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TMI Blog2020 (5) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act. On the one hand, terming and placing a transaction / agreement under the genre of Lease and then to say that such particular species of that genre will not be entitled to the deductions as prescribed for the lease transactions under the Income Tax Act, in our view, serves no purpose other than confusion and conflict of opinion giving rise to the dispute and litigation on the issue. As per the provisions of the Income Tax Act what is to be determined as to whether the agreement / transactions in question is of a lease or a loan or of a hire / purchase. Whether the agreement with CISCO is of a lease as claimed by the assessee or the same is mere loan / finance agreement? - The impugned order is to be read as a whole, and a single line or word can not be chosen to interpret a different meaning. What the Ld. CIT(A) has conveyed is that though the execution of the lease deed is not doubted but the real intention behind the deed is to be gathered from the various clauses of the deed and facts and circumstances of the case. Thus, we have no hesitation in holding that the arrangement in the present case was a loan / finance arrangement in the guise of a lease agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his contention has been raised before us for the first time. Even the CIT(A) has not gone into this aspect having denied the claim of deduction u/s 35D of the Act only. We, therefore, restore this issue to the CIT(A) to examine all the facts of the case on this issue and thereafter decide the claim in accordance with law. Disallowance of interest expenditure u/s 36(1)(iii) - HELD THAT:- Tribunal in the case of ACIT Vs. Janak Global Resources Pvt Ltd [ 2018 (12) TMI 902 - ITAT CHANDIGARH]3 holding that that if the assessee is possessed of sufficient own interest free funds to meet the investments / interest free advances, then, under the circumstances, presumption will be that interest free advances / investments have been made by the assessee out of own funds / interest free funds. Reliance in this respect can also be placed on the decision of the Hon'ble Supreme Court in the case of Hero Cycles (P) Ltd Vs. CIT [ 2015 (11) TMI 1314 - SUPREME COURT] and also CIT (LTU) Vs. Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] . Thus, as per the settled law no disallowance u/s 36(1)(iii) of the Act is warranted on this issue. This ground is accordingly allowed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee, therefore, was not required to deduct the TDS on the principal component of the loan amount. The assessee, however, has deducted TDS on the said component also, which under the circumstances, is to be considered as deduction of TDS towards interest component. The issued is accordingly restored to the file of the Assessing Officer for decision a fresh as per our observations made above. Disallowance u/s 14A - expenditure incurred for earning of tax exempt income - HELD THAT:- No disallowance is attracted u/s 14A of the Act in case the assessee has not earned any income not forming part of the total income. This issue is accordingly decided in favour of the assessee. The disallowance made by the lower authorities on the above issue is ordered to be deleted. - ITA No.547/Chd/2017, ITA No.842/Chd/2018, ITA No.139, 140/Chd/2019 - - - Dated:- 6-5-2020 - SHRI N.K. SAINI AND SHRI SANJAY GARG, JJ. Appellant by : Shri Ashwani Kumar, CA Respondent by : Shri Chandrajit Singh, CIT (DR) on 4.12.2019 and Smt Chandrakanta CIT (DR)on 18.03 2020 Sanjay Garg, J. ORDER These appeals relating to different assessment years have been preferred by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreed lease rent. The asses see debited only the interest in the Profit and Loss account and further treated the assets leased (set top boxes) as fixed assets. However, for the purpose of computation of income as per the provisions of the Income Tax Act, the principal component of the lease rentals amounting to Rs .58,87,16,983/ was also claimed as deduction along with interest component. On being asked to explain in this respect, the assessee explained that in the books of accounts, following mandatory accounting standard AS-19 for the companies prescribed by the Institute of Chartered Accountants of India, the assets were treated as fixed assets and the transaction with CISCO was treated as Finance Lease, whereas, for the purpose of Income Tax Act, the transaction was treated as operating lease and thereby claiming the lease rental paid to CISCO as deduction. The AO, after analyzing the various clauses of the agreement entered into by the assessee with CISCO, held that the assessee had entered into a finance lease agreement with CISCO and was entitled to claim depreciation on the assets so leased. Accordingly, the Assessing Officer disallowed the claim of deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firming the action of the Assessing Officer with regard to the addition of ₹ 42,69,02,407/- as lease rental charges and allowing the depreciation u/ s 32 as per AO order, which is against the decided law on the subject and the various judgments, which we had cited before him the claim by the appellate of lease rent to the tune of ₹ 58,87,16,983/- has been denied in summary manner on certain irrelevant facts. 5. That the Worthy CIT (A) has erred in holding in para 5.4.13 about treating the lease rental as capital expenditure and not allowing the deduction u/ s 37 of the Income Tax Act is against the facts and circumstances of the case. 6. That the Worthy CIT (A) has erred in confirming the action of the Assessing Officer in disallowing the deduction u/ s 35D amounting to ₹ 2.40 crores. 7. That the Worthy CIT (A) has erred in confirming the addition of ₹ 3,41,870/- on account of alleged unexplained expenditure. 8. That the Worthy CIT(A) has erred in confirming the action of the Assessing Officer in disallowing the interest amounting to ₹ 28,68,096/- u/ s 36 (l)(iii) and holding that the amount of ₹ 3.20 crores as advanced by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was part of the total figure of ₹ 9.48 crores debited under the head 'Finance Cost' and not a part of the figure of R s. 64.87 cores relating to the lease payment charges. The Ld. counsel in this respect has further submitted that the payment of ₹ 5.35 cores, notice of which has been taken by the Assessing Officer was towards interest on service tax which was apparent from the fact that the said amount was deposited under the code 00440218 - Cable Operator . The Ld. Counsel has further relied upon the copy of the challans placed at pages 59 to 61 of the paper book to show that the interest / penalty / overheads as service tax, whereas, the code 00440217 relates to service tax. The sum and substance of the whole arguments of the Ld. counsel, was that the interest component of the total lease rental paid by the asses see was required to be debited into the profit and loss account even as per AS-19, however, the asses see inadvertently capitalized the entire amount of lease rental of R s. 64.87 crores. However, in the income tax return, the entire lease rental of ₹ 64.87 cores has been claimed as deduction of expenditure u/ s 37 of the Income Tax Act. