2014 (9) TMI 1105 - AT - Income Tax

Depreciation on Point of Sale (POS) systems - Held that - POS in itself functions like a computer as against any peripheral devices. This ground of appeal is accordingly decided in favour of the appellant in the aforesaid terms and the assessing officer is directed to allow deprecation @ 60% on such POS wherein issue in dispute has been decided in favor of the assessee and against the Revenue, no interference is called for in the valid and reasoned order passed by the Ld. First Appellate. See Commissioner of Income Tax vs. Rajdhani Powers Ltd. 2015 (11) TMI 927 - ITAT DELHI

Summary

Issues Involved:
Depreciation on Point of Sale (POS) systems - Whether POS systems are computers eligible for depreciation at 60% or should be considered as computer accessories and peripherals for depreciation at a lower rate.

Analysis:
The appeal was filed by the Revenue against the order passed by the Ld. CIT(A)-V, New Delhi relevant to assessment year 2003-04. The primary issue raised in the appeal was whether Point of Sale (POS) systems should be considered as computers eligible for depreciation at 60% or as computer accessories and peripherals for depreciation at a lower rate. The Assessing Officer disallowed the claim of depreciation at 60% on POS systems, treating them as computer accessories and peripherals, and allowed depreciation at 25% instead. The Ld. First Appellate Authority, in the impugned order, decided the issue in favor of the assessee by considering the POS systems as computers eligible for depreciation at 60%. The authority relied on the technical specifications of the POS systems, which were found to be similar to computers, supporting data processing, storage, and other functions. The authority also referenced a decision of the Delhi High Court that allowed depreciation at 60% on computer accessories and peripherals forming an integral part of the computer system.

The Ld. First Appellate Authority found that the POS systems functioned like computers themselves, rather than peripheral devices, and hence, should be categorized as computers eligible for depreciation at 60%. The authority's decision was influenced by the technical specifications of the POS systems, including processor, memory, support for operating systems, data sharing capabilities, and USB ports. The authority's decision was also supported by a previous decision of the Delhi High Court that allowed depreciation at 60% on computer accessories and peripherals forming an integral part of the computer system.

Based on the findings and reasoning of the Ld. First Appellate Authority, which aligned with the decision of the Hon'ble High Court of Delhi in a similar case, the appeal filed by the Revenue was dismissed. The Tribunal affirmed the order of the Ld. CIT(A) and upheld the decision in favor of the assessee, concluding that no interference was warranted in the reasoned order passed by the Ld. First Appellate Authority. Consequently, the appeal filed by the Revenue was dismissed, and the order was pronounced in the Open Court on 01/9/2014.