Scrutiny case - depreciation on computer and peripherals
This query is : Resolved
29 January 2015
URGENT
Dear all
I have a client who got scrutiny notice and AO argued that in aadhar kit contains printer,finger print scanner web camera etc are not come under computer and peripherals and we argued that as printer,scanner, etc are come under computer and peripherals because these are used only with computers hence these all come under computer & peripherals so,friends please suggest me how to draft a note to AO representing that these are fall under computer &peripherals and also provide case laws for this
Thanks
Dear all
I have a client who got scrutiny notice and AO argued that in aadhar kit contains printer,finger print scanner web camera etc are not come under computer and peripherals and we argued that as printer,scanner, etc are come under computer and peripherals because these are used only with computers hence these all come under computer & peripherals so,friends please suggest me how to draft a note to AO representing that these are fall under computer &peripherals and also provide case laws for this
Thanks
29 January 2015
ITO Vs. Samiran Majumdar (2006) 98 ITD 119 (Kol) wherein the Tribunal allowed depreciation at higher rate by observing as under :
“Therefore, the printer and scanner were integral part of the computer system and were to be treated as computer for the purposes of allowing higher rate of depreciation, i.e., 60 per cent".
“Therefore, the printer and scanner were integral part of the computer system and were to be treated as computer for the purposes of allowing higher rate of depreciation, i.e., 60 per cent".
29 January 2015
sir please suggest me how to draft a note on the said notice
23 July 2025
To draft a response to the **Assessing Officer (AO)** regarding the inclusion of items like **printer**, **fingerprint scanner**, and **web camera** under the category of **"computers and peripherals"** for the purpose of claiming depreciation, you should consider presenting the following points:
---
### **Draft Response to AO Regarding Depreciation on Computer and Peripherals:**
#### **Subject:** Response to Scrutiny Notice regarding Depreciation on Computer and Peripherals (Aadhar Kit)
#### **Respected Sir,**
We refer to the scrutiny notice issued for the assessment year \[mention assessment year], wherein the department has raised an issue regarding the inclusion of certain items, such as **printer, fingerprint scanner, web camera**, etc., as part of the **computer and peripherals** for the purpose of depreciation. The department has contested our claim for higher depreciation, asserting that these items do not qualify as **"computer and peripherals."**
We, respectfully, submit our response to the query raised, as follows:
### **1. Depreciation on Computers and Peripherals:**
According to the **Income Tax Act, 1961**, depreciation is allowed on computers and peripherals, and as per the **Income Tax Rules**, these assets are eligible for a higher rate of depreciation (i.e., 60% as per the current tax provisions) if they are used for business purposes.
### **2. Definition of "Computer and Peripherals":**
* The term "computer" under the **Income Tax Act** and **Income Tax Rules** is not limited to just the central processing unit (CPU) but extends to all components that form an integral part of the computer system.
* The **peripherals** (such as **printers, scanners, web cameras**) are essential parts of the overall functioning of a computer system, and their usage is directly associated with the computer.
### **3. Judicial Precedents Supporting Our Claim:**
In support of our submission, we refer to the following case laws which have dealt with the issue of depreciation on computer peripherals:
1. **ITO vs. Samiran Majumdar (2006) 98 ITD 119 (Kol)**:
* In this case, the **Tribunal** ruled that items like **printers** and **scanners** were integral parts of a computer system and, therefore, qualified for depreciation at the higher rate (60%) applicable to computers and peripherals.
* **Key observation by the Tribunal**: "The printer and scanner were integral parts of the computer system and were to be treated as computer for the purposes of allowing the higher rate of depreciation."
2. **CIT vs. BSES Rajdhani Power Ltd. (2010) 327 ITR 133 (Delhi)**:
* The **Delhi High Court** held that for the purpose of depreciation, any hardware or equipment used in conjunction with a computer system and forming an integral part of the computer system qualifies as a **computer peripheral**, and is therefore eligible for the higher depreciation rate.
3. **CIT vs. Vishal Communication (P) Ltd. (2008) 299 ITR 22 (Delhi)**:
* The Court held that devices such as **scanners** and **printers** qualify as peripherals used in conjunction with the computer system, and depreciation on such devices is eligible under the same head as **computer and peripherals**.
### **4. Practical Usage and Integration of Components:**
* The **printer**, **fingerprint scanner**, and **web camera** are **integral to the working of the computer system**, especially in the case of Aadhar kits, where these peripherals are directly linked to the computer system for processing the biometric data.
* The **fingerprint scanner** and **web camera** are essential tools used for capturing data, and the **printer** is used for printing Aadhaar cards or related documents, directly relying on the computer system. Thus, these items **cannot function independently** without being integrated with the computer system.
### **5. Conclusion and Request:**
In light of the above facts and legal precedents, we respectfully submit that the **printer, fingerprint scanner**, and **web camera** are **integral peripherals of the computer system**, and their depreciation should be allowed at the higher rate of 60% applicable to computers and peripherals.
We request you to kindly reconsider your position on this matter and allow depreciation at the higher rate of 60% on these items, in line with the provisions of the **Income Tax Act** and judicial precedents. We are ready to provide any additional information or documentation as required.
