Delhi High Court recently held that, Computer accessories and peripherals like printers, scanners and server are eligible for depreciation at rate of 60 percent as they form an integral part of computer system.

Facts of the case

The learned counsel for the Revenue, submitted that the Tribunal had erred in law in allowing depreciation to the assessee at the higher rate of 60 percent on computer accessories and peripherals instead of the normal rate at 25 per cent, since  the computer peripherals and accessories could not be treated at par with computer and computer software.

However, upon a perusal of the file, Delhi High Court said that high rate of depreciation was allowed both by the Commissioner of Income-tax (Appeals) (“the CIT(A)”) and the Tribunal. In fact, the Tribunal in its impugned order has observed that the issue involved in this appeal is covered by the decision of co-ordinate Bench of the Tribunal as discussed.

In the case of ITO v. Samiran Majumdar [2006] 98 ITD 119 (Kol.), Income-tax Appellate Tribunal Kolkata Bench “B”, has taken a view that the printer and scanner are integral part of the computer system and are to be treated as computer for the purpose of allowing higher rate of depreciation, i.e., 60 per cent.

The Income-tax Appellate Tribunal, Delhi “F” Bench in the case of Expeditors International (India) (P.) Ltd. v. CIT [2008] 118 TTJ 652 (Delhi) has held that peripherals such as printer, scanners, NT Server, etc., form integral part of the computer and the same, therefore, are eligible for depreciation at the rate of 60 per cent. as applicable to a computer.

Respectfully following the aforesaid decisions of the co-ordinate Bench, we uphold the order of the learned Commissioner of Income-tax (Appeals) in allowing the depreciation at 60 per cent. on computer peripherals and accessories, and, thus, the ground raised by the Revenue is rejected.

In the result, the appeal filed by the Revenue is dismissed, We are in agreement with the view of the Tribunal that computer accessories and peripherals such as, printers, scanners and server, etc., form an integral part of the computer system. In fact, the computer accessories and peripherals cannot be used without the computer. Consequently, as they are the part of the computer system, they are entitled to depreciation at the higher rate of 60 per cent.

Read the full order here

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