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2013 (11) TMI 131 - AT - Income TaxDepreciation on UPS - integral part of the computer Held that - Following Deputy CIT v. Datacraft India Ltd 2010 (7) TMI 642 - ITAT, MUMBAI - The expression computer has not been defined in the Income-tax Act or the Rules and hence any device, which is essential to run the computer, has to be treated as part of the computer and entitled to the same rate of depreciation as that of the computer There were frequent power failures in Ambarnath and in order to run the computer effectively UPS is an essential ingredient - Decided in favour of assessee.
Issues:
1. Whether UPS can be considered an integral part of a computer for the purpose of claiming depreciation. Analysis: The case involved an appeal by an assessee against the order of the Commissioner of Income-tax (Appeals) regarding the assessment year 2008-09. The only issue in dispute was whether the UPS (uninterrupted power supply) used by the company, engaged in the business of pneumatic conveying systems, should be treated as an integral part of the computer for claiming depreciation. The assessee argued that the UPS was essential due to frequent power failures at their location, Ambarnath, ensuring uninterrupted technical operations. The Income-tax Appellate Tribunal "D" Special Bench, Mumbai, had previously observed that any device essential to run a computer should be considered part of the computer for depreciation purposes. The assessee contended that the UPS was necessary for running the computer effectively in the face of power failures, a fact not disputed by the Assessing Officer. It was noted that the UPS was solely used for connecting to the computer and was crucial for uninterrupted power supply. Considering the circumstances and the precedent set by the Special Bench, it was held that the assessee was entitled to claim depreciation on the UPS at the same rate as that available for computers. Consequently, the Assessing Officer was directed to allow depreciation on the UPS accordingly. In conclusion, the appeal filed by the assessee was treated as allowed for statistical purposes, with the order being pronounced in open court on September 18, 2012.
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