ATM machine are functioning only with the use of computer so depreciation can claim @60% and depreciation on software license for new branch can claim @ 30%

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The facts of the case are that the assessee company is a subsidiary of Saraswat Co.Op.Bank Ltd., and the assessee company provides software development and information technology enabled services to its holding company, i.e. Saraswat Bank. During the year, the holding company i.e. Saraswat Bank acquired three banks, i.e. Nasik Peoples Co.op.Bank, Murgha Rajendra Sahakari Bank and Anna Saheb Karale Sahakari Bank. During the course of assessment proceedings, the assessee company had acquired certain capital assets which would provide certain computers and technology services to its holding company, i.e. Saraswat Co.Op. Bank Ltd. The Assessing Officer also noticed that the assessee company had capitalized purchase of UPS under the block of “computers” and claimed depreciation @ 60%. The AO further noted that the assessee company had claimed depreciation @ 60% on the ATM machines. The Assessing Officer, while dealing with both these independent items held that so far as UPS is concerned, it is an electrical appliance for temporary supply of electricity in the event of power failure and is just another form of inverter and, therefore, at best, can be considered as a part of plant and machinery office equipment eligible for depreciation @ 15%. He, therefore, disallowed the excess claim and added the same to the total income of the assessee. So far as ATM was concerned, held that this cash dispensing machine with a projector, and here too, the AO held that there were only part of plant and machinery/office equipment and eligible for depreciation @ 15%. The AO, therefore, disallowed excess depreciation amounting to Rs. 11,02,442 and added it back to the income of the assessee company. The AO, further disallowed depreciation of Rs. 50,54,400 on account of purchase of software licence, holding that the assessee company could not prove that the assessee physically received the licence by 31.3.2008 and sent them to its branches who in turn installed and put the same in use on 31.3.2008. The AO, therefore, disallowed the depreciation and added it back to the assessee’s income.

Citation :
Saraswat Infotech Ltd.,Plot No.85, Madhushree, Sector-17,Vashi, Navi Mumbai.PA No.AAJCS 4303 A (Appellant)Vs.ACIT 10(C), Aayakar Bhavan, M.K. Road,Mumbai-20 (Respondent)