TMI Blog2021 (9) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... nied to have IMEI number, in the subject matter of iPad, however no concrete evidence has been produced on record in this regard. Lastly we are also of the opinion that in case the assessee wishes to claim that iPad is a computer and is required to have depreciation at the higher rate, then in our opinion, the onus is on the assessee to prove that the assessee is entitled to higher depreciation and merely on the basis of deduction/assumption it cannot be held that the iPad is computer. Hence iPad is not a computer, hence depreciation at low rate is applicable. Hence this ground of the assessee is dismissed. Disallowance of foreign travelling expenses @ 5% (excluding air ticket visa fee) - HELD THAT:- Admittedly some vouchers for the expenditure incurred by the assessee was missing and as such the lower authorities have taken a view of restricting the expenditure to 5%. In our considered opinion the expenditure restricted by the lower authority, in the absence of the supporting document was reasonable and no interference is called for at available.In the result the appeal of the assessee is devoid of merit in the same is dismissed. - I.T.A. Nos. 234 & 316/Asr/2017 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission which out of the following effect: 1. The first ground of appeal is that the ld. CIT(A) has erred in upholding the action of the assessing officer of restricting depreciation on apple ipad at the general rate of 15% which was reduced to 7.5% on the basis of the date of purchase of the fixed asset in place of the rate applicable to a computer i.e. 60%. The facts of the case are that the assessee had purchased an apple ipad during the year and copy of the purchase bill is at page no. 6 of the paper book. Printout of the specifications of the model of ipad purchased by the assessee is enclosed at page no. 7. Ipad is basically a small/tablet computer and depreciation applicable to a computer is to be allowed for an ipad/tablet [1st para at page no. 1 of the paper book]. 2. The term computer has not been defined in the Income Tax Act. It would therefore be relevant to consider the definition contained in the Information Technology Act 2000 or the meaning of the term in common parlance. The term computer has been defined in section 2(1)(i) of the above referred act and its definition is given below: computer means any electronic, magnetic, optical or other high ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3)]: a) Apple has two other variants - one is iphone and the other is Mac Book and comparison of the technical specifications would reveal that ipad has more similarity with iphone in that both of them share the same operating system i.e. IOS whereas Mac Book uses OS-X . b) Both ipad and iphone contain an inbuilt 2G/3G/4G connectivity and GPS primarily an inherent feature of mobile phone whereas Mac Book does not contain the same. c) Sim card and mobile network comes under both ipad and iphone and not Mac Book. 5. After making the above comparison, between the various products of Apple Inc, the ld. A.O concluded that ipad had more similarity with iphone and thus was a phone and not a computer. With regard to the above observation, we are to submit: a) Comparing various products of the same supplier is not the way to determine the exact nature of the electronic device in question. The ld. Assessing officer erred in taking apple products as a benchmark. The exact functions which can be performed by ipad have not been considered at all. b) Having 2G/3G/4G connectivity and GPS does not define a device as a phone. Even security devices have above fea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessed from any other device which is synced. Wifi is used for transferring data from ipad along with USA port. CD is only a means of transferring data which can be done through wired as well as wireless communication such as USB, wifi, 2G/3G/4G, Bluetooth etc. iii) Windows is only one of the operating systems used by computers. Computers existed before windows operating system was available. The earlier operating system DOS is remembered by many who used computers in 1980's and 1990's. Even today, the other operating systems are available such as - MacOS, Linux, Android, Chrome etc. Also programs like word, excel and power point are available on ipad through from other software providers. The assessing officer has presumed that there is no software supplier other than Microsoft. The specifications of ipad as given at page no. 7 show that it is capable of messaging, email, push mail etc. Word processor, excel sheet and power point are also available on ipad under the name of numbers (Equivalent to excel), pages (equivalent to word) and keynote (equivalent to power point). 8. Ipad which has all the essential features of a computer and performs the functions of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication sheet under the head Network it has been clearly mentioned that there is no cellular connectivity. This is further supported by the fact that under the head Comm i.e. communication it is clearly stated that the communication of ipad 2 wifi could be through WLAN (Wireless Local Area Network) i.e. wifi, Bluetooth, GPS and through USB. Cellular network capability has not been mentioned in the features. 12. Importantly, the ld. CIT(A) has wrongly presumed that ipad does not have a USB port and this was one of the reasons given for rejecting the claim of the assessee that ipad was a tablet computer. The specification sheet filed at page no. 43 shows that ipad purchased has USB 2.00 port which is a common port for data transfer as well as charging of ipad. 13. Attention is also drawn to the decision of the Karnataka High Court in the case of CIT vs. NCR Corporation P. Ltd. reported 117 Taxmann.com 252/193 DTR 66 wherein it was held that an ATM machine is a computer entitled to higher rate of depreciation. This device also does not have a USB port or a CD drive. Copy of the decision is enclosed at page no. 44 to 46. 