Tribunal Affirms 60% Depreciation on Printers and Scanners as Computer Components; Xerox Machines at 25% Depreciation.

The ITAT upheld the Ld. CIT(A)'s decision, allowing 60% depreciation on the printer and scanner, affirming them as integral components of the computer system. The Tribunal dismissed the revenue's appeal, referencing legal precedents and definitions from the Income Tax Act and the Institute of Chartered Accountants of India. The Tribunal concluded that the colour Xerox machine does not qualify as a computer, thus receiving 25% depreciation. The decision emphasized the interdependence of the printer and scanner with the computer, aligning with the principle that assets fulfilling specific technical functions qualify as plants for depreciation purposes.

---

---

Issues:
- Disallowance of depreciation at a higher rate for a colour Xerox machine.
- Interpretation of the term "computer" for depreciation purposes.
- Whether the printer and scanner are integral parts of the computer system.

Analysis:
1. The appeal concerned the disallowance of depreciation on a colour Xerox machine at a higher rate. The Assessing Officer found the machine not eligible for the claimed 60% depreciation, reducing it to 20%. The Ld. CIT(A) sought a remand report, concluding the machine was not a computer and should receive 25% depreciation. The Departmental Representative argued against the higher rate, citing the machine's nature and its separation from the computer.

2. The assessee contended that the printer and scanner were part of the computer system, thus eligible for 60% depreciation. Reference was made to the Institute of Chartered Accountants of India's definition of a computer, including input and output devices. The purchased scanner and printer were described as integral components of the computer, with software loaded in the CPU, supporting the claim for higher depreciation.

3. The Tribunal noted the absence of a statutory definition for a computer but referred to the definition of a computer system under the Income Tax Act. The Institute of Chartered Accountants of India's definition was also considered, emphasizing the components and functions of a computer. The Inspector's report highlighted the interdependence of the printer and scanner with the computer, crucial for their operation.

4. Relying on legal precedents, including the Allahabad High Court and the Supreme Court judgments, the Tribunal determined that the printer and scanner were integral parts of the computer system. Following the principle that assets serving specific technical requirements qualify as plants, the Tribunal upheld the Ld. CIT(A)'s decision to allow 60% depreciation on the printer and scanner, dismissing the appeal by the revenue.

---