The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT), Bangalore directed fresh adjudication on depreciation on networking equipment, and thereby granting relief to NXP India Pvt Ltd.
The appeal by the assessee is against the final assessment order passed by Assessing Officer, for the assessment year 2016-17.
The assessee, NXP India Pvt.Ltd. is among the top five MNC employers in the semiconductor space and is a major force in the Indian Semiconductor space and as a contract development service organization. The core areas of the assessee’s activities in India include development, design and sales agent support services.
The assessee creates semiconductor related system solutions and software that deliver better sensory experience in mobile phones, personal media players, identification applications, cars and a wide range of other electronic devices.
The assessee acquired certain networking equipment during the year under consideration and the same have considered as addition to 60% depreciation block of assets. The AO held that the networking equipment cannot be classified as Computers and therefore allowed the depreciation at 15% instead of 60% and made the addition for the difference. The DRP confirmed the addition on the same ground.
The contention of the assessee that the net working equipment included servers, netapp filter, optiplex, monitor, laptop video, etc. which ought to be classified as a “computers” and depreciation at 60% thereon ought to be allowed.
A Division Bench consisting of N V Vasudevan, Vice President and Padmavathy S, Accountant Member observed that “We remand the issue back to the file of the Assessing Officer for fresh consideration with a direction to take into account the decision of the special bench in the case of Datacraft India Ltd, after affording the assessee adequate opportunity of being heard and to file details / submissions required. It is ordered accordingly.”
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