Depreciation on iPad to be charged at lower rates because it is not a computer

Last updated: 02 September 2021

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In a recent tax tribunal ruling, M/S Kohinoor India Pvt. Ltd. questioned whether an iPad should be classified as a computer for depreciation purposes. The tribunal decided that an iPad is not a computer, but rather a communication device. Therefore, it should be subject to lower depreciation rates, as opposed to the higher rates applicable to computers.

Court :
Commissioner of Income tax (Appeals)

Brief :
In M/S Kohinoor India Pvt. Ltd. V. Assistant Commissioner Income Tax[I.T.A. Nos. 234 & 316/Asr/2017 decided on August 16, 2021] M/S Kohinoor India Pvt. Ltd ("the Appellant") filed an appeal in the Appellate tribunal against the order dated March 14, 2017 passed by the Commissioner of Income tax (Appeals) ("the Respondent") in respect of assessment years 2012-13 and 2013-14, posing a question as to whether iPad falls under the ambit of computer or mobile phone. The question is relevant in determining the rate of depreciation, if it falls under the definition of computer because higher rate of depreciation will be charged whereas if it falls under the definition of mobile phones relatively lower rate of depreciation will be charged.

Citation :
I.T.A. Nos. 234 & 316/Asr/2017 decided on August 16, 2021

In M/S Kohinoor India Pvt. Ltd. V. Assistant Commissioner Income Tax [I.T.A. Nos. 234 & 316/Asr/2017 decided on August 16, 2021] M/S Kohinoor India Pvt. Ltd ("the Appellant") filed an appeal in the Appellate tribunal against the order dated March 14, 2017 passed by the Commissioner of Income tax (Appeals) ("the Respondent") in respect of assessment years 2012-13 and 2013-14, posing a question as to whether iPad falls under the ambit of computer or mobile phone. The question is relevant in determining the rate of depreciation, if it falls under the definition of computer because higher rate of depreciation will be charged whereas if it falls under the definition of mobile phones relatively lower rate of depreciation will be charged.

The Tribunal however, opined that an iPad cannot be treated as a computer as it is a communication device having an IMEA number, rather than a computing device. Listing out the main features of iPad like e-mail, WhatsApp, calls, etc. The Tribunal observed that though the iPad may have some features of a computer, the mere assumption of the assessee is not enough to claim it as a computer and hence, charge depreciation at a higher rate. Hence, held that depreciation should be applicable at a lower rate.

FAQ :

The main issue was whether an iPad should be classified as a computer or a mobile phone for the purpose of calculating depreciation rates.

The tribunal classified the iPad as a communication device, not a computer.

The classification affects the rate of depreciation that can be claimed. Computers are subject to higher depreciation rates than communication devices like iPads.

The tribunal noted features such as email, WhatsApp, and the ability to make calls, along with the presence of an IMEI number, identifying it as a communication device.

The tribunal decided that depreciation should be applicable at a lower rate, as the iPad was not considered a computer.

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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