2018 (4) TMI 1871 - AT - Income Tax

Depreciation on photo-copy machines - @ 15% or 60% - HELD THAT - We find that the assessee has separately shown photo-copiers and has claimed depreciation @ 15% only. This can be seen from the schedule of fixed assets and depreciation exhibited. The impugned assets on which the dispute arose are multifaceted printers having dimensional functions but at the same time, the impugned assets are printers and are part and parcel of the computer system. The Hon ble High Court of Delhi in the case of BSES Yamuna Powers Ltd. 2010 (8) TMI 58 - DELHI HIGH COURT has held that computer accessories and peripherals such as printers, scanners and server, etc., form an integral part of computer system and, hence, they are entitled to depreciation at higher rate of 60%. Thus we direct the A.O. to allow depreciation @ 60%. - Decided in favour of assessee.

Summary

Issues involved:
1. Dispute over denial of higher depreciation on computer peripherals.
2. Applicability of depreciation rates on specific assets.

Analysis:

Issue 1: Dispute over denial of higher depreciation on computer peripherals
The case involved two separate appeals by the Assessee against orders of the Ld. CIT(A)-3, Vadodara for A.Ys. 2012-13 & 2013-14. The dispute centered around the denial of higher depreciation on computer peripherals claimed by the Assessee in their business of Xerox, scanning, and binding services. The Assessing Officer (A.O.) contended that the applicable rate of depreciation was 15%, resulting in excess depreciation of ?29,35,153. The Assessee argued that the assets in question were computer peripherals, warranting a higher depreciation rate of 60%.

Issue 2: Applicability of depreciation rates on specific assets
The dispute was resolved by examining the nature of the assets in question. The lower authorities allowed higher depreciation on certain items but disallowed it on others based on the nomenclature used in the books of accounts. The Tribunal observed that the assets were multifaceted printers integral to the computer system. Citing a precedent from the Hon’ble High Court of Delhi, it was established that computer accessories and peripherals, including printers, scanners, and servers, are entitled to a higher depreciation rate of 60%. Consequently, the Tribunal directed the A.O. to allow depreciation at 60% on the disputed assets, leading to the allowance of both appeals by the Assessee.

In conclusion, the judgment clarified the distinction between general assets and computer peripherals, emphasizing the integral role of certain assets in the computer system to warrant a higher depreciation rate. The decision aligned with established legal precedents and upheld the Assessee's claim for higher depreciation on the identified assets.