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , though, in view of the mandatory requirement for the companies as per Companies Act to follow the Accounting Standard AS-19 prescribed by Institute of Chartered Accountants of India, the lease transaction with CISCO was booked as Finance Lease, however, in fact, the same was an operating lease. Hence, though, as per the accounting standard ES-19, STPs were capitalized and depreciation computed, however, in the income tax return the depreciation so computed was written back and instead the lease rent (both principal component and interest component) was claimed as deductible expenditure u/s 37 of the Act. B) That as per the provisions of the Income Tax Act ( in short the Act ), depreciation is admissible under section 32 of the Act only to the owner of the asset. That the lease charges paid for the use of the asset to the owner of the asset are allowable as revenue expenditure under section 37 of the I.T. Act to the payer. C) That at page 80 in paragraph 5.4.4 of the impugned order, the Ld. CIT(A) himself has mentioned, there is no doubt about the genuineness of the lease agreement . The Ld. Counsel in this respect has submitted that when the CIT(A) did not have any doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from page 38 to 41 of the written submissions that for claiming CENVET credit, it is not essential that assessee must be owner of the goods. K) The Ld. Counsel for the assessee has further invited our attention to the following clauses of the lease agreement and submitted that it was apparent that the assessee was not the owner of the equipment and that CISCO was the owner of the equipment: i) That in the Master Lease and Finance Agreement Financing and leasing are separate transactions. The finance agreement is applicable to software license, maintenance, services whereas lease agreement are applicable to equipment. ii) That monthly rent was paid for usage and no lump sum payment was paid showing that the asset had been leased to the assessee for usage only. iii) That the risks and rewards of ownership were equally distributed between the lessor and the lessee. iv) As para 1.2 of the deed, the lessor shall all times retain title to the equipment. Without permission of the lessor the lessee shall not dispose of any of the equipment. The record of maintenance etc. will be produced before the lessor. v) As per clauses 5.1 and 5.2, the lessee was entitled to use the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncancellable and the obligation was absolute (Clause 1.3). D. That the life span of set top box was 3 to 4 years. The term of the lease deed was so devised to cover both the principal and interest components of the financed amount within the lease period.( Lease Schedule Clause 11 ). The lessee had, on the termination of lease, the option to transfer the asset at ₹ 1 per set top box. E. The CISCO has no ownership control over the equipment. In case of breach of contract, the set top boxes cannot be taken away from the millions of consumers by the CISCO. That the other option of returning the asset after uninstallation from customers premises and shipping back to the lessor, being far more expensive, the said option was merely a camouflage, with the real intention being to sell the asset to the lessee at very low price on the termination/expiry of the agreement. F. The assessee had availed credit of custom duty paid on the import of the set top boxes against service tax liability. The assessee had also availed CENVAT credit on STBs claiming them to be capital goods. G. That the regulations framed by Telecom Regulatory Authority of India (TRAI) stipulate that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks while the lessor was exonerated from the same and the element of bailment was completely missing. (Clause 6) f) While the lessee had the right to terminate the lease by prepaying the rent, the lessor had no such option except in the case of default by the lessee. (Clause 10.2) g) The lessee was granted all rights of possession and user of the equipment and of manufacturer warrantee rights relating to the asset. (Clause 8) h) The lessee had been given right of sublease the equipment to its customers and put permanent marking on the equipment. (Clause 12 of lease schedule) i) Foreign Exchange fluctuation loss or gain on imports of asset was to be borne by the lessee. Reliance has been placed on the decision of the Special Bench of I.T.A.T. in the case of Indusind Bank Ltd. Vs. CIT 135 ITD 165, Asea Brown Boveri Ltd. Vs. Industrial Finance Corporation of India , 154 Taxman 512, Association of Leasing and Financial Service Companies Vs. Union of India (2011) 2 SCC 352. Reliance was also placed on CBDT Instruction No.1978 dated 31.12.1999 laying down certain features to determine the ownership of leased asset for the purpose of allowing depreciation u/s 32 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation 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 intangible 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 any block of assets, such percentage on the written down value thereof as may be prescribed: [Provided 18. Section 37 of the Income Tax Act deals with the allowability of the expenditure solely incurred for the business purposes, the relevant part of the section is reproduced as under:- General Section - 37 37. Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een procured on lease or hire basis to be used solely for business purpose of the assessee, the hire charges / lease rental paid for such an asset will be admissible as revenue expenditure u/s 37 of the Act. In this case, the Revenue has tried to draw distinction between two types of leases classifying them as operating lease and finance lease as per guidelines issued by the ICAI vide AS-19. We find that AS-19 has been prescribed by the ICAI to be followed for maintaining the account books by the companies. However, so far as the Income Tax Act is concerned, the same has no relevance. There is no provision under the Income Tax Act differentiating between Operating Lease and Finance Lease. Further the CBDT Circular No. 2 of 2001 dated 9.2.2001 reads as under:- CIRCULAR NO. 2 of 2001 Finance Lease Agreements-Effect of publication of Accounting Standards on allowability of depreciation- Reg. 9/02/2001 DEPRECIATION SECTION 32 Under the Income-tax Act, in all leasing transactions, the owner of the asset is entitled to the depreciation if the same is used in the business, under section 32 of the Income-tax Act. The ownership of the asset is determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As per the provisions of the Income Tax Act what is to be determined as to whether the agreement / transactions in question is of a lease or a loan or of a hire / purchase. The Hon ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. Vs CIT 227 ITR 172: [1997] 93 Taxman 502 (SC) has held that normally, the Accounting Standards is accepted but it cannot override the provisions of the Income Tax Act. The relevant part of the observation made by the by the hon ble Supreme Court is reproduced as under: 28. It is true that this Court has very often referred to accounting practice for ascertainment of profit made by a company or value of the assets of a company. But when the question is whether a receipt of money is taxable or not or whether certain deductions from that receipt are permissible in law or not, the question has to be decided according to the principles of law and not in accordance with accountancy practice. Accounting practice cannot override section 56 or any other provision of the Act. As was pointed out by Lord Russell in the case of B.S.C. Footwear Ltd. (supra), the Incometax Law does not march step by step in the footprints of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well of the Hon'ble High Courts are unanimous to hold that the true legal relation arising from a transaction determines the taxability of the receipt arising from the transaction under the Income Tax Act. In a case, where the terms of the transaction are embodied in a document, the true effect of a transaction may be determined from the terms of the agreement considered in the light of the surrounding circumstances. For the purpose of deciding whether a particular transaction is a lease or not, the question of intentions of the parties is to be determined and the intention has to be inferred from the circumstances of each case. As per the facts of the present case, the transaction in question may be either of a Lease or of a loan or a HirePurchase agreement. Now we will discuss separately about the respective salient features of Lease, loan and Hire-Purchase agreements. 