UPS Classified as Integral Part of Computer for Depreciation Purposes

The Income-tax Appellate Tribunal "D" Special Bench, Mumbai, allowed the assessee's appeal regarding the classification of UPS as an integral part of a computer for depreciation purposes. The UPS was deemed essential for uninterrupted technical operations due to frequent power failures, and as it was solely used for connecting to the computer, it was considered part of the computer. Following precedent and considering the necessity of the UPS, the assessee was granted the right to claim depreciation on the UPS at the same rate as computers. The Assessing Officer was directed to allow depreciation accordingly.

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Issues:
1. Whether UPS can be considered an integral part of a computer for the purpose of claiming depreciation.

Analysis:
The case involved an appeal by an assessee against the order of the Commissioner of Income-tax (Appeals) regarding the assessment year 2008-09. The only issue in dispute was whether the UPS (uninterrupted power supply) used by the company, engaged in the business of pneumatic conveying systems, should be treated as an integral part of the computer for claiming depreciation. The assessee argued that the UPS was essential due to frequent power failures at their location, Ambarnath, ensuring uninterrupted technical operations. The Income-tax Appellate Tribunal "D" Special Bench, Mumbai, had previously observed that any device essential to run a computer should be considered part of the computer for depreciation purposes.

The assessee contended that the UPS was necessary for running the computer effectively in the face of power failures, a fact not disputed by the Assessing Officer. It was noted that the UPS was solely used for connecting to the computer and was crucial for uninterrupted power supply. Considering the circumstances and the precedent set by the Special Bench, it was held that the assessee was entitled to claim depreciation on the UPS at the same rate as that available for computers. Consequently, the Assessing Officer was directed to allow depreciation on the UPS accordingly.

In conclusion, the appeal filed by the assessee was treated as allowed for statistical purposes, with the order being pronounced in open court on September 18, 2012.

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