$~54
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

                                               Decided on 22nd April, 2015

+     ITA 273/2015 & C.M. No. 7357/2015 (Delay)

      COMMISSIONER OF INCOME TAX-I                      ..... Appellant

                         Through     Mr. Rohit Madan, Mr. Ruchir Bhatia
                                     and Mr. P Roy Chaudhury, Advs.

                         Versus

      M/S CAIRS COMPUTER AIDED INFORMATION & SERVICES
      PVT LTD                            ..... Respondent

                         Through     None

CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.K.GAUBA

MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)

%

1.    The revenue is aggrieved by the order of the Income Tax Appellate
Tribunal (ITAT). It contends that the assessee's claim for depreciation for
assessment year (AY) 2009-10 was, in the circumstances of the case,
wrongly permitted.     The revenue's appeal against the order of the
CIT(Appeals) was rejected by the impugned order.
2.    The assessee provides online lottery services on behalf of Nagaland
Government and for this purpose it had appointed distributors and sub-









ITA 273/2015                                                         Page 1
distributors. The business model, inter alia, included provision of gaming
solution which enabled the customer to access the scheme. In its return for
AY 2008-09, the assessee claimed depreciation to the extent of
72,16,610/-. The AO disallowed this on the ground that the assessee was
unable to demonstrate that the machinery claimed to have been used by it
was in fact owned or acquired by assessee for its business. The assessee's
contention was that the machinery was provided to sub-distributor at that
site for use by the customers.
3.    The assessee's appeal to the CIT (Appeals) was allowed, who took
note, inter alia, of two facts i.e. for AY 2006-07 and 2007-08, depreciation
had been allowed in scrutiny assessment and that for AY 2009-10, in the
reply to queries under Section 133(6), one of the assessee's sub-distributors
had confirmed that the machinery on the site was provided. The revenue's
appeal was rejected by the ITAT. The impugned order holds as follows :

      "6. We have heard rival contentions and perused the material
      available on record, Following facts clearly emerge :
             a.     The assets qua which the depreciation is
             claimed were not purchased during this year, but in
             earlier years. Purchases and depreciation thereon
             have been allowed in earlier years.
             b.     It is undisputed that they were purchased in
             earlier years i.e. in A.Y. 2006-07 and 2007-08 besides
             depreciation was allowed and the assessments were
             framed u/s 143(3).
             c.     The impugned assets became part of the block
             of assets and any question in subsequent year about
             the ownership is meaning less, therefore, we are
             unable to sustain the finding of the assessing officer
             that assets were not owned by the assessee.




ITA 273/2015                                                          Page 2
      6.1. Adverting to the issue about user of impugned assets
      towards the assessee's business of online lottery the assessee
      has demonstrated the use of the assets along with the sub-
      distributor. The subsequent upgradation of the software and
      machinery etc. though may be with the sub distributor the fact
      remains that the assessee's assets were also used. It is not the
      case of the revenue that the upgradation expenditure was not
      incurred by the sub-distributor and it has been claimed by the
      assessee. This is so because in that case assessing officer ought
      to have disallowed it. Under these circumstances we are of the
      view that the impugned assets were used for the purpose of the
      assessee's business, therefore, depreciation is to be allowed.
      We find force in the argument of ld. Counsel for the assessee
      that assuming worst against the assessee the assets being the
      part of the existing block of assets on such presumption also
      become assets already part of the block of assets kept in
      readiness for use of the business, the depreciation is to be
      allowed. In view of above we find no merit in revenue's
      appeals."






4.    This Court has considered the submissions. It is a matter of record
that for AY 2006-07 and 2007-08, the assessments were completed under
Section 143(3) after due enquiries were conducted by the AO. There is
nothing on the record to suggest that those were either erroneous or based on
premises which did not disclose relevant details. The revenue's attempt in
reopening the assessment of 2009-10, by relying upon statement of one of
the sub-distributors also failed because the said concern, M/s Best &
Company, in fact confirmed the assessee's contention. Given the factual
nature of these findings, the Court is of the opinion that no substantial
question of law arises for consideration.
5.    For the previous years, we have affirmed the order of the ITAT (in
ITA No. 238/2015 Commissioner of Income Tax-I vs. M/s Cairs Computer




ITA 273/2015                                                          Page 3
Aided Information & Services Pvt. Ltd. Decided on 13.04.2015). In view of
the said order, no question of law arises to be determined.
6.    The appeal and application are consequently dismissed.


                                                   S. RAVINDRA BHAT, J



                                                              R.K.GAUBA, J
APRIL 22, 2015
mr




ITA 273/2015                                                         Page 4