judgment of the Supreme Court in the case of Mahalakshmi Sugar Mills Co. vs. CIT (1980) (123 ITR 429) where it was held that the interest for delayed payment of statutory dues is an allowable deduction u/s. 37(1) of the Act. The same view was taken by Supreme Court in the case of Lachmandas Mathurdas vs. CIT (254 ITR 799). Similarly, in the recent decision of the Cochin Bench of the Tribunal in the case of Lakshdweep Development Corporation Limited in ITA No. 312/Coch/2019 dated 03/10/2018, the Tribunal has held that interest on delayed payment of VAT and TDS is only compensatory and is not penal in nature. Therefore, the CIT(A) has correctly deleted the disallowance made for the interest expenditure claimed on delay payment of VAT and TDS. Thus, this ground of appeal of the Revenue is dismissed. Thus, the appeal of the Revenue in ITA No.661/Coch/2019 for the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that the assessee has claimed depreciation at 60% on various items like printers, scanners, modems, switches, hubs, cables/cards and software etc., by treating them as computer. Though the assessee argued that all these items being integral part of computer are eligible for depreciation at 60% but the Assessing Officer rejected all the contentions of the assessee and allowed depreciation @25% by treating it as plant and machinery. While coming to such conclusion, the Assessing Officer as in case of assessment Year 2002-03 held that only CPU, monitor, key board, mouse can be considered to be computer whereas other peripherals like printers, scanners, modems, switches, photo/edit/equipment, UPS, net work cables and software cannot be considered as computer. This view of the Assessing Officer was also upheld by the CIT (A). 16. We have heard the submissions of the parties and perused the material on record. We have decided identical issue in assessee's appeal in ITA No.1241 /Hyd/2008 for the asstt. Year 2002-03. In view of our finding in paras 11 and 12 of the order hereinbefore, we also decide this issue in favour of the assessee by holding that depreciation claimed at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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