08 November 2008
During the course of assessment the Assessing Officer has raised a query and asked the assessee to justify that :Why the depreciation on computer peripherals be not restricted to 25% instead of 60%?
Is there any case law in support of the the Assessee's contentions that depreciation on computer peripherals is admissible @ 60% and not 25%.?
08 November 2008
On the basis of the fact that computer peripherals, unless they can be used independently or with any other category of fixed assets also, have to be treated under the classification as computer only.
09 November 2008
there is no rate of 25% in the income tax rules check as srinivasaraghavan had already advised that what the AO is asking such questions
09 November 2008
Nilesh Shah Writes: Cell: 92246-59941 E mail: nilesh63@vsnl.com
Your question can be answered by taking an example of whether UPS (Uninterrupted Power Supply)or a printer or a scanner is a part of Computer System entitled to depreciation @ 60%
The expression 'Computer' has not been defined in the Act. However, it has been defined by Sec 2(1)(i) of the Information Technology Act, 2000. As per the said Act, 'computer' means any electronic, magnetic, optical or other high speed data processing device or system which performs logical, arithmetic & memory functions by manipulation of electronic or magnetic or optical impulses & include all input-output processing, storage, computer software or communication facilities which are connected or related in a computer system or computer network. There is no in built system of power supply in the computer. The UPS keeps the computer running for several minutes after a power outage & thus saves data & shuts down the computer gracefully. Thus the UPS only supplies power & it regulates the flow & thereby protects the data & the sensitive equipment. It is only an alternative power supply & applying the functional test it is a part of the power system & not the computer system. A UPS is not an integral part of the computer as a battery in a laptop is. A computer system can function without UPS & even a UPS can be used to ensure uninterrupted power supply to other electronic equipment, other than a computer. A printer & a scanner are output device & thus are integral part of the computer as stated in the definition above. Therefore deprecitation at the enhanced rate of 60% cannot be claimed on UPS. It is a part of the plant & machinery.
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