TMI Blog2020 (7) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... the largeness of the amount involved. There is no case for the department that the expenditure is in the nature of prior period expenses. The Chennai Bench of the Tribunal in the case of ITO(OSD) vs. Sicgil India Pvt. Ltd. [ 2009 (3) TMI 239 - ITAT MADRAS-C] dealt with a case wherein the contractual liability which was disputed arose in the year of settlement of dispute. In the instant case, the dispute involved was finally settled during the F.Y. 2006-07 relevant to the A.Y. 2007-08. - Decided against revenue. Difference between liability of interest due and penal interest which arose out of the demand by a competent authority - HELD THAT:- Supreme Court in the case of Mahalakshmi Sugar Mills Co. vs. CIT [ 1980 (4) TMI 1 - SUPREME COURT] where it was held that the interest for delayed payment of statutory dues is an allowable deduction u/s. 37(1). The same view was taken by Supreme Court in the case of Lachmandas Mathurdas vs. CIT [ 1997 (12) TMI 16 - SUPREME COURT] . Similarly, in the recent decision of the Cochin Bench of the Tribunal in the case of Lakshdweep Development Corporation Limited [ 2018 (10) TMI 283 - ITAT COCHIN] the Tribunal has held that interest on del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing 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 encode digital information, and also demodulates such a carrier signal to decode the transmitted information The order on which Ld CIT(A) relied upon does not discuss the issue of depreciation of modems in detail, but passed the 'order simply considering the decision held in ITA No.1241/Hyd/2010, for other peripherals which are not at all similar to modems . For these and other grounds that may be advanced at the time of hearing the order of the learned Commissioner of Income-tax (Appeals), T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal is the admissibility of interest paid of ₹ 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 ₹ 22.99 crores based on the earlier order of KSEB dated 05/12/2019 was reduced to ₹ 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 was due the serious anomalies in the apportionment of poles in the urban and in the rural areas. The assessee has placed a copy of the demand raised by KSEB on 28.09.2006 and copy of the order of High Court in OP No. 323210 of 2002 dated 16.06.2015 settling the dispute. In view of the fact that the demand had arisen and liability crystallized during the year, the statutory auditors had disclosed the expenditure under extraordinary item in the financial sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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 year 2007-08 is dismissed. ITA No. 662/Coch/2019 : AY 2010-11 12. 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 inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 60% on printers, scanners, modems, switches, hubs, cables/cards and software etc., should not be disallowed as these devices are used along with the computer and their functions are integrated with the computer. Accordingly, we set aside the order passed by the CIT (A) by allowing the grounds of the assessee 15. Following the above decision of the Tribunal, the CIT(A) held that the depreciation on Modems is allowab ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
