Whether computer software purchased should be capitalised as computer or is it should be treated as intangible asset under the income tax act ?
computer software is grouped with computers and 60% dep can be taken as per IT act 1961.
ya Computer software will be added to computer value
please provide any reference.
SUMMARY OF CASE LAW
Printers, scanners and other peripherals are part and parcel of computer and depreciationagainst such asset are allowable @ 60 per cent.
CASE LAW DETAILS
Decided by: ITAT, DELHI BENCH `B’: NEW DELHI
In The case of: ACIT v Container Corporation of India Ltd.
Appeal No. : ITA Nos. 2851 & 3680/Del/2007
Decided on: February 27, 2009
RELEVANT PARAGRAPHS:
40. The accessories and peripherals of computers provide input processing, storage and various output devices. The output devices such as printer, scanner etc. are computer peripherals and form essential parts of PC. These output devices cannot work in isolation and also working on computer system without an output device such as printer would be futile. In view of the above, the claim ofdepreciation at 60% on printer, scanner and other computer peripherals is completely justified. The claim of depreciation of 60% further gets justified in view of the fact that even computer software which is installed on computer system supports the computer hardware and is eligible for depreciation at 60%.
41. As held by the Calcutta High Court decision in Jokai India Ltd. 251 ITR 39. in view of decision of Kolkata, ITAT in the case of ITO Vs. Sa Majumdar-2804TR~ 74, we hold that printers, scanners and other peripherals were part and parcel of computer anddepreciation against such asset are allowable @ 60%. This ground is to be decided in favour of the assessee and against the revenue in view of the decision of the Kolkata Bench `B’ of the Tribunal in the case of ITO vs. Samiran Majumdar (2006) 98 ITD 119 (Kol) wherein the Tribunal allowed the claim 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 and accordingly, no interference was required in the order passed by the Commissioner (Appeals) on that account.” Therefore, the effective ground remains with regard to deduction under section 80IA in respect of inland ports.
42. We accordingly uphold the order of the CIT(A) in allowing depreciation @ 60% on computer peripherals and accessories by treating them as computers.
Thanks a lot Disha
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