The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the computers and computer peripherals would be eligible for depreciation of 60%.
The assessee, Owens Corning’s Industries (India) Private Limited, claimed depreciation of 60% on computer and software. Assessing Officer was of the opinion that all the assets included under computers were not eligible for depreciation of 60% and computer peripherals were eligible for depreciation only for 25%.
The Commissioner of Income Tax Appeal (CIT(A)) directed the Assessing Officer to take note of the decision of the Tribunal in assessee’s own case for the assessment years 2000-01 to 2007-08 and 2009-10 to re-compute the depreciation on intangible assets, except goodwill.
Devices used to enter data into computers or distribute processed data to people or other machines are known as peripherals of a computer. Peripherals of a computer are those devices that link to the core computer to offer it extra power and ability.
Similar decision was made by the Ahmedabad Bench of Income Tax Appellate Tribunal in Vodafone Business Services Ltd vs DCIT which held that computer software was eligible for depreciation at 60%.
Sandhya, on behalf of the assessee submitted that computers as well as the computer peripherals were eligible for depreciation of 60% and he placed reliance on decision in CIT vs. Sony India P. Ltd and CIT vs. Orient Ceramics & Industries Ltd.
Shakeer Ahamed, who appeared on behalf of the revenue vehemently contended that certain items like printers, USB etc would not fall in the category of computers, to be eligible for depreciation of 60% and the Assessing Officer was right in disallowing the excess depreciation.
The two-member Bench of Ramakanta Panda, (Vice President) and S K. Narasimha Chary, (Judicial Member) dismissed the appeal filed by the revenue holding that, “we are of the considered opinion that this issue is no longer res integra. Computers as well as the computer peripherals are eligible for depreciation @60%. Hence, the disallowance is directed to be deleted.”
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