14. Merely because a computer is small it cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. No definition of plant/computer has been provided by the income Tax Act. In the schedule of depreciation it only mentioned as computers include computer software . 5.3. Definition of computer as provided under Information Technology act in section 2(1)(i) to the following effect: computer means any electronic, magnetic, optical or other high speed data processing device or system which performs logical, arithmetic, and memory function by manipulation of electronic, magnetic or optical impulses, an includes all input, output, processing, storage, computer software, or communication facilities which are connected or related to the computer in a computer system of computer network 5.4. Undoubtedly, iPad and smart mobile phones are high-speed data processing devices. Both are akin to computer as per the definition of computer under Information Technology Act, being capable of processing, assimilating collating information, storage of data, means of communication for audio and video calls, email, whatsap, facebook, youtube, can be used for accounting, automation, surveillance, gaming etc. In terms of storage both are having high internal memory with expandable memory. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble Supreme Court in/TO vs. Arihant Tiles Marbles (P) Ltd. (2010) 320 ITR 79 (SC). 18. From the afore stated portion of the Statement of objects and reasons and the preamble of the Act, it is evident that the rationale behind the Information Technology Act, 2000 is quite distinct from that of the Income-tax Act, as can be seen from its preamble, which is 'An Act to consolidate and amend the law relating to income-tax and super tax' Thus it is palpable that both these Acts are not in pari material. There is significant difference in the scope, purpose and substance of these two statutes. Ex consequential the definition of 'computer' as given in the Information Technology Act, 2000, cannot be applied in the context of section 32 of the Income-tax Act. However, though the learned Authorised Representative also agreed that the definition in the Information Technology Act cannot be imported, we are of the opinion that a perusal of the objects of that enactment and a perusal of the definition of the term 'computer' given in the Information Technology Act, 2000 are nothing but common parlance definition which can be of some use in the definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of the pre-requisite conditions as per section 32A was that the industrial undertaking should be engaged inter alia in the manufacturing. It was noticed that the word manufacture was not defined in the Income-tax Act. In such circumstances it was held that; 'In the absence of a definition, the word manufacture has to be given a meaning as is understood in common parlance, it is to be understood as meaning the production of articles for use from raw or prepared materials by giving such materials new forms, qualities or combinations whether by hand labour or machines. If the change made in the article results in a new and different article then it would amount to manufacturing activity.' 22. Similar view has been taken by the Hon'ble Supreme Court in Mangulu Sahu Ramahari vs. The State Tax Officer 1974 CTR (SC) 14 by holding that in the absence of specific definition, the meaning as understood in common parlance has to be adopted. From the legal position as enunciated in the above judgments, it is crystal clear that where a word has not been defined in the Act, it is desirable to comprehend its meaning as is understood in its natural sense. 23. A computer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta Sky etc. But TV does not become computer for the reason that its principal function cannot be done only with the aid of 'computer functions' notwithstanding the fact that in the entire process of networking or receiving the output from different channels and making it available to the viewers, some sort of computer functions are necessarily involved. Similarly take the case of mobile phone. Its principal task is to receive and send calls. It is not a standalone apparatus which can operate without the relevant network, such as Airtel, BSNL, Reliance. It, therefore, follows that any machine or equipment cannot be described as computer, if its principal output or function is the result of some sort of 'computer functions' in conjunction with some non-computer functions. In order to be called as computer, it is sine qua non that the principal output/object/function of such machine should be achievable only through 'computer functions'. 5.6. In this age of technology, most of gadgets/machines available or functioning in commercial/industrial set up are working with the aid of computers whether CNC (computerised numerical control), computerised printing mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dly assumed (we are justified to say this) that the position is well settled in the interpretation of a taxing statute: It is the law that any ambiguity in a taxing statute should enure to the benefit of the subject/assessee, but any ambiguity in the exemption clause of exemption notification must be conferred in favour of revenue - and such exemption should be allowed to be availed only to those subjects/assesses who demonstrate that a case for exemption squarely falls within the parameters enumerated in the notification and that the claimants satisfy all the conditions precedent for availing exemption. (emphasis supplied by us) Presumably for this reason the Bench which decided Surendra Cotton Mills Fert. Co's Case (supra) observed that there exists unsatisfactory state of law and the Bench which referred the matter initially, seriously doubted the conclusion in Sun Export Corporations's Case (supra) that the ambiguity in an exemption notification should be interpreted in favour of the assessee. 41. After thoroughly examining the various precedents some of which were cited before us and after giving our anxious consideration, we would be more than justified to conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
