2012 (3) TMI 527 - AT - Income Tax

Routers & switches are to be included in the block of computers as they cannot be used without the computers. Depreciation on purchase of software license disallowed - assessee company could not prove that the software was acquired and installed and put to use by 31.3.2008 - Held that - As the licence was to be acquired and to be put to use for the newly acquired co-operative banks enhanced licenses were to be acquired. It was submitted by the AR that the assessee company acquired the licences for enhanced use and wee put to use on 31.3.2008 the AR invited our attention to a copy of daily trial balance for Ankali Miraj Branch on 31.3.2008. On going through the facts on this issue also we feel that the assessee company has gone on to prove that the software which was actually acquired and put to use on 31.3.2008 and hence the assessee company has rightly claimed depreciation at 30% (being 50% of 60%). We accordingly allow the grievance of the assessee on this count.

Summary

Issues:
Depreciation on UPS, Depreciation on ATM machines, Depreciation on purchase of software license

Depreciation on UPS:
The appeal involved the disallowance of excess depreciation claimed on UPS and ATM machines by the Assessing Officer (AO). The AO held that UPS and ATM machines were eligible for depreciation at 15% as part of plant and machinery/office equipment, instead of the claimed 60%. The CIT(A) upheld the AO's findings, leading to the appeal. The appellant argued that UPS is integral to computer systems, regulating power flow to prevent data loss. Citing a decision of the Hon'ble Delhi High Court, the appellant contended that UPS should be considered for higher depreciation. The ITAT Mumbai bench, following the Delhi High Court's decision, allowed higher depreciation on UPS.

Depreciation on ATM machines:
The issue of depreciation on ATM machines was also contested. The revenue authorities considered ATMs as mere cash dispensers and projectors, not computer peripherals. The appellant provided evidence showing the computer-dependent functions of ATMs and referenced a Delhi ITAT decision supporting depreciation at 60%. The ITAT Mumbai bench, in line with the Delhi ITAT decision, allowed higher depreciation on ATM machines, emphasizing the importance of computer peripherals in the banking industry.

Depreciation on purchase of software license:
Regarding the depreciation on the purchase of software licenses, the revenue authorities disallowed depreciation as the appellant allegedly failed to prove installation and use by a specific date. The appellant presented evidence demonstrating the acquisition and use of software licenses by the deadline. The ITAT Mumbai bench acknowledged the proof provided by the appellant, allowing depreciation at 30% and ruling in favor of the appellant.