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Depriciation on computerised scanner medical device

Harry (Professional) (25 Points)

03 September 2014

Hello,

One of my clients is a practising eye surgeon and has taken a Computerised Eye scanning machine worth 22 Lakhs. It is a computer system which scans the conditon of the eye and stores it. On next visits the machine scans again and compared it to the previous images to generate the progress / deterioration in the eye condition. It is called as OCT (Optical Coherence Tomographer)

The entire machinery consists of an Eye Scanner, CPU, Flat screen, Printer to generate reports.

Can this be taken as 60% Depriciateion under computers.

Reagrds

Harshit Shah

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7 Replies

CA Raj Doshi (Practising CA) (8795 Points)
Replied 04 September 2014

I think it is plant and machinery.

CA Sanket Gujar (Professional) (74 Points)
Replied 04 September 2014

It is directly relating to business and should be shown as P & M.

1 Like

Harry (Professional) (25 Points)
Replied 05 September 2014

Thanks Raj & Sanket for the help.

I have a doubt, even if the equipment is directly relating to business it still is a computer. A computer for a BPO or a Computer institute would still be eligeble for 60% Depriciation.(Correct me if I may be wrong).

Now,

The Info. Tech. Act-2000 defines 'Computer' means any electronic magnetic, optical or other high-speed data processing device or system which performs logical, arithmetic, and memory functions by manipulations of electronic, magnetic or optical impulses, and includes all input, output, processing, storage, computer software, or communication facilities which are connected or related to the computer in a computer system or computer network. The word 'computer' and 'computer system' have been so widely defined and interpreted to mean any electronic device with data processing capability, performing computer functions like logical, arithmetic and memory functions with input, storage and output capabilities and therefore any high-end programmable gadgets like even a washing machine or switches and routers used in a network can all be brought under the definition.

Now Income tax does not define but referes to Information Technology act 2000 for defining computers.

The equipment procured fits exactly in the above defination.

I read the thread : /experts/details.asp?mod_id=496420#.VAlYj8KSxjg

where smart phones were being discussed to be considered as Computers for the purpose of depriciation.

Please do help to reason out Logically where I am I going wrong.

Regards

Harshit

CA Raj Doshi (Practising CA) (8795 Points)
Replied 20 September 2014

I agree. The machine fits in the above definition. Still if you can find some a professional who practises this act or a CA who has sound knowledge of this act and is willing to issue a certificate in this mattrr , then take a certificate from him that "as per his understanding , the machine falls into the definition of computer as per I.T.Act and hence eligible for depreciation @ 60%. Do not submit the certificate anywhere before asking him. This is only for your record and reference.

CA Raj Doshi (Practising CA) (8795 Points)
Replied 20 September 2014

It is written in the brochure that it is a DIGITAL IMAGING SUPER COMPUTER SO TAKE DEPRECIATION @ 60%. ALONG WITH CERTIFICATE , ATTACH THIS BROCHURE and any other supporting documents like Invoice. I think that will be enough. ( If you can tell the seller of machine to mention super computer on the face of the invoice then I think that will be all to prove ).

(Guest)

A Computerised Eye scanning machine Though it is described as a super computer is essentially an eye scanning machine. Our smart phones and cars also are computers to some extent, but they cannot be classified as computers.

[Assessee engaged in printing business, used certain hardware for execution of printing process, said hardware could not be categorized as ‘computer’ and would not be eligible for higher depreciation. It is only where machine is being used essentially and predominantly for computing capability and where it is not being harnessed for other specialized industrial uses, be it mechanical, electric or electronic (or a composite thereof) activity that it could be called as a computer.(A.Y. 2005-06). Refer, S. T. Reddiar & Sons vs. Dy. CIT 129 ITD 475 / 135 TTJ 480 / 49 DTR 326 (Cochin)(Trib.). ]

You should also consider that claiming 60% depreciation might exhaust the asset faster than its useful life causing losses in initial years of acquisition.

1 Like