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2016 (7) TMI 728 - AT - Income TaxAdditional depreciation on ATMs - whether Automated Teller Machines are substantially in the nature of computers - Held that - Similar issue on identical facts has been decided by the Coordinate Bench of the Tribunal in assessees own case for earlier assessment years, we direct the Assessing Officer to allow depreciation @ 60% to ATMs subject to recomputation of WDV for each assessment year. Accordingly, the ground raised by the assessee is allowed subject to the above for both the assessment years. Depreciation on UPS at the rate of 60% allowed Disallowance made under section 36(1)(viia) - Held that - As decided in assessee s own case for the assessment years 2005-06, 2007-08 & 2010-11, and hold that the allowable deduction u/s.36(I)(viia) of the Act is @ 10% of the total average aggregate advances made by the rural branches and not on the incremental average aggregate advances, as contemplated by the Assessing Officer. The assessee s appeals in this regard are allowed
Issues Involved:
1. Validity of reopening assessments under section 147 of the Income Tax Act. 2. Eligibility for higher depreciation rate on Automated Teller Machines (ATMs). 3. Eligibility for higher depreciation rate on Uninterruptible Power Supplies (UPS). 4. Disallowance under section 36(1)(viia) of the Income Tax Act. Detailed Analysis: 1. Validity of Reopening Assessments under Section 147: The assessee challenged the reopening of assessments for the years 2006-07 and 2008-09 under section 147, arguing that it was without jurisdiction and thus invalid. The CIT(A) confirmed the Assessing Officer's (AO) decision to reopen the assessments, based on the reasons recorded and relevant judicial pronouncements. The Tribunal upheld the CIT(A)'s decision, noting that similar issues on identical facts had been previously decided in the assessee's own case for earlier assessment years, confirming the reopening of assessments. 2. Eligibility for Higher Depreciation Rate on ATMs: The assessee claimed a depreciation rate of 60% for ATMs, treating them as computers, while the AO allowed only 15%, treating them as normal plant and machinery. The CIT(A) upheld the AO's decision. However, the Tribunal, following its earlier decision in the assessee's own case and the Delhi Tribunal's decision in DCIT v. Global Trust Bank Limited, held that ATMs, being integral to computer systems, are eligible for a 60% depreciation rate. The Tribunal directed the AO to allow the higher depreciation rate, subject to recomputation of the Written Down Value (WDV) for each assessment year. 3. Eligibility for Higher Depreciation Rate on UPS: The AO restricted the depreciation on UPS to 15%, treating them as non-computer equipment. The CIT(A), following the decision in the assessee's own case for earlier years, directed the AO to allow a 60% depreciation rate, treating UPS as part of computer systems. The Tribunal upheld the CIT(A)'s decision, noting consistent rulings in favor of treating UPS as part of computer hardware eligible for 60% depreciation, including decisions by the Delhi High Court and various ITAT benches. 4. Disallowance under Section 36(1)(viia): The AO disallowed the assessee's claim under section 36(1)(viia), interpreting that the deduction should be on incremental advances by rural branches, not on the aggregate average advances. The CIT(A), following the ITAT's decision in Lakshmi Vilas Bank Ltd. v. ACIT, allowed the deduction on the aggregate average advances. The Tribunal upheld the CIT(A)'s decision, confirming that the deduction should be on the total average aggregate advances made by rural branches, not just the incremental advances. Conclusion: The appeals filed by the assessee for the assessment years 2006-07 and 2008-09 were partly allowed, granting higher depreciation rates for ATMs and UPS. The appeals filed by the Revenue for the same assessment years were dismissed, upholding the CIT(A)'s decisions on the validity of reopening assessments and the disallowance under section 36(1)(viia). The Tribunal's decisions were consistent with prior rulings in the assessee's own case and relevant judicial precedents.
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