Depreciation accounting

UPS does not form an integral part of the Computer System. without UPS the computer would work. As it is a type of machinery so it shud be clubbed under Plant & Machinery & deprc calculated  @ the rate prescribed in Schedule XIV for P&M.

UPS means Uninterrupted Power Supply backup instrument/mechanism which is not computer  item but an electrical item like voltage stabilizer, DG Set, etc. UPS are meant as backup power supply arrangement in case of main power supply failure till the time power supply is resumed to keep the computers in running condition. UPS as rightly pointed out by Mr. Girdhar is a part of P&M (Plant & Machinery) item and accordingly chargeable to Depreciation.

I hava a doubt.  We are classifying Printer, Scanner, Switches, Server everything into computer grouping and claiming 60% depreciation in Income-tax.  Like these, if UPS connected to the computer it needs to treated as one of accessory of Computer Devices and can be grouped into Computers.  If it used for other power back-ups we can classify this under P&M.  Based on the usage we can change the grouping.  If wrong please clarify.

Printers, scanners, UPS are not accessories for computers.  They are like plant & machinery.  If you do not use these it wont affect the working of the computer.  So they are not an integral part of the computers.

Thye shud be classified as plant & machinery and not considred as part of teh computeers.

Dear Mr. Satesh

We have classified UPS under Computers block. But ITO has disallowed the higher rate of depreciation on UPS stating that this is not forming part of the Computers. He was added it to Plant & Machinery block and recomputed the depreciation. We are disputing the same by stating that our machinery does not require UPS except for computers.

Still this case was not disposed. Hence you may take a call on this.

But I personally feel, you can add the same to computer block. But while paying the advance tax and making the tax provision, you can recalculate the same by including under plant and machinery and pay the tax and make the necessary provision in the books. Tomorrow if ITO disallows that, your tax liability can take care.

Dear Members and querist,

I tend to revise my earlier version as well as contrary to the most of the above views expressed  and would now state that Printers, Scanners, UPS.., etc. would be treated for higher depreciation @ 60% alongwith Computers grouping in view of a few case-laws.

All acesesories of computer cannot work in isolation

Please refer for details to:

https://www.lawyersclubindia.com/judiciary/All-acesesories-of-computer-cannot-work-in-isolation-allowed-depreciation-60-and-expenditure-on-exempt-income-cannot-be-allowed-3687.asp