TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether UPS was eligible for depreciation at 60% as part of computer hardware; (ii) Whether disallowance under section 14A read with Rule 8D(2)(iii) was to be computed only with reference to investments that yielded exempt income.
Issue (i): Whether UPS was eligible for depreciation at 60% as part of computer hardware.
Analysis: The Tribunal followed its earlier view, consistent with the cited coordinate Bench decision, that UPS functions as part of computer hardware for depreciation purposes and is therefore entitled to the higher rate applicable to computers rather than the lower rate applied by the Assessing Officer.
Conclusion: The claim for depreciation at 60% on UPS was upheld in favour of the assessee.
Issue (ii): Whether disallowance under section 14A read with Rule 8D(2)(iii) was to be computed only with reference to investments that yielded exempt income.
Analysis: The Tribunal accepted that some expenditure was attributable to monitoring investments, but held that the computation under Rule 8D(2)(iii) cannot extend to all investments in the balance sheet. The disallowance must be confined to the average value of investments that actually generated income not forming part of total income.
Conclusion: The disallowance was directed to be recomputed on a restricted basis, in favour of the assessee.
Final Conclusion: The Revenue's appeals failed, while the assessee obtained partial relief on the expenditure disallowance issue, with the matter restored only for recomputation on the correct basis.
Ratio Decidendi: For disallowance under section 14A read with Rule 8D(2)(iii), only those investments that have yielded exempt income can be taken into account, and UPS is to be treated as part of computer hardware for depreciation purposes.
TaxTMI 