We look forward to your favorable consideration.
#### **Thanking you,**
**\[Your Name]**
**\[Designation]**
**\[Firm Name]**
**\[Contact Information]**
---
### **Key Points to Consider When Drafting:**
1. **Legal Citations**: The case laws mentioned (such as **Samiran Majumdar**, **BSES Rajdhani Power**, and **Vishal Communication**) should be referred to strongly to back your argument.
2. **Clarity in Explanation**: Explain that the peripherals are necessary for the functioning of the computer and that their operation is intertwined with the computer system.
3. **Reference to Income Tax Act and Rules**: You may want to highlight relevant provisions from the **Income Tax Act, 1961** (specifically relating to depreciation rates for computers) and the **Income Tax Rules** to support your case.
Would you like to refine the draft further or require any additional details?
---
### **Draft Response to AO Regarding Depreciation on Computer and Peripherals:**
#### **Subject:** Response to Scrutiny Notice regarding Depreciation on Computer and Peripherals (Aadhar Kit)
#### **Respected Sir,**
We refer to the scrutiny notice issued for the assessment year \[mention assessment year], wherein the department has raised an issue regarding the inclusion of certain items, such as **printer, fingerprint scanner, web camera**, etc., as part of the **computer and peripherals** for the purpose of depreciation. The department has contested our claim for higher depreciation, asserting that these items do not qualify as **"computer and peripherals."**
We, respectfully, submit our response to the query raised, as follows:
### **1. Depreciation on Computers and Peripherals:**
According to the **Income Tax Act, 1961**, depreciation is allowed on computers and peripherals, and as per the **Income Tax Rules**, these assets are eligible for a higher rate of depreciation (i.e., 60% as per the current tax provisions) if they are used for business purposes.
### **2. Definition of "Computer and Peripherals":**
* The term "computer" under the **Income Tax Act** and **Income Tax Rules** is not limited to just the central processing unit (CPU) but extends to all components that form an integral part of the computer system.
* The **peripherals** (such as **printers, scanners, web cameras**) are essential parts of the overall functioning of a computer system, and their usage is directly associated with the computer.
### **3. Judicial Precedents Supporting Our Claim:**
In support of our submission, we refer to the following case laws which have dealt with the issue of depreciation on computer peripherals:
1. **ITO vs. Samiran Majumdar (2006) 98 ITD 119 (Kol)**:
* In this case, the **Tribunal** ruled that items like **printers** and **scanners** were integral parts of a computer system and, therefore, qualified for depreciation at the higher rate (60%) applicable to computers and peripherals.
* **Key observation by the Tribunal**: "The printer and scanner were integral parts of the computer system and were to be treated as computer for the purposes of allowing the higher rate of depreciation."
2. **CIT vs. BSES Rajdhani Power Ltd. (2010) 327 ITR 133 (Delhi)**:
* The **Delhi High Court** held that for the purpose of depreciation, any hardware or equipment used in conjunction with a computer system and forming an integral part of the computer system qualifies as a **computer peripheral**, and is therefore eligible for the higher depreciation rate.
3. **CIT vs. Vishal Communication (P) Ltd. (2008) 299 ITR 22 (Delhi)**:
* The Court held that devices such as **scanners** and **printers** qualify as peripherals used in conjunction with the computer system, and depreciation on such devices is eligible under the same head as **computer and peripherals**.
### **4. Practical Usage and Integration of Components:**
* The **printer**, **fingerprint scanner**, and **web camera** are **integral to the working of the computer system**, especially in the case of Aadhar kits, where these peripherals are directly linked to the computer system for processing the biometric data.
* The **fingerprint scanner** and **web camera** are essential tools used for capturing data, and the **printer** is used for printing Aadhaar cards or related documents, directly relying on the computer system. Thus, these items **cannot function independently** without being integrated with the computer system.
### **5. Conclusion and Request:**
In light of the above facts and legal precedents, we respectfully submit that the **printer, fingerprint scanner**, and **web camera** are **integral peripherals of the computer system**, and their depreciation should be allowed at the higher rate of 60% applicable to computers and peripherals.
We request you to kindly reconsider your position on this matter and allow depreciation at the higher rate of 60% on these items, in line with the provisions of the **Income Tax Act** and judicial precedents. We are ready to provide any additional information or documentation as required.
We look forward to your favorable consideration.
#### **Thanking you,**
**\[Your Name]**
**\[Designation]**
**\[Firm Name]**
**\[Contact Information]**
---
### **Key Points to Consider When Drafting:**
1. **Legal Citations**: The case laws mentioned (such as **Samiran Majumdar**, **BSES Rajdhani Power**, and **Vishal Communication**) should be referred to strongly to back your argument.
2. **Clarity in Explanation**: Explain that the peripherals are necessary for the functioning of the computer and that their operation is intertwined with the computer system.
3. **Reference to Income Tax Act and Rules**: You may want to highlight relevant provisions from the **Income Tax Act, 1961** (specifically relating to depreciation rates for computers) and the **Income Tax Rules** to support your case.
Would you like to refine the draft further or require any additional details?
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