THE CITIZEN CO-OPERATIVE BANK LIMITED,VASCO vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 2(1), , PANAJI

Brief facts of the case are that the assessee in its return of income for the assessment year under consideration had claimed depreciation on UPS @ 60% which works out to Rs. 3,13,675/-. Accordingly, the assessee was asked to explain as to why the depreciation should not be restricted to 15%. The assessee contended that UPS is an integral part of the computer system, therefore, depreciation of 60% is applicable in the case of UPS also. However, Assessment Year: 2012-13

The assessee has challenged the impugned order passed by the Ld. CIT (A) on the following effective ground:- “That based on facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in not allowing the depreciation on UPS at 60% by restricting it to 15%. The depreciation has to be allowed at 60%.”

At the outset, the Ld. counsel for the assessee submitted that the issue involved in the present appeal is covered in favour of the assessee by the order of the Delhi Tribunal in the case of ACIT, New Delhi vs. M/s Caparo Engineering India Pvt. Ltd., ITA No. 6838/Del/2014 for the A.Y. 2007-08. Therefore, the assessee in the present case is also entitled to claim depreciation @ 60% on the UPS.

On the other hand, the Ld. Departmental Representative (DR) relied on the concurrent findings of the authorities below.

We have perused the material in the light of the rival submissions including the decision of the Delhi Bench of the Tribunal relied upon by the assessee. We notice that the Delhi Bench of the Tribunal in the case of AICT vs. M/s Caparo Engineering India Pvt. Ltd. (supra) has decided the identical issue in favour of the assessee. The relevant paras of the said order read as under:- “15. Lastly, with regard to the disallowance of claim of depreciation @ 60% on UPS, the Assessing Officer has allowed 15% instead of 60% claimed by the assessee on the ground that UPS is not part of computer and thereby made the addition of Rs. 2,21,895/-. The assessee had purchased UPS for Rs. 4,93,110/- and had claimed depreciation thereon @ 60% for Rs. 2,95,860/-. The Assessing Officer observed that depreciation mentioned in Appendix-I Rule 5 of IT Rules applies only to computer and Assessment Year: 2012-13

The ld. CIT (A) has deleted the addition, following the judgment of Hon’ble Delhi High Court in the case of CIT vs. BSES Rajdhani Powers Ltd. in ITA No. 1266/2010, wherein computer accessories/peripherals like printers, scanners, server, UPS, etc., have been held to be integral part of computer system, and therefore, entitled to depreciation @ 60%. Accordingly, the ld. CIT (A) following the judgment of Hon’ble Delhi High Court and other decisions of the Tribunal allowed the assessee’s claim @ 60%.

We do not find any infirmity in the order of the ld. CIT (A) as the issue, whether computer accessories/peripherals like printers, scanners, server, UPS etc, the rate of depreciation allowable is @ 60% as held by the Hon’ble Juri ictional High Court and catena of other judgments. Thus, ground no. 3 raised by the Revenue is dismissed.”

Since, the Delhi Bench of the ITAT has decided the identical issue in favour of the assessee in ACIT vs. M/s Caparo Engineering India Pvt. Ltd. (supra) and since no decision was brought our notice by the revenue contrary to the decision of the ITAT aforesaid, we respectfully following the said decision allow the sole ground of appeal of the assessee and direct the AO to allow the depreciation on the UPS @ 60%. In the result, appeal filed by the assessee for assessment year 2012-2013 is allowed. Order pronounced in the open court on 31st January, 2019. (SHAMIM YAHYA) JUDICIAL MEMBER Panaji; दिन ांक Dated: 31/01/2019