In the case of Assistant Commissioner of Income Tax vs M/s. Caparo Engineering India Pvt. Ltd, Delhi bench of Income Tax Appellate Tribunal ( ITAT ) recently ruled that UPS is also an integral part of a computer and accordingly allowed 60 percent of depreciation on the same.
Assessee Company in the instant case engaged in the activity of purchase of old or used machinery and accessories through international trade with the UK. The Assessee was of the view that instead of investing heavy amount for buying new machines, it had decided to purchase the similar used machines. During the relevant financial year, the Assessee Company had imported certain machines from the UK.
During the assessment year, the Assessee Company had purchased a UPS for Rs. 4,93,110 and had claimed thereon depreciation at 60 percent for Rs.2,95,860. While completing the Assessment proceedings the Assessing Officer (AO) has allowed only 15 percent instead of 60 percent claimed by the Assessee as depreciation. The AO held that rule 5 of the Income Tax rules apply only to computer and computer software which alone are entitled to depreciation at 60% and the same rate cannot be applied to UPS. Further, he held that UPS is not part of the computer and accordingly he made the addition of Rs. 2,21,895.
On appeal, the CIT(A) granted relief to the Assessee by holding the fact that wherein computer accessories or peripherals like printers, scanners, server, UPS etc. have been held to be an integral part of the computer system and therefore Assessee in the present case entitled to depreciation at 60%.
Thereafter, the Revenue approached the Tribunal on appeal against the order passed by the authority.
While dismissing the appeal, the Tribunal bench comprising of Judicial Member Amit Shukla and Accountant Member Prashant Maharishi also upheld the order passed by the CIT(A) by holding that “whether computer accessories/ peripherals like printers, scanners, server, UPS etc., the rate of depreciation allowable is at 60% as held by the Hon’ble Jurisdictional High Court and catena of other judgments”.
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