Depreciation on Computer Peripherals

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CA RAMESH KUMAR AHUJA (Querist)
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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%.?

How the same may be explained to convince the AO?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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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.

What is the basis of AO's contention?

CA Sanjeev Kr Jain

CA Sanjeev Kr Jain (Expert)
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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

Nilesh Shah

Nilesh Shah (Expert)
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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.

Your's Sincerely,

Nilesh Shah

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