2020 (1) TMI 372 - AT - Income Tax

Depreciation on office equipment - @10% OR 15% as claimed by the assessee - On examination of them, the ld. CIT(A) confirmed the addition made by the AO on office equipment on the ground that the nature of items comprised under this head are more in the nature of electrical fittings and installations eligible for depreciation @ 10% and not plant and machinery on which depreciation of 15% is permissible. The Ld.CIT(A) dismissed the appeals of the assessee. HELD THAT - In the assessee's own case 2016 (5) TMI 1518 - ITAT CHENNAI the co-ordinate bench has decided the issue on allowability of depreciation on office equipments in favour of the assessee - Depreciation @ 15% allowed on Office Equipments

Summary

Issues:
Assessment of depreciation on office equipment at 10% instead of 15%.

Analysis:
The assessee, engaged in stock broking and insurance business, appealed against the AO's decision to restrict depreciation on office equipment to 10% instead of 15%. The CIT(A) upheld the AO's decision, stating that the items under "office equipment" were more akin to electrical fittings eligible for 10% depreciation, not plant and machinery qualifying for 15% depreciation. The assessee contended that the items, such as UPS batteries, air-conditioning, and telephone systems, were integral to their computer network and should be classified as plant and machinery. The AR argued based on a previous Tribunal order in the assessee's favor for the assessment year 2010-11. The DR supported the CIT(A)'s decision, highlighting the lack of explanation on how the office equipment qualified as plant and machinery.

The Tribunal reviewed the previous order and observed that office equipment fell under Block III, eligible for a 15% depreciation rate, as per the Income Tax Rules. The Tribunal noted that the CIT(A) had correctly directed the AO to allow depreciation at 15% on office equipment in the previous order. In line with the precedent set in the previous case, the Tribunal allowed the appeals for the assessment years 2011-12, 2012-13, and 2013-14. Consequently, the appeals of the assessee were allowed, overturning the decisions of the AO and CIT(A).

In conclusion, the Tribunal's decision was based on the classification of office equipment under Block III for a 15% depreciation rate, as per the Income Tax Rules. The Tribunal upheld the assessee's appeal, citing the precedent set in a previous case for the assessment year 2010-11, where depreciation on office equipment had been allowed at 15%. The decision emphasized adherence to the rules and previous judgments, leading to the allowance of the appeals for the specified assessment years.