Tribunal Confirms Deductions for Scrap Sales, Employee Loans & Computer Peripherals

The Tribunal upheld the CIT(A)'s decisions on both issues. It confirmed the eligibility of deductions u/s 10A/10B for income from the sale of scrap and interest income on loans to employees, citing relevant precedents and judgments. Additionally, the Tribunal supported the CIT(A)'s ruling on the depreciation rate of 60% for computer peripherals, emphasizing their integral role in a computer system. The revenue's appeal was dismissed, affirming the decisions in favor of the assessee.

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Issues:
1. Deduction u/s 10A/10B for income from sale of scrap and interest income on loans to employees.
2. Depreciation rate on computer peripherals.

Issue 1: Deduction u/s 10A/10B
The appellant contested the CIT(A)'s decision allowing deduction u/s 10A/10B for income from the sale of scrap and interest income on loans to employees. The CIT(A) relied on precedents like Wipro Ltd., Kirloskar Ebara Pumps Ltd., and Shipping Corporation of India Ltd. to support the allowance of these deductions. The CIT(A) emphasized that the income from the sale of scrap and interest income on loans to employees were integrally linked to the eligible business, thus qualifying for deduction u/s 10A/10B. The revenue challenged this decision, but the Tribunal upheld the CIT(A)'s ruling. The Tribunal referenced similar cases from Bangalore and Amritsar Benches, supporting the eligibility of income from the sale of scrap for deduction u/s 10A. Additionally, the Tribunal cited the judgment of the Hon'ble Karnataka High Court regarding interest income on loans to employees, affirming its eligibility for deduction u/s 10A/10B. The Tribunal concluded that both income from the sale of scrap and interest income on loans to employees were eligible for deduction u/s 10A/10B.

Issue 2: Depreciation Rate on Computer Peripherals
The second issue revolved around the depreciation rate applicable to computer peripherals claimed by the assessee. The AO allowed depreciation at a rate of 15% for computer peripherals, considering them part of plant and machinery. However, the CIT(A) ruled in favor of the assessee, permitting depreciation at a rate of 60% for computer peripherals. The CIT(A) based this decision on various judicial pronouncements, including a judgment of the Hon'ble Delhi High Court. The revenue appealed against this decision, but the Tribunal upheld the CIT(A)'s ruling. The Tribunal referred to the judgment of the Hon'ble Jurisdictional High Court in the case of CIT vs. BSES Rajdhani Power Ltd., which supported the view that computer peripherals such as printers, scanners, and servers were integral parts of a computer system and thus eligible for depreciation at a rate of 60%. Consequently, the Tribunal affirmed the CIT(A)'s decision, allowing depreciation at a rate of 60% for computer peripherals.

In conclusion, the Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decisions regarding both the deduction u/s 10A/10B for income from the sale of scrap and interest income on loans to employees, as well as the depreciation rate of 60% for computer peripherals.

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