25. No definition has been given of Lease under the Income Tax Act. However, the term lease has been defined under Section 105 of the Transfer of Property Act, 1882, but the same is in context to lease of immovable property. The said definition is reproduced as under:- a lease of immovable property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lessor over the term of the lease which generally is the economic life of the asset and acquiring ownership of the asset on termination of the lease at very low price. The third type of such like transactions is a hire-purchase agreement which in fact is lease cum purchase agreement. In Hire -purchase agreement, the hirer has option to terminate the agreement by returning the goods to the owner, but, in financial lease, the terms are so devised that the goods are passed on to the lessee without any option to the lessee to terminate the agreement at his own will by returning the goods. In hire-purchase agreement, the seller remains the owner of the goods till the last instalment of the agreed price is paid by the hirer or the hirer chooses to buy the goods before the expiry of the term of agreement. An interesting question as to whether the transaction was a hire-purchase agreement or a mere loan/finance transaction came into consideration before the Hon ble Supreme in the case of Sundaram Finance Ltd vs State Of Kerala And Another 1966 AIR 1178, 1966 SCR (2) 828 after analyzing the various terms and clauses of the agreement observed that an owner of goods who purports to conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction. c) As per clause 1.3 of deed, the lease is a non- cancelable lease and lessee is obliged to pay the rent due under the leased unaffected by any circumstance. The relevant clause is reproduced hereunder: 1.3 Term Not cancelable and Obligations Absolute, The Original Term of a Lease with respect to each item of Equipment leased or the Financing Transaction with respect to each Financed item under a Schedule shall commence on the date as specified in the Schedule (the Commencement Date ) and shall continue for the term provided in that Schedule, except in cases provided in sections 5.4,10.2 and 11. d) All cost, expenses and liability relating to the equipment including taxes, insurance and maintenance have to be borne by the assessee as per clause 2 of the agreement. e) Further the lessee is responsible, at its own expense, for the delivery of the equipment and even in installation thereof. f) Further all risks pertaining to damage, loss or destruction of the equipment is the sole responsibility of the lessee. g) Further the lessee is required to obtain all risk, insurance coverage with respect to the equipment for ensuring against any causality, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y lease transaction is to be treated as finance lease in the books of account. The assessee in this case, fully knowing the facts and as per the actual intentional between the parties relating to the nature of the transaction, out of its own will, has treated the transaction in question as finance lease. However, we have already held that said treatment by the assessee of the transaction in question as per AS-19 has no relevance so far as the claim of deductions under Income Tax Act is concerned. The contention of the Ld. Counsel for the assessee that the lessor, CISCO had been allowed depreciation on the assets by the ITAT from A.Y 2008-09 to 2010-11, thus proving that its ownership of the assets stood accepted by the Revenue, in our view, is of no consequence since the present lease agreement was entered into on 07-12-2011, relating to A.Y. 2012-13 which is a subsequent assessment year. Even otherwise on going through the orders of the ITAT in the case of CISCO it is revealed that the issue before the Co-ordinate Bench of the ITAT related only to the rate of depreciation to which the assessee was eligible on the leased assets and the question regarding entitlement of claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis which is essential to and integral part of main business of broadcasting of channels of the assessee, is to be treated as business/trading asset of the assessee eligible for claim of deduction of expenditure u/37 of the Act or as a capital asset of the assessee eligible for claim of deduction of depreciation under section 32 of the Act. Since, no arguments have been advanced on this issue by any of the parties, hence, in view of the discussion made in earlier paras of this order, we proceed to decide the next controversy treating the asset as a capital asset in the hand of the assessee. The assessee, therefore, is entitled only to claim interest paid as part of the said lease rentals as expenditure u/s 36 (1) (iii) of the Income Tax Act. The assessee, in view of the discussion made above, is not entitled to claim the principal component of alleged lease rent paid as revenue expenditure u/s 37(1) of the Act. However, the assessee is also entitled to claim depreciation on the said assets purchased from borrowed capital. Additional Ground: 29. Now the issue raised through Additional Ground of appeal before us is as to at what rate depreciation is allowable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of rectification application u/s 154 of the Act. Neither any new fact, nor any new evidence is required to be produced for adjudication of the above issue as all the relevant facts relating to the issue are already on the file. The question as to whether the assessee can take an additional ground at the appellate stage even when the same has not been raised before the lower authorities has been thoroughly discussed by the Co-ordinate Division Bench of the Tribunal at Mumbai, one of us (Judicial Member) being part of the said Bench, in the case of Pandoo P. Naig in ITA No.7089/Mum/2011 decided on 24.06.2016 [2016 (9) TMI 1062]. The Tribunal, while relying upon the decision of the Hon ble Supreme Court in the case of National Thermal Power Company Ltd. vs. CIT 229 ITR 383, Full Bench of the Hon ble Bombay High Court in the case of Ahmedabad Electricity Co. Ltd. vs. CIT (1993) 199 ITR 351, another decision of the Hon ble Bombay High Court in the case of CIT vs. CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom.) has held that the appellate authorities have jurisdiction to deal not merely with additional ground which became available on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee. 20. The facts of the case in hand are on better footing. In the case in hand, though under consistent pressure, the assessee offered the additional income for taxation in the assessment proceedings but when he was burdened with many more additions, he at the first instance during the appeal before the Ld. CIT(A), challenged the offer of additional income on the basis of statement recorded under section 133A. Even the said ground was also admitted by the Ld. CIT(A) for adjudication though finally decided against the assessee. The full bench of the Hon ble Bombay High Court in the cases of Ahmedabad Electricity Company Ltd. vs. CIT and Godavari Sugar Mills Ltd. vs. CIT by way of a common order dated 30.04.1992 (1993) 199 ITR 351 has observed that the basic purpose of an appeal procedure in an income tax matter is to ascertain the correct tax liability of the assessee in accordance with law. Therefore, at both the stages, either by the Appellate Assistant Commissioner or before the Appellate Tribunal, the appellate authority c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as, the contention of the counsel for the assessee is that STBs were classifiable under the head Computers including Computer Software as provided under Item-Ill (5) of the table of rates of depreciation in Appendix 1 to the Incometax Rules, 1962 and