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Issues involved: The judgment involves the issues of claim of loss on sale of repossessed assets u/s 36(1)(vii) read with S. 36(2) of the I.T.Act and the issue of depreciation claimed by the assessee on computers.
Claim of Loss on Sale of Repossessed Assets: The appeals filed by the revenue challenged the deletion of additions made by the AO on account of disallowance of loss on sale of repossessed assets. The assessee argued that the repossessed assets were never intended to be held as its own assets, but were sold as part of its core business, constituting a deductible business loss. The AO, however, relied on a High Court decision and disallowed the claim. The CIT(A) held that the deduction claimed by the assessee was admissible u/s 36 of the I.T.Act as it constituted a write off of bad debts, not a trading loss. The CIT(A) distinguished the High Court decision and deleted the additions, which was upheld by the Tribunal. Depreciation Claim on Computers: The assessee claimed depreciation @ 60% on computer accessories and peripherals, which was disallowed by the AO as per the I.T.Rules specifying depreciation only for computers and computer software at 60%. The CIT(A) allowed the depreciation @ 60% based on a Kolkata ITAT decision treating computer accessories and peripherals as part and parcel of computers. The Tribunal upheld the CIT(A)'s decision, stating that the depreciation claim was rightly allowed. In conclusion, the Tribunal dismissed the appeals of the Revenue, upholding the CIT(A)'s orders regarding both the claim of loss on sale of repossessed assets and the depreciation claim on computers.
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