Relief for Genpact India: ITAT Allows 60% Depreciation Citing Printers and Routers as Part of an Integrated System with Computers [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) granted relief to Genpact India by allowing depreciation at the rate of 60% on certain computer peripherals such as printers, routers etc., citing that they are all part of an integrated system with computer.

Genpact India., the assessee engaged in business activities requiring the use of Information Technology ( IT ) equipment, claimed depreciation at the rate of 60% on certain computer peripherals like printers, routers, and similar devices while computing its income.

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The Assessing Officer ( AO ) disputed this claim, arguing that these peripherals, such as printers and routers, could operate independently from the main computer system. The AO concluded that these devices should not be categorized as "computers" for depreciation purposes and, therefore, applied a lower depreciation rate.

Consequently, the AO disallowed the claim of the assessee. Aggrieved by the decision, the assessee appealed before the Commissioner of Income Tax (Appeals) [CIT(A)] who allowed the 60% depreciation claim based on prior judicial rulings.

The revenue appealed the CIT(A) decision before the Delhi bench of ITAT arguing that Printers, routers, and other such peripherals can operate independently of a computer system. Therefore, they should not qualify for the higher depreciation rate of 60% applicable to computers.

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The two-member bench comprising Saktijit Dey ( Vice-President ) and  Rifaur Rahman ( Accountant Member ) noted that this issue had already been decided in the assessee's favor in an earlier assessment year (2011-12).

The tribunal observed that peripherals like printers and routers are part of an integrated computer system and would not be useful independently. The Tribunal referenced the High Court's ruling in BSES Yamuna Power and Orient Ceramics, which upheld the classification of such peripherals as part of the computer system, thereby justifying the 60% depreciation rate.

Therefore, the tribunal ruled that the assessee is entitled to claim depreciation at the rate of 60% for the computer peripherals. The revenue’s appeal was dismissed.

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