were eligible for depreciation @ 60%. The Ld. Counsel to demonstrate that a STB is not only in itself a computer but also is part and parcel of a larger computer system from which it gets the signals, decode the audio -video signals and pass on to the television. He in this respect has made the following written submissions: Without prejudice, it is further respectfully submitted that even in a scenario the aforesaid arrangement is treated as finance lease and the appellant is deemed to be the owner of these equipment's, then depreciation on STBs should, in our submission, be allowed to the appellant at the rate of 60%, being classifiable under the head Computers including Computer Software as provided under Item-Ill (5) of the table of rates of depreciation in Appendix 1 to the Income-tax Rules, 1962 for the reasons explained hereunder: What is STB? In this regard, it is respectfully submitted that set-top bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystem or computer network. Definition as per ICAI Attention in this regard is further invited to the study material for PEE II Information Technology Paper VI issued by the ICAI, which states as follows: The term Computer can logically be applied to any calculating machine. However, in common usage, the definition of a computer has become more limited in a contemporary usage. We now define a computer as an electronic data processing device capable of receiving input, storing sets of instructions for solving problems and generating output with high speed and accuracy. Computers are composed of switches, wires, motors, transistors and integrated circuits assembled on frames. The frames form components such as keyboards, printers, visual display units, disk drives, magnetic tape drives and central processing units. These components are wired together into a netM'ork called a computing system often called a computer. [emphasis supplied] Thus, from the above, it is evident that computers do not simplicitor mean CPU's, but any device which contain computer programmes, electronic instructions, input data and output data and performs functions including, but n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing but a computer for the Cable Industry to function in as much as set top boxes too responds to a specific set of instructions in a welldefined manner and perform input/output processing. Thus, in view of the above, it may be appreciated that set top boxes clearly qualify as computer . Without prejudice to the above, it is submitted that STB's are capable of being a computer and are also an integral part of the network of computers, such as Oracle Based Billing System and Conditional Access System (CAS) which processes the content and the individual STB usage for the subscriber. The fact that the STB is an integral part of the entire computer network responsible for transmitting signals and displaying the relevant output on the monitor screen/Television is explained diagrammatically as per Annexure 1. Further, apart from the above and even otherwise, it may be appreciated that set top boxes are functionally dependent on computers as demonstrated hereunder: It may be pertinent to note that set-top boxes comprise three separate subsystems-TV, conditional access (CA), and PC components. The TV subsystem includes a number of tuners and video decoders that are respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has always been allowed depreciation @ 60% on STB's in the preceding as well as subsequent assessment year(s) in assessments concluded under section 143(3) of the Act in respect of STB's that were owned by the assessee. Hence the principle of consistency should be followed. He in this respect has made the following submissions: Specific reliance in this regard is placed on the decision of Bangalore Bench of Tribunal in the case of Cisco Systems Capital (India) Pvt. Ltd. vs. ACIT: ITA No. 1558 of 2012. In that case, the assessee claimed depreciation @ 60% on audio visual conferencing equipment and video streaming equipment's treating them as computers. However, the assessing officer restricted the claim of depreciation to 15% treating it as plant and machinery. On objections filed before the DRP, the addition made in draft assessment order was confirmed by DRP. On appeal filed before the Tribunal against final assessment order, it was held as under: 8. Having heard both the parties and having considered the rival contentions, we find that to treat the equipment as computer or computer system, the nature of the equipment and the functions they perfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use if these input and output devices are not used. Therefore, thoueh the input and output devices may have independent existence and functionality in so far as the activity of the assessee is concerned, they do form part of the computer network system without which the computer used for the purpose of audio and video conferences would be useless. The Special Bench of the Tribunal in the case of Datacraft India Ltd., (cited supra) has held that peripheral equipments used along with computer are also part of the computer. We find that a similar issue had come up before 'B' Bench of the Tribunal at Delhi in the case of M/s.Crabtree India Ltd. vs. ACITin ITA Nos.3638 3639/Del/2008 and the Tribunal vide orders dated 25-22010 has held that video conferencing system is a computer device that accepts information in the form of digital data by way of video input i.e. with the help of web/cam or video camera and audio input with the help of microphone and the system thereafter processed the data and transfer through analogue or digital telephone network or LAN and digital gives the output data by way of audio video output. Therefore, it is a technical device whose functions are s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dance with law and our observation above. (emphasis supplied) It is pertinent to note that in the remand proceedings, the assessing officer allowed depreciation @ 60% on audio-visual equipments. Further, it is submitted that in the assessment order passed in the case of CISCO for the assessment year 2013-14, the assessing officer has accepted the fact that audio-visual equipments (Set-Top Boxes) are eligible for depreciation at the rate of 60%. The relevant findings of the assessing officer are reproduced as under: 9.1 The issue of the percentage of depreciation to be allowed in the case of audio- visual equipments had been remanded to the assessing officer for AY 2008-09 and 2009-10. This issue was discussed in detail with the authorized representatives during the passing of the remanded back order for the AY 2008-09 and 2009-10. Based on the submission of the assessee, it was concluded that the assessee is making use of these audio-visual equipments along with the computers and they form part of the integral computer system and hence it was decided that they are eligible for depreciation at 60%. Hence, the same is applicable here and the audio visual e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the earlier assessment years out of its own funds and claimed depreciation @ 60% thereon which was allowed by the tax authorities after due application of mind. In this regard, it is respectfully submitted that though principle of res-judicata does not apply to income tax proceedings, it is well settled that if there being no change either in facts or in law, as compared to the earlier and subsequent years, the position accepted/ determined by the Department needs to be followed even on the principle of consistency. Reliance in this regard is placed on the following decisions: - CIT vs. Excel Industries Ltd.: 358 ITR 295 (SC) - Radhasoami Satsang v. CIT: 193 ITR 321 (SC) - DIT (E) v. Apparel Export Promotion Council: 244 ITR 734 (Del) - CIT v. Neo Polypack (P) Ltd: 245 ITR 492 (Del.) - CIT v. Dalmia Promoters Developers (P) Ltd: 281 ITR 346 (Del.) - DIT v. Escorts Cardiac