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For the purpose of depreciation,Can we classified computer ups also under computer?
 
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Originally posted by : jijesh
For the purpose of depreciation,Can we classified computer ups also under computer?

UPS is NOT an integral part of computer. It will be treated as Plant & Machinery.

Nestle India Ltd. vs Deputy Commissioner Of Income Tax on 30 April, 2007.


 


Total thanks : 5 times

 
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Can you please clarify whtether UPS is coming under electrical equilpments or plant & machinery?

 
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Thanks for the Tip!!

 

 
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Yes, even as per AS-6

There are 2 kinds of assets, dependent and independent

Dependent assets are those assets which are dependent on the other asset for the use for example Graphic cards , printers, scanners and other peripherals  in case of computers . Their use is dependent, they can't be used independently. And such assets should be capitalized in such other asset . They integrate into system/asset

In case of independent asset if the asset can be used without depending upon a particular asset then such an asset is independent asset for eg UPS (not necessarily requires computer) , They do not integrate into system/asset

 

Para 9 states 

 

 Any addition or extension to an existing asset which is of a capital nature
and which becomes an integral part of the existing asset is depreciated over
the remaining useful life of that asset. As a practical measure, however,
depreciation is sometimes provided on such addition or extension at the rate
which is applied to an existing asset. Any addition or extension which retains
a separate identity and is capable of being used after the existing asset is
disposed of, is depreciated independently on the basis of an estimate of its
own useful life.

 

Para 24 states

 Any addition or extension which becomes an integral part of the

existing asset should be depreciated over the remaining useful life of

 

that asset. The depreciation on such addition or extension may also be  
provided at the rate applied to the existing asset. Where an addition or
extension retains a separate identity and is capable of being used after
the existing asset is disposed of, depreciation should be provided
independently on the basis of an estimate of its own useful life

 

In the case cited above UPS was categorized in Plant and machinery

Its prolly 'cause it is not covered under heads of electrical items and hence taken into genral category 

 

Electrical equipment :
(a) Shunt capacitors and synchronous condenser systems
(b) Automatic power cut off devices (relays) mounted on individual motors
(c) Automatic voltage controller
(d) Power factor controller for AC motors
(e) Solid state devices for controlling motor speeds
(f) Thermally energy-efficient stenters (which require 800 or less kilocalories
(g) Series compensation equipment
(h) Flexible AC Transmission (FACT) devices - Thyristor controlled series 
(i) Time of Day (ToD) energy meters
(j) Equipment to establish transmission highway for National Power Grid to 
(k) Remote terminal units/intelligent electronic devices, computer 
(l) Special energy meters for Availability Based Tariff (ABT)

Similar view point was taken in ACIT v Container Corporation of India Ltd

 
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