2022 (6) TMI 1197 - AT - Income Tax

ITAT confirms 60% depreciation rate on POS Terminals, dismissing Revenue's appeal

Dy. CIT Circle Circle-19 (1), New Delhi Versus M/s. Oxygen Services (India) Pvt. Ltd.

The ITAT upheld the Ld. CIT(A)'s decision to allow a 60% depreciation rate on POS Terminals, dismissing the Revenue's appeal based on consistent judicial ... Disallowance of depreciation claimed at a higher rate of 60% on POS Terminals - whether ‘POS Terminal’ does not come under the purview of ‘Computer Software’ which has been defined as ‘any computer program recorded on any disc, tape, perforated media or other information storage device’ in Note 7 to New Appendix 1 of the Income Tax Rules,1962? - HELD THAT:- Issue decided in favour of assessee as relying on own case [2019 (2) TMI 993 - ITAT DELHI] - Decided against revenue. Issues Involved:1. Disallowance of depreciation on POS terminals.Issue-wise Detailed Analysis:1. Disallowance of Depreciation on POS Terminals:(A) The Revenue appealed against the order of the Learned Commissioner of Income Tax (Appeals)-22, New Delhi (Ld. CIT(A)), dated 15.10.2019, for the Assessment Year 2015-16. The primary issue was the deletion of the addition of Rs.3,60,53,156/- made by the Assessing Officer (AO) due to the disallowance of depreciation claimed at a higher rate of 60% on POS Terminals by the assessee. The AO treated POS Terminals as 'Plant and Machinery' and allowed depreciation at 15%, contrary to the assessee's claim of 60% under the classification of 'Computers.'(B) The AO's assessment order dated 13.11.2017, under section 143(3) of the Income Tax Act, disallowed the higher depreciation rate on POS Terminals. The assessee contended that POS Terminals qualify as 'Computers' eligible for a 60% depreciation rate, but the AO reclassified them as 'Plant and Machinery.'(B.1) The assessee appealed to the Ld. CIT(A), who deleted the disallowance based on precedents in the assessee's own cases for previous assessment years (2007-08 to 2016-17) and the Income Tax Appellate Tribunal (ITAT) orders for Assessment Years 2008-09, 2009-10, and 2010-11. The Ld. CIT(A) concluded that the facts remained consistent with earlier years, justifying the 60% depreciation rate on POS Terminals.(B.1.1) The Revenue's present appeal before the ITAT argued against the Ld. CIT(A)'s order. However, during the appellate proceedings, the assessee's representative submitted multiple ITAT orders and a brief synopsis reinforcing the claim that the issue was previously settled in favor of the assessee by the jurisdictional High Court of Delhi.(B.2) Both parties agreed that the issue was covered by judicial precedents, including the jurisdictional High Court's decision and ITAT orders in the assessee's favor. The ITAT noted that neither party presented new material to challenge the Ld. CIT(A)'s decision or the established judicial precedents.(B.2.1) After hearing both sides and reviewing the records, the ITAT found no reason to deviate from the previous rulings. The ITAT upheld the Ld. CIT(A)'s order, dismissing the Revenue's appeal and confirming the 60% depreciation rate on POS Terminals.(C) Consequently, the Revenue's appeal was dismissed, and the ITAT's decision was pronounced orally on 16th June 2022 and signed in writing on 20th June 2022.Conclusion:The ITAT upheld the Ld. CIT(A)'s decision to allow a 60% depreciation rate on POS Terminals, dismissing the Revenue's appeal based on consistent judicial precedents favoring the assessee.