Depreciation

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mark. (Querist)
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25 September 2010 Reference to:
https://www.caclubindia.com/articles/whether-ups-is-a-part-of-the-computer-system--753.asp

Sirs,

A client of the firm i work for received a notice from the IT Dept. Stating that UPS's and modems are to be shown as plant and machinery and not as computers.

I would like to clarify the following.

If we capitalize accessories like A/C, stereo/CD player, Seat covers, Car Batteries etc when we purchase a vehicle. why cant we capitalize a UPS when we purchase a computer.

Besides: A Battery to a car = A UPS to a computer

Modems to be classified as computers
Ref:
ITAT MUMBAI BENCHES ‘D’ SPECIAL BENCH : MUMBAI
DCIT

v.

Datacraft India Ltd.

ITA Nos. 7462 & 754/Mum/2007
July 9, 2010

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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25 September 2010 I think in case of UPS ,AO observation is correct. It can't be compared with car battery, since like battery it is not used in side the computer, also it is not a compulsory eqp. UPS is more likely to electrical Eqp.

However , in case of modem it is part of computer. so it will be treated as computer for depreciation.

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mark.

mark. (Querist)
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01 October 2010

As far as the location whether inside or outside the computer, a modem / printer which is located outside the computer is classified as a computer.
Now for the compatibility with a Car,
A battery is provided for the comfort of the driver to start the vehicle without having to pulley start (thats how cars were started 50 years ago) or push start a vehicle. Similarly a UPS is provided for the comfort of a computer user so that when there are fluctuations in current, important information is not lost and can be saved.

Now the income tax act has not defined vehicles nor computers
referring to the motor vehicles act. a vehicle does not include a battery, music system, air condition etc, yet the income tax department allows us to capitalize all accessories when purchasing a vehicle, now going by the information technology act, a computer too does not include a UPS but it is essential to work with a computer.
What am not understanding is the discrimination in capitalizing assets?

mark.

mark. (Querist)
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02 October 2010 A laptop too can work without a battery, but we classify the laptop including the battery too as a computer and get depreciation @ 60%

now what am saying is when we buy a computer with UPS why not capitalize it the same way we would have, had it been a laptop

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