The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that the Automated Teller Machines ( ATM ) would be eligible for the higher rate of depreciation as these machines can be treated as “Computers” for the purpose of Section 32 of the Income Tax Act, 1961.
The assessee is engaged in the business of ATM management services and claimed a higher rate of depreciation on such machines. The Assessing Officer allowed 15% as against the claim of the assessee at 60% and observed that the ATM machine does not fall within the meaning of ‘’computer’’ qualifying for depreciation @60%.
The counsel for the department contended that the Karnataka High Court in the case of Diebold Systems (P.) Ltd, while interpreting an entry in the schedule in Karnataka Sales Tax Act, 1957 on the basis of commercial parlance meaning, over technical meaning, held that ATM is not a computer by itself but are electronic goods.
The Tribunal observed that the Karnataka Sales Tax Act and the Income-tax Act, 1961 are not similar, i.e., pari materia legislations.
“In the matter of interpretation of an entry under the sales tax laws ‘Trade Test’ or ‘Common Parlance Test’ is applied while considering whether a particular item/goods fall in an entry or not, whereas under the Income-tax Act, 1961, particularly when considering whether an item is to be considered as ‘plant and machinery’ and/or ‘building’ or any of the items specified in the Appendix to the Income Tax Rules, 1962, a functional test is the decisive test, as ruled by the Hon’ble Supreme Court of India in numerous cases, one such being CIT vs. Anand Theatres (2000) 244 ITR 192/110 Taxman 338. In other words, the test would be: Does an ATM fulfil the functions of a Computer in the business activity of an assessee? Is it a tool of his trade with which it carries on his business? If the answer is in affirmative, it would be a computer and moreover the issue was already decided in favour of the assessee in assessee ‘s own case by the Co-ordinate Bench of the Tribunal and hence, we do not find any reason to depart from the findings of the Co-ordinate Bench of the Tribunal,” the Tribunal said.To Read the full text of the Order CLICK HERE