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M/s. India Healthcare Solutions Pvt. Ltd. Versus The Income Tax Officer, Company Ward- II (1) , Chennai.

2016 (1) TMI 707 - ITAT CHENNAI

Claim of depreciation on UPS - assessee claimed at 80% whereas Commissioner of Income Tax (Appeals) allowed 60% - Held that:- No infirmity in the order passed by the Commissioner of Income Tax (Appeals) in restricting the depreciation on UPS to 60% as the UPS systems are required for operations of the computers. Hence the UPS becomes part and parcel of the computer systems once they are attached to the computers. Hence they are legible for depreciation @ 60% being the depreciation available for .....

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ction under section 10A of the Act. Thus, we restore this issue to the file of the Assessing Officer for thorough examination and decide the issue in accordance with law i.e. whether the assessee is entitled for deduction under section 10A of the Act or not.- Decided in favour of assessee for statistical purposes. - I.T.A.No.897/Mds/2015 - Dated:- 29-10-2015 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER For The Appellant : Mr. T.Banusekar, C.A. For .....

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r play. 2. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the order of the Assessing Officer is without jurisdiction. 3. For that the Commissioner of Income Tax (Appeals) erred in holding that the software expenses claimed by the appellant were capital in nature. 4. For that the Commissioners of Income Tax (Appeals) erred in rejecting the appellant's contention that UPS are energy saving devices and consequently in restricting depreciation on UPS at 60% instead o .....

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ppellant had fulfilled all the conditions of Section 10A and was therefore eligible for deduction u/s 10A of the Income Tax Act. 8. For that ₹ 5,11,9271- being the disallowance u/s 40(a)(ia) ought to be added to business profits while computing deduction u/s 1OB / 10A. 3. Ground no.1 is general need not be adjudicated. 4. In ground No.2 , the assessee challenges that order of the Assessing Officer is without jurisdiction. However, no arguments are advanced on this ground and therefore this .....

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hence eligible for higher rate of depredation @ 80%. The UPS systems are required for operations of the computers. Hence the UPS becomes part and parcel of the computer systems once they are attached to the computers. Hence they are legible for depreciation @ 60% being the depreciation available for computers. There are several pronouncements in this regard, including Delhi High Court and the jurisdictional ITAT, where it was held that UPS also forms part of the computer system and, therefore, .....

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We do not agree with the submissions of the AR that the UPS is an energy saving device, therefore, depreciation @ 80% should be granted. However, we are in consonance with the decision of Hon'ble Delhi High Court in the case of Orient Ceramics & Industries Ltd. (supra), wherein the Hon'ble Court has granted depreciation @ 60% by treating UPS as part of computer hardware. Accordingly, we allow depreciation © 60% on UPS arid partly allow the ground of appeal of the assessee. 4.2.3 .....

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e above findings, we do not find any infirmity in the order passed by the Commissioner of Income Tax (Appeals) in restricting the depreciation on UPS to 60% and thus uphold the same and reject the grounds of appeal of the assessee on this issue.. 8. In ground no.5, the assessee is challenging the order of the Commissioner of Income Tax (Appeals) in holding that assessee is not eligible for deduction under section 10B of the Act. Alternatively in ground no.6 and 7, it was the contention of the as .....

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t is entitled for exemption under section 10A of the Act but wrongly claimed deduction under section 10B and it was a technical mistake in claiming deduction under section 10B of the Act. The assessee submitted that it has fulfilled all the conditions prescribed for claiming deduction under section 10A of the Act. The Commissioner of Income Tax (Appeals) upheld the action of the Assessing Officer in rejecting the assessee s claim for deduction under section 10B of the Act observing as under:- 4. .....

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ppointed by the Ministry of Industries. The assessee, before the Assessing Officer, has accepted that it had not obtained any such approval, though its unit was registered with the STPI. Approval from the "Inter-Ministerial Standing Committee" is a pre-requisite for the purpose of allowing the deduction u/s.l0B of the Act. In the absence of such approval the assessee is not eligible for deduction u/s.l0B of the Act, as held by the High Court of Delhi in the case of CIT v s Regency Crea .....

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the assessee is not eligible for deduction u/s.10B of the Act. therefore, the action of the Assessing Officer in rejecting the assessee s claim of deduction u/s.10B of the Act is as per the law and justified. The assessee fails in its appeals in this regard. 10. On going through the order of the Commissioner of Income Tax (Appeals), we do not find any infirmity in upholding the assessment order in rejecting the deduction under section 10B of the Act. The Commissioner of Income Tax (Appeals) reje .....

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for the assessee referring to the provisions of sub-section (2) (i)(b) of section 10A submits that an undertaking which begins to manufacture or produce articles or things or computer software during the previous year relevant to the assessment year commencing on or after 01.04.1994 in any electronic hardware technology park, or as the case may be Software technology park, is eligible for deduction under section 10A of the Act. He submits that this provision was completely ignored by the Assess .....

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