Diseases Hospital: 300 ITR 75 (Del.) - CIT v. P. KhrishnaWarrier: 208 ITR 823 (Ker) - CIT v Harishchandra Gupta 132 ITR 799 (Ori) - CIT v. SewaBharti Haryana Pradesh: 325 ITR 599 (P H) - CIT v. Rajasthan Breweries Limited.: ITA 889/2009 (Del) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the device that may be included in the term computer system . He has submitted that the STBs just pass information to the TVs, it is not a computer. He has further submitted that the STBs would not also fall within the definition of Audio-Visual Equipment upon which depreciation @ 60% has been allowed in the case of CISCO. He, therefore, has submitted that the Assessing Officer has rightly allowed the depreciation @ 15%. The Ld. DR has also relied upon the observations and findings made by the Assessing Officer on this issue in the Assessment order for AY 2014-15. The Ld. DR, has also strongly relied upon the decision of the co-ordinate Cochin Bench of the Tribunal in the case of ACIT vs Kerala Communicators Cable Limited (ITA No. 271/Cochi/2018 dated 30.4.2019), to submit that the Coordiante Bench of the Tribunal has decided the issue of depreciation @ 15% on STBs in favour of the Revenue. The Ld. DR in this respect has also made the following written submissions: Note on Depreciation allowable on Set Top Box 60% or 15% 1. It is worth noting that during the assessment proceedings for AY 2017-18 the assessee has made elaborative submissions to justify that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices from computers? Different devices now-a-days have embedded many different hardware like relays, transistors, memory chips, digital gates etc. and further they also include various software in order to execute pre-configured functions. Such devices include toasters, washing machines, microwave ovens, mobile phones, smart TVs, digital wristbands etc. 3. Therefore various courts have come with the concept of computer network. Further under Income tax act for computer or computer network 60 % depreciation is allowable. What falls under computer and computer network has been defined 3.1 ITAT Special Bench in the case of Datacraft India Ltd. (supra) had the occasion to consider the meaning of word 'computer'. After elaborately considering the Special Bench has expounded as under: Thus in order to determine whether a particular machine can be classified is a computer or not, the predominant function, usage and common parlance understanding, would have to be taken into account. To analyse further, let us take the case of a Television, the principal task of which is to deliver visuals accompanied with audio. The signals are received through the relevant networks such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se additional features are achieved using computers at the back end. The STBs installed at the premises of the users helps the operator to actualize this informational and supervisory control. However, the main function of the STBs is to deliver the audio-video feed to users. The major function of the STBs i.e. decoding and thus delivering the audit video signals to the TV sets is independent of the various servers installed at the premises of MSO (Multiple System Operator). Therefore, the main functions of the STBs do not depend on servers and other electronic devices installed in the premises of operator. This main function is not dependent on backend computers installed at the premises of operator because STBs are devices which are used even in cable television, over the air televisions etc. 4.2 Therefore STBs are neither a part of Computer Systems nor a dependent on Computers. They can be at best called as Information Appliances attached to Television sets to enjoy multiple contents. Further as per case law of DCIT Mumbai v. Data Craft India Ltd. (2010) 40 SOT 295 (Mum.) (SB) ITAT), it is already decided by Hon'ble ITAT that televisions cannot be treated as computers. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the activity of the assessee is concerned, they do form part of the computer network system without which the computer used for the purpose of audio and video conferencing would be useless However the assessee in the present case has failed to justify how STBs are on par with Audio-Video Conferencing Devices. Further, it is observed that the assessee himself has made claim of depreciation of 15% on STBs in previous years. It is worth noting that for AY 2012-13 to AY 2016-17, the assessee has always been claiming 15 % depreciation on STBs. For AY 2017-18, the assessee for the first time has claimed that it is eligible for 60 % depreciation on STBs. Therefore, it is inferred that without any proper justification assessee is claiming higher depreciation rate i.e. 60% on the same kind of STBs which is not acceptable. 6. Further, a brief note on analogy of the STBs with the mobile phone is discussed as under:- 6.1 The STB is a self-contained system installed at the premises of the customers. The functioning of the STB is analogous to the functioning of the mobile phones. 1. Like the Mobile Phone the data is transmitted and received using RF waves further th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecial Bench in the case of Datacraft India Ltd. (supra) had the occasion to consider the meaning of word 'computer1., as explained in above mentioned paras. In the case of DCIT Mumbai v. Data Craft India Ltd.(2010) 40 SOT 295 (Mum.) (SB) ITAT), the issue was related to router and switches which were part and parcel of le computer hardware and other functions were found to be integrated one. In the case of CIT v. Bses Yamuna Powers Ltd. ITA 1267 of 2010 (Delhi High Court, depreciation was allowed at the rate of 60% on computer accessories and peripherals such as printers, scanners and server as these were integral part of the computer system responsible for completing the required working. Here is not the case like that. In the case of Nestle India Ltd. v. DCIT111 TTJ 498 (ITAT Delhi) it has been held that UPS is not an integral part of computer, hence not entitled for higher rate of depreciation. Similarly, though ATM is run on the basis of computer devise, is not entitled for higher depreciation applicable to the computer. This propositions is there in the case of HDFC Bank Ltd. v. ACIT 2011 TIOL - 101 (ITAT Mumbai). Similarly, machines for designing and printing usi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited to the case of Fastway Transmissions Private Limited Para No. As per Order Applicability to Fastway 31.1 In short, Router is a hardware device that routes data (hence the name) from a local area network (LAN) to another network connection. A router acts like a coin sorting machine, allowing only authorized machines to connect to other computer systems. Most routers also keep log files about the local network activity. Now the question is whether this machine can be used independent of Computer. If yes, then it cannot be called Computer Hardware in all circumstances. It is submitted that the assessee has already established that the STB's have all the capabilities of a computer and therefore eligible for depreciation of a computer. 31.4 In view of the above discussion, we are of the considered view that router and switches can be classified as a computer Hardware when they are used along with a computer and when their functions are integrated with a 'computer' In other words, when a device is used as part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g System, Input / Output mechanism enabling them to carry out all the functions of a computer. Accordingly, it is submitted that the said judgement is not applicable to the company. 