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TMI Blog2019 (2) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... d memory function, ability for processing and could also perform logical action by synchronizing the inputs to display. Thus in our opinion, the LED panel purchased by the assessee was eligible for claiming depreciation at the rate of 60%. - decided against revenue - I.T.A. No.2358/CHNY/2014 - - - Dated:- 12-2-2019 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER For The Appellant : Shri. Sridhar Dora, JCIT For The Respondent : Shri. V. Sridharan, Sr. Adv. for P.J. Rishikesh, Advocate ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER Department in this appeal, filed against an order dated 05.06.2014 of the ld. Commissioner of Income Tax (Appeals)-IV, Chennai has raised two issues. First is on the cost, which is to be adopted for calculating depreciation on an LED panel acquired by the assessee from its sister concern called M/s. Tricom Vision. Second is whether the LED panel could be considered as equivalent to a computer for allowing deprecation at the rate of 60%. 2. Ld. Counsel for the Revenue, strongly assailing the order of the ld. CIT(A) allowing the claims of the assessee submitted that assessee had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the cost that was to be considered for allowing deprecation was ₹ 3,12,60,000/- (including VAT of ₹ 12,60,000/-) paid by the assessee for acquiring the LED panel board from M/s. Tricom Vision. Further, according to him, ld. CIT(A) also erred in holding that LED board was a computer eligible for deprecation at the rate of 60%. 5. Per contra, ld. Authorized Representative strongly supporting the order of the ld. CIT(A) submitted that depreciation was to be allowed on the actual cost to the assessee. Reliance was placed on the judgment of Hon ble Apex Court in the case of Jogta Coal Co. Ltd vs. CIT (1959) 36 ITR 521. As per the ld. AR, actual cost to the assessee was ₹ 3,12,60,000/-. Contention of the ld. AR was that there was no reduction of Income Tax liability in the hands of the seller or the buyer, since the surplus arising on sale of the panel was considered as short term capital gains in the hands of the seller M/s. Tricom Vision and such assessment was accepted by the said firm. Ld. AR also pointed out that assessee had filed a valuation report dated 02.01.2004 from an approved valuer who had placed the fair market value of the LED display at & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax (by claiming depreciation with reference to an enhanced cost) the actual cost to the assessee shall be such an amount as the (Assessing) Officer may, with the previous approval of the (Joint Commissioner) determine having regard to all the circumstances of the case . The above Explanation in our opinion does not empower the ld. AO to adopt the written down value of the seller as the actual cost for the buyer acquiring the asset. It has to be determined according to the circumstances of the case. In the present case before us, assessee had filed a valuation report from the Government approved valuer named Shri. V. Shanmugavel who had assessed the fair market value at ₹ 3,05,00,000/-. No reason has been mentioned by the ld. AO for disregarding the valuation of the approved valuer. Hon ble Apex Court in the case of Jogta Coal Co. Ltd (supra) has clearly held the cost for the purpose of depreciation allowance would be cost in the hands of the assessee and not that of the previous owner. That apart, assessment order of M/s. Tricom Vision, the seller, for the very same assessment year, placed at paper book pages 1 to 7 clearly show that the surplus on sale of the LED panel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for that particular asset, depredation has bun claimed under clause (i) of Sub section (1) of Section 32 and 3) that the asset was or has bun used for the purpose of business. All the conditions must be simultaneously fulfilled by a person to claim, the benefits CIS given under S 41(2). For the sake of clarity, sub section 1 of Section 32 is also reproduced below : 32 (1) In respect of depreciation of - ( i) buildings, machinery, plant or furniture, being tangible assets; ( ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangtbte assets acquired on or after the 1st day of April, 1998, Owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed - ( i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed. ( ii) in the case of block of assets, such percentage on the written down value thereof as may be prescribed ... From the above, it is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue that the acquisition of the LED panel from M/s. Tricom Vision by the assessee was for reduction of tax liability by claiming excess depreciation. In our opinion ld. CIT(A) was justified in holding that cost to the assessee for the purpose claiming depreciation was cost incurred by it for acquiring the LED panel from M/s. Tricom Vision. 8. As to the question whether the LED panel is equivalent to a computer for availing depreciation at the rate of 60% for computers in New Appendix I of Income Tax Rules, 1962, term computer has not been defined in the Act. However, it has been defined in Section 2(1) of Information Technology, Act, 2000 as under:- Computer means electronic, magnetic, optical or other highspeed data processing device or system which performs logical, arithmetic and memory functions by manipulations of electronic, magnetic or optical impulses, and includes all input, output, processing, storage, computer software or communication facilities which are connected or relates to the computer in a computer system or computer network . Characteristic of the LED Panel acquired by the assessee has been given in the registered valuer s report a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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