2018 (5) TMI 636 - HC - Income Tax

Rate of depreciation on printers - to be allowed at normal rate or at enhance rate @60% - whether the printers would be included within the term computer as contained in old Appendix I Clause III(5)? - entry in the depreciation table specifically says, computers including computer software - Held that - It is a claim for depreciation and if two views are possible, one which is in favour of the assessee should be preferred. Going by the usage of the equipment purchased by the petitioner, we have to take a decision. In paragraph 6 of the order passed by the Commissioner of Income Tax (Appeals), it has been stated that it can be inferred that the machines computer printers under consideration can either be called computers-printers, since a lot of independent functions done by the computers are done by these printers and they can be called an integral part of the computer system. Therefore, the Commissioner of Income Tax (Appeals) came to the conclusion that it should be treated as part of the computer and an accessory to the Computer. This factual finding cannot be dislodged by us, as no material has been placed by the Revenue before this Court. The claim by the assessee at 60% is acceptable. Thus, for the above reasons, we find that since in respect of percentage on depreciation claimed in respect of the very same machinery has been permitted for the earlier years and affirmed by the Division Bench, the the Revenue cannot take a difference stand. - Decided in favour of assessee.

Summary

Issues:
- Whether printers are eligible for 60% depreciation as computers under the Income Tax Act, 1961.

Analysis:
1. The case involved appeals by the Revenue against the orders of the Income Tax Appellate Tribunal regarding the eligibility of printers for 60% depreciation. The Tribunal upheld the assessee's claim, considering printers as part of the computer system.

2. The assessing officer initially denied the depreciation claim, arguing that the high-value printers used by the assessee were not standard printers but specialized equipment for large-scale printing, not integral to a computer. However, the Commissioner of Income Tax (Appeals) allowed the claim after a video demonstration and technical manual review, concluding printers were part of the computer system.

3. The Tribunal, following precedents, affirmed that printers should be treated as computers for depreciation purposes, citing the decision in a Kolkata Tribunal case and the Supreme Court's ruling in another matter.

4. The Division Bench, in a previous related case, upheld the view that printers and scanners are integral to a computer system, allowing 60% depreciation. The Court emphasized the factual consistency in previous assessments and dismissed the Revenue's appeal.

5. The Court considered the interpretation of the relevant entry in the tax statute, emphasizing giving full effect to all words used and not ignoring specific descriptions. The Court noted that the equipment in question could be considered part of the computer system, as demonstrated and confirmed by the Commissioner of Income Tax (Appeals).

6. The Court highlighted the principle that in cases of ambiguity, the interpretation favoring the assessee should be preferred, especially in matters of depreciation claims. The Court also distinguished a different case cited by the Revenue, emphasizing the unique facts of each case.

7. Ultimately, the Court dismissed the Revenue's appeals, upholding the assessee's claim for 60% depreciation on printers as part of the computer system. The decision was based on consistent findings in previous assessments and the absence of new evidence to challenge the factual conclusions.