Appeal Dismissed: Mobile Phone Depreciation Rate Set at 15%

The Tribunal dismissed the appeal of the assessee concerning the disallowance of excess claim of depreciation on mobile phones. The Tribunal upheld the decision of the Hon'ble Kerala High Court, which determined that depreciation on mobile phones should be allowed at a rate of 15% as they are not classified as computers. The Tribunal emphasized that if a mobile phone's functionality is comparable to or surpasses that of a computer, it may be considered a computer for depreciation purposes. However, as no evidence was presented in this case, the Tribunal affirmed the 15% depreciation rate for mobile phones based on the Kerala High Court's ruling.

---

---

Issues:
1. Disallowance of excess claim of depreciation on mobile phones.

Analysis:
The appeal was filed against the order of the CIT (Appeals) regarding the disallowance of excess claim of depreciation on mobile phones. The main issue in this appeal was whether the CIT (Appeals) was correct in upholding the action of the Assessing Officer in allowing depreciation on mobile phones at 15% instead of the 60% claimed by the assessee. The assessee, a company engaged in the business of purchase and sale of air-time for mobile phones, had filed its return of income for the assessment year 2012-13. The assessment was made by the Dy. Commissioner of Income Tax, determining the total income of the assessee. The dispute arose due to the disallowance of the excess claim of depreciation amounting to &8377; 16,16,817.

The assessee failed to appear before the authorities despite multiple notices. The learned DR argued that the issue was settled by a decision of the Hon'ble Kerala High Court, which held that depreciation on mobile phones should be allowed at 15% as they are not considered computers. The DR contended that this decision was followed by the CIT (Appeals) and should be upheld in this case as well.

After considering the contentions and reviewing the lower authorities' orders, the Tribunal noted that the issue of depreciation on mobile phones had been settled by the decision of the Hon'ble Kerala High Court in the case of Federal Bank Ltd. Vs. ACIT. The Court held that mobile phones are not computers and, therefore, depreciation on them should be allowed at the general rate of 15%. The Tribunal upheld this decision and dismissed the appeal of the assessee. The Tribunal also mentioned that if a mobile phone's functionality is equivalent to or exceeds that of a computer, it may qualify as a computer for depreciation purposes. However, as no such information was provided in the present case, the Tribunal followed the Kerala High Court's decision and upheld the 15% depreciation rate for mobile phones.

In conclusion, the Tribunal dismissed the appeal of the assessee based on the decision of the Hon'ble Kerala High Court regarding the allowable depreciation rate for mobile phones.

---