2016 (1) TMI 1127 - AT - Income Tax

Claim of depreciation on electrical equipments - Held that - We have heard both the parties and carefully perused the materials available on record. We find merit in the contention of the Ld. A.R. Control panel board and Transformers are more or less items either falling in the category of Instrumentation and monitoring systems as stated in the depreciation schedule in New Appendix-IIII-( 8)(ix)B of Income Tax Rules or Electrical equipment as stated in the New Appendix-I-III-(8)(ix)E under the head Electrical Equipments taking into account of the principles of EJUSDEM GENERIS. Therefore we hereby direct the Ld. Assessing Officer to grant depreciation @ 80% to the assessee on these above stated items. Claim of depreciation on computers and computer peripherals - Held that - Only computer peripherals can be at the most considered as computers for the purpose of claiming depreciation at the rate prescribed in New Appendix-III(5) of the Income Tax Rules. All other items fall in the category mentioned in New Appendix-III(1) of the Income Tax Rules as held by the Ld. CIT (A). Therefore we do not find any reason to interfere with the order of the Ld. CIT (A) on this issue who has elaborately considered this matter in his order.

Summary

Issues involved:
1. Disallowance of depreciation on electrical equipments.
2. Disallowance of depreciation on computers and computer peripherals.

Issue 1: Disallowance of depreciation on electrical equipments:
The Assessee claimed 80% depreciation on "control panel board and transformer" as electrical equipments under specific categories in the depreciation table. However, the Assessing Officer disallowed the claim and granted depreciation at 15% as machinery and plant. The CIT (A) upheld this decision, stating that the items did not qualify for 80% depreciation as they were not classified under the specified category. The Appellant argued that the items could be classified under the relevant categories for higher depreciation. The Tribunal found merit in the Appellant's contention, applying the principle of EJUSDEM GENERIS, and directed the Assessing Officer to grant depreciation at 80% on the items.

Issue 2: Disallowance of depreciation on computers and computer peripherals:
The Assessee claimed depreciation at 60% on various items like scanners, routers, and modems, treating them as computers under specific categories in the depreciation table. However, the Assessing Officer allowed depreciation at 15% for most items, citing discrepancies in the classification and description of the machines. The CIT (A) allowed 60% depreciation on certain items but restricted others to 15%, emphasizing that the machines were not solely computers but part of plant and machinery. The Tribunal concurred with the CIT (A), stating that only computer peripherals could be considered as computers for depreciation purposes, while other items fell under plant and machinery categories. Therefore, the Tribunal upheld the CIT (A)'s decision on this issue.

In conclusion, the Tribunal partly allowed the Assessee's appeal, directing the Assessing Officer to grant higher depreciation on specific electrical equipments and confirming the depreciation rates on computers and peripherals as determined by the CIT (A).