33 We prefer the view taken in the case of Samiran Majumdar (supra) over that in the case of Routermania Technologies (supra) ; With utmost respect, the Mumbai Bench had taken a narrow view on this issue, by holding that only a device which can perform logical, arithmetical or memory functions by manipulations of electronic impulses etc. is computer. It has restricted the meaning of computer only to the CPU of the computer and pulled out the input and output devices from the ambit of computer. No doubt the function of the computer, as one composite unit, is to perform logical, arithmetical or memory functions etc., but it is not only the equipment which performs such functions that can be called as computer ; All the input and output devices, as discussed above, which support in the receipt of input and outflow of the output are also part of computer. CPU alone, in our opinion, cannot be considered as synonymous to the expression 'Computer'. The function of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, he has also demonstrated from the functioning of the STBs that an STB performs function of a computer with a slightly reduced instructions set. That the system software or the device drivers are also as that in a personal computer but instructed to perform the specialized functioning meant for the STBs.; that even the application software in STBs is same and developed with the same programming language as for a computer, but for specific and specialized functions. However, the main thrust of the argument of the Ld. DR has been that just because some sort of computer functions are necessarily involved, mechanical system cannot be said to be a computer unless its principal function cannot be done without the aid of the computer function. The ld. DR relying upon the decision of Special Bench in the case of Data Craft India Limited (supra) has submitted that any machine or equipment cannot be described as computer unless its principal output or function is the result of some sort of computer function in conjunction with some non-computer functions. That since the main function of STBs is to deliver the Audio / Video feed to user, thus the major function of the STBs i.e. decodin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at back and thus being part and parcel of a larger computer system also, whereas, the Ld. DR has stressed that although the STB may be performing many functions as that of a computer, yet the primary function of the STB is decoding of the audio video signals and further delivering the audio video signals to TV sets, hence, the primary function is not of computing, hence, they cannot be said to be computers. 37. In our view, though both the ld. representatives have gone too technical regarding the specific functions of the STBs to submit whether they fall within the definition and scope of computer or not? However, in our view, neither under the provisions of Income Tax Act nor in the Appendix 1 to Income Tax Rules, 1962 (providing for rate of depreciation) any such hyper technical approach has been taken. The rate of depreciation on a capital asset under the provisions of Income Tax Act and Rules thereto has been provided taking into consideration the general or approximate age of the asset and the speed at which it depreciates. Similar type of assets irrespective of their quality, make or the material used in, are placed under the same category on which rate of depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a short span of time. The growth in technology sector is very fast and the older devices become useless and obsolete, not always due to the reason that these devices have outlived their life but due to the fact that they are required to be replaced with their new version to keep pace with the time and to compete in the market. In our view, it is not only the primary function that may be the sole criteria for deciding whether the STBs will be eligible for depreciation as applicable to the computers or not, rather the overall facts and circumstances such as the architectural design, nature of its components, the economic life of the STBs and their functions both primary and other functions, that are the deciding factors. A perusal of the Appendix 1 to Income Tax Rules,1962 reveals that the rate of depreciation provided is not item or quality specific, rather, the depreciation rate has been mentioned taking the genre of the particular type of assets and not on the basis of any specific species or to say not on the basis of differentiating nature or qualities of the assets falling within one genre/category. As noted above, different type of assets may be of different species but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) Heart lung machine (d) Cobalt Therapy Unit (e) Colour Doppler (f) SPECT Gamma Camera (g) Vascular Angiography System including Digital Subtraction Angiography (h) Ventilator used with anaesthesia apparatus (i) Magnetic Resonance Imaging System (j) Surgical Laser (k) Ventilator other than those used with anaesthesia (l) Gamma knife (m) Bone Marrow Transplant Equipment including silastic long standing intravenous catheters for chemotherapy (n) Fibre optic endoscopes including, Paediatric resectoscope/audit resectoscope, Peritoneoscopes, Arthoscope, Microlaryngoscope, Fibreoptic Flexible Nasal Pharyngo Bronchoscope, Fibreoptic Flexible Laryngo Bronchoscope, Video Laryngo Bronchoscope and Video Oesophago Gastroscope, Stroboscope, Fibreoptic Flexible Oesophago Gastroscope (o) Laparoscope (single incision) A perusal of the above details reveals that separate items though falling under the heading Life Saving Medical Equipment have been mentioned separately under different alphabetic numbers, however, the items at (n) above shows that Paediatric resetoscope and audit resectoscope have been separated w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at which these devices are evolved to new and improved versions, the component of such devices being delicate and sensitive and the functioning of such devices being a mixture of communication and computing, which is akin to that is performed by a computer, the mobile phones, in our view, cannot be placed and equated with simple plant and machinery of every type, rather, it will be appropriate to place these under the genre computers and software . So far as the argument of the Ld. DR that just because some sort of computer functions are necessarily involved, mechanical system cannot be said to be computer, we agree to that extent with this argument of the Ld. DR. Now a days with the advancement of technology, even the machines meant to perform mechanical functions such as a washing machine or a Lift have also been embedded with some sort of computer device, which gives command to said machine to perform certain specific functions; however, considering the material and components of such machines, their life, their main and associated functions and characteristics, they can be categorized either as mechanical devices, electrical devices, electronic devices or computer devices. Ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parameters laid down by the Special Bench in the case of Data Craft India (supra), STBs would form part and attachment of the computer systems. 40. Even it is an admitted fact that in the case of CISCO, the matter relating to the depreciation on audio visual conference devices had been restored by the Tribunal to the file of the assessing officer for decision a fresh on the issue as per the observations/guidelines of the tribunal. It is also an admitted fact that the Assessing officer in the set aside proceedings has granted depreciation @ 60% on those Audio-Visual equipment on the analogy that they being attached, form part of the computer systems. However, the sole contention of the Ld. DR in this respect has been that it is not proved that STBs and Audio visual conference device mentioned in the CISCO s case were similar to the STBs. However the Ld. Counsel for the assessee in this respect has submitted that a letter was written by the Assessing Officer himself to the CISCO for clarification on this point, to which the CISCO vide their letter dated 18.02.2016 replied as under: 5. Details of Depreciation claimed by us on Assets under Lease with Fastway transmission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f DPB-II) and the sworn statement recoded u/s 131 on 20.2.2014 of Sh Sushil Thakur S/o Sh. Karam Singh Thakur working as Assistant Manager (accounts) in the assessee company since 2008 (page 143 of DPB-III) wherein he had categorically stated that that usage life of STB is approx. 