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2014 (1) TMI 1888 - AT - Income TaxDepreciation on UPS - @ 60% OR 15% - Whether UPS is an electrical appliance for temporary supply of electricity therefore is in nature of plant and machinery? - Depreciation on ATM - @ 60% OR 15% - ATM is a cash dispensing machine with a projector and therefore is in nature of plant and machinery - depreciation on software - HELD THAT - As decided in M/S. SARASWAT INFOTECH LTD. 2013 (1) TMI 861 - BOMBAY HIGH COURT UPS was held to be the part of the computer system and depreciation at 60% was allowed. Similarly so far as ATMs are concerned the Tribunal on finding of fact concluded that ATM cannot function without the help of computer and would be a part of the computer used in the banking industry.ATM was a computer equipment and depreciation 60% was allowed. So far as the use of software is concerned the Tribunal records a fact that the evidence of the use of the software on 31/3/2008 was produced before the Tribunal. Thus the Tribunal held that depreciation @ 30% on software was rightly claimed. - Decided against revenue.
Issues:
Depreciation rate on UPS, Depreciation rate on ATM, Depreciation on purchase of software Depreciation rate on UPS: The department appealed the CIT(A) order regarding the depreciation rate on UPS, arguing it should be 15% as UPS is considered plant and machinery. The AR contended that a similar issue was decided in favor of the assessee by the Hon'ble Bombay High Court previously. The Tribunal upheld the depreciation rate of 60% on UPS, citing it as an integral part of the computer system to prevent data loss due to power fluctuations. The decision was supported by a Delhi High Court case ruling UPS as part of the computer system. Depreciation rate on ATM: The department also challenged the CIT(A) decision on the depreciation rate for ATMs, advocating for a 15% rate as ATMs are part of plant and machinery. The Tribunal, however, affirmed the 60% depreciation rate on ATMs, considering them essential for banking operations and reliant on computers. A Delhi Tribunal case was referenced to support the classification of ATMs as computer equipment eligible for higher depreciation. Depreciation on purchase of software: Regarding the depreciation on software purchase, the department disputed the CIT(A) ruling due to the failure of the assessee to prove software usage by a specific date. The Tribunal upheld the 30% depreciation claim on software, noting evidence of software usage provided during the proceedings. The decision was based on factual findings, and the Tribunal found no reason to question the judgment. The Tribunal dismissed the department's appeal, aligning with the decisions of the Hon'ble Bombay High Court and the ITAT Mumbai on similar issues. The Tribunal emphasized the factual findings supporting the depreciation rates on UPS, ATM, and software, leading to the rejection of the department's grounds. The appeal was ultimately dismissed, maintaining the depreciation rates as determined previously.
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