3-4 years only and lease tenure is also 34 years . The tenure as per lease schedule is nearly the same as economic life of the equipment. Thus, lease period is settled in such a way so that the CISCO fully recovers the investment in the asset together with interest thereon within the life span of the asset. Further, in the written submissions dated 26.2.2018, it has been submitted as under:- The physical life of the assets is not relevant here. It is the economic life span of STB which is relevant as per ITAT Special Bench decision in Indus Ind Bank and accounting standard. As per TRAI guideline and sworn statement u/s 131 of Shri Sushil Thakur the economic life span is 3 to 4 years. Even otherwise the assessee has charged depreciation of these assets @ 27.82% (page 176 of DPB 1 on STB / Headends) in its books viz-a-viz charging of depreciation on other assets @ 14%. Thus major part of the lif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omes the owner of the equipment. As observed in the assessment order, at the end of the 3 years, the security deposit so forfeited or appropriated to it is offered as income by the assessee. The equipment thus is deemed to be sold to the consumer. Thus, the agreement of the assessee with consumers in substance is a hire purchase agreement for a term of 3 years. The equipment remains on hire for 3 years with the consumer but is deemed to be sold at the end of 3 years. Here, the interesting point is that when at the end of 3 years, the equipment is sold and the receipt / sale price along with the hire charges received from the consumer during the period already offered to the income tax, how can the deduction of corresponding investment / expenditure incurred for the purchase of such equipment can be postponed beyond such date of sale of equipment? The income under the Income Tax Act is the resultant profit after deduction of the investment / expenditure incurred from the total sale price received / receivable. Therefore, when the total receipt relating to the equipment either in the shape of hire charges or sale price in the shape of security deposit appropriated at the end of 3 yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ₹ 1 crores. On 1.8.2010 it had entered into an IRU agreement with CBSL and as per the said agreement it was given fibre links on lease on a route of 2000 kms for a period of five years commencing from 1.4.2010. A payment of ₹ 12 crores was made for the same. This payment was treated as preliminary expenses by the assessee and 1/5th of the same was claimed as deduction u/s 35D of the Act. The A.O. denied the same to the assessee for the following reasons: 1) CBSL had acquired the user rights of these fibre links from a company HFCL Infotel Ltd.(HITL) and as per the terms of agreement entered into by CBSL with HITL only user rights of the fibre links could be given by CBSL to any other concern. As per the A.O. the leasing out agreement was, therefore, void ab initio and hence any transaction entered into in pursuance to the same was not a business transaction and the assessee, therefore, could not be claim any benefit out of this transaction. 2) That this was not even normal lease agreement since no service tax had been paid by the assessee which it was bound to pay if it was a lease agreement. 3) That it was only a pay out to CBSL as part of consideration of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, disallowance of interest @ 14% amounting ₹ 28,68,096/- was made u/s 36(l)(iii) of the Act. 51. The CIT(A) confirmed the disallowance so made by the Assessing Officer. 52. Before us, the Ld. counsel for assessee has contended that it was possessed of sufficient own funds for the purpose of making the impugned advance and, therefore, no disallowance u/s 36(1)(iii) of the Act was warranted. It was pointed out that the assessee company had reserves and surplus of ₹ 107.36 crores and share capital of ₹ 105 crores, while advance given to M/s G.S. Majestic was ₹ 3.20 crores only out of which a sum of ₹ 2 crores had been received back. The Ld. counsel for assessee has contended that in the light of the above facts, no disallowance u/s 36(1)(iii) of the Act was warranted. He in this respect has relied on the decision of the Hon'ble Jurisdictional High Court in the case of M/s Bright Enterprises Pvt. Ltd., reported in 381 ITR 160. 53. The Ld. DR, on the other hand, has relied upon the orders of the lower authorities. 54. We have heard the rival contentions. We find merit in the contention of the Ld. counsel for assessee. The Ld. Counsel has de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -3, Gurgaon is against law and facts on the file in as much as he was further not justified to disallow/restrict depreciation amounting to ₹ 91,28,670/- in respect of certain assets which were allegedly not put to use during the relevant period or were allegedly put to use after September, 2011. 3. That the order dated 29.12.2018 passed u/s 250(6) of the Act by the Learned Commissioner of Income-Tax (Appeals) -3, Gurgaon is against law and facts on the file in as much as he was not justified to decide the appeal on the basis of principles of natural justice. 4. That the order dated 29.12.2018 passed u/s 250(6) of the Act by the Learned Commissioner of Income-Tax (Appeals) -3, Gurgaon is against law and facts on the file in as much as he has gravely erred in adjudicating the grounds of appeal relating to the appeal. 5. That the appellant company reserves its rights to raise any additional gads of appeal. 57. Ground No.1 : A perusal of above reproduced ground No.1 reveals that the issue taken in this ground is identical to that has been adjudicated vide ground Nos.2 to 5 of ITA No.547/Chd/2017 as above. The only differentiating fact pointed out by both the learned r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 147, assessee cannot seek a review of concluded item, unconnected with escapement of income for purpose of computation of escaped income. However, we note that in this case, the claim of the assessee is directly related and connected with the issue on which the A.O. has reopened the assessment. The case of the A.O. has been that the assessee has claimed depreciation at a higher rate i.e. @ 35% as against its entitlement of 15% whereas the assessee in the return filed in response to notice u/s 148 of the Act has claimed the depreciation @ 60%. The very issue of rate of depreciation was the subject matter of the proceedings and under the circumstances, in our view, the assessee had got right to put his stance of application of higher rate on the said issue as against of lower rate proposed by the AO. However, we are of the further view that even the above proposition laid down by the Hon ble Supreme Court otherwise will not be applicable as such in this case because of the direct statutory provisions on the issue involved of allowability of depreciation. Explanation 5 to section 32(1) Inserted by the Finance Act, 2001, w.e.f. 1-4-2002 reads as under: Explanation 5.-Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 65 (Gujarat) and in the case of Dr. Mrs. Sudha S. Trivedi Vs ITO 318 ITR 356 (Mumbai- Tribunal). 61. In the case of Bhagwati Sponge (P.) Ltd. (supra), the co- ordinate Kolkata Bench of the tribunal has observed, With regard to the claims made in the revised return, we find that the Learned CITA had not considered the same in view of the fact that the revised return was filed by the assessee beyond the prescribed period u/s 139(5) of the act. The Learned CITA had applied the decision of Goetze India Ltd. supra and accordingly rejected the claim of the assessee. But we find from the last paragraph of the decision of Goetze India Ltd,supra, wherein the Hon'ble Apex Court observed that revised return though filed belatedly could be considered by the Appellate Authority and hence we hold that the assessee is entitled to make its claim by way of revised return. It has been further observed, when there is a mandate to grant depreciation to the assessee whether or not such claim is made by the assessee in the return in terms of Explanation 5, it would be just and fair that the same mandate would get automatically extended to the claim of additional depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer made the assessment without referring to those documents. In first appeal, the Commissioner of Income-tax(Appeals) allowed the claim of the assessee which was the second appeal before the Tribunal. When the matter was again taken before the Hon'ble High Court, their Lord-ships held that as per Form 10CCB filed by the assessee in the assessment proceedings, the claim of deduction made by the assessee was admissible. The court held that the assessee was not making any fresh claim and had duly furnished and submitted the Form for claiming deduction under sec.80IB and in such circumstances, there was no requirement of filing any revised return. In the present case also, the assessee has made a claim for depreciation on WDV method but the rate chosen was not a correct one. The assessee asked for adopting the correct rate which is in fact, was only a prayer to rectify a mistake apparent on record. The assessee was not claiming any fresh claim before the assessing authority. Therefore, the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra) does not apply to the present case. 19. The above position is fortified by the order of the ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. 64. Further in the case of Goetze India Ltd vs CIT (supra) the issue that was settled by the Hon ble Supreme Court was limited to the bar on the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return , however, the Hon ble Supreme Court made it clear that it does not impinge on the power of the Income-Tax Appellate Tribunal under section 254 of the Income-tax Act, 1961 as held by the Apex Court in the case of NTPC Ltd. (supra). Applying the same ratio, the bar, if any, to entertain a counter claim by the assessee as laid down by the hon ble supreme court in the case of Sun Engineering (supra) is on the powers of the Assessing Officer, however, in our humble view, that does not impinge or curtail the Powers of the Tribunal and higher authorities to entertain an Additional/ fresh claim based on the facts on the file in the light of proposition laid down by the hon ble supreme court in the case of NTPC Ltd. (supra) and other case laws ( supra) as discussed in earlier paras (Para No. 31 32 above) of this order. In view of the above discussion, we hold that the Assessing Officer as well as the Ld. CIT(A) were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of appeal of the appellant cannot be accepted and hence the addition made by the AO on this account is confirmed. 66. The Ld. Counsel for the assessee has submitted that though the assets may not be put to use as alleged above during the relevant period, however, the assets were ready to use. As per our observations as noted above, it has been held that the transaction of acquiring of STBs by the assessee was a loan/financial transaction meaning thereby the STBs were purchased by the assessee to put to use in its business. As further observed as above, the STBs are further given to the consumers on hire purchase agreement which are deemed to be sold to the consumers after three years from the date of delivery/installation. Under the circumstances, it can be safely concluded that the assessee had put the STBs in its business from the date it acquired/purchased the same. In view of this, the assessee is entitled to deprecation irrespective of the date of installation of STBs in the premises of the consumers. This issue is accordingly allowed in favour of the assessee. 67. Ground Nos.3 to 5: The above grounds are general in nature. In view of our findings given abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case. 9. That the Ld. CIT(A) has erred in confirming the disallowance of ₹ 2,40,000/- on account of disallowance u/s 35D of the Act ignoring the fact that in the earlier year s the said deduction have been allowed by the department in the order passed u/s 143(3) for the Assessment ear 2012-13. 10. That the Ld. CIT(A) has erred in confirming the disallowance of interest amounting to ₹ 80,28,714/- and ₹ 20,06,322/- u/s 36(1)(iii) overlooking the fact that there was huge surplus in the shape of share capital and reserves and surplus and as per binding judgment of Hon ble Supreme Court and Hon ble Punjab Haryana High Court, no such disallowance is called for. 11. That the Ld. CIT(A) has erred in confirming the disallowance u/s 14A amounting to ₹ 63,38,690/- specially, when thee was no exempt income and, as such, the disallowance u/s 14A is wholly unjustified. 12. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 69. Apart from the above grounds of appeal, the assessee has taken the following additional grounds of appeal : Without prejudice, the assessing officer e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground Nos. 3 to 5 of ITA No.547/Chd/2017 and it has been held that the said lease rentals in fact were repayment of the loan amount. The assessee, therefore, was not required to deduct the TDS on the principal component of the loan amount. The assessee, however, has deducted TDS on the said component also, which under the circumstances, is to be considered as deduction of TDS towards interest component. The issued is accordingly restored to the file of the Assessing Officer for decision a fresh as per our observations made above. 74. Ground No.9: The above ground is relating to the disallowance of expenditure claimed u/s 35D of the Act, which is identical to ground No.6 of the assessee s appeal; ITA No.547/Chd/2017 and our findings and directions given thereupon will apply mutatis mutandis to this ground also. 75. Ground No. 10: The above ground is relating to the disallowance of expenditure claimed u/s 36(1)(iii) of the Act, which is identical to ground No.8 of the assessee s appeal; ITA No.547/Chd/2017 and the facts being identical and the assessee being possessed of sufficient funds to meet the advance given, hence, our findings and directions given above on ground No.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n making an addition of ₹ 4,21,870/- as alleged unexplained expenditure. 5. That he was further not justified to uphold the action of the Learned Assessing Officer in disallowing a sum of ₹ 61,40,984/- made as a disallowance u/s 14A of the Income Tax Act, 1961. 79. Apart from the above grounds of appeal, the assessee has taken the following additional grounds of appeal : Without prejudice, the assessing officer erred in not allowing depreciation on Set top boxes at the eligible rate of 60% 80. Ground Nos. 1,2 and Additional Ground: Ground Nos. 1, 2 and Additional Ground of this appeal are identical to ground Nos.3 to 5 and Additional Ground in assessee s appeal for assessment year 2013-14 in ITA No.547/Chd/2017, hence our findings given above while adjudicating ground Nos.3 to 5 and additional ground in ITA No.547/Chd/2017 will apply mutatis mutandis to these grounds also. 81. Ground No.3: The above ground of appeal is identical to ground No.6 in ITA NO.547/Chd/2017, hence our findings and directions given above in ITA No.547/Chd/2017 will apply mutatis mutandis to this ground also. 82. Ground No.4: The above ground is not pressed. 83. Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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