TelCordia Technologies India Pvt Ltd v. ACIT, CIR 3(3), Mumbai
In the Income Tax Appellate Tribunal Mumbai Bench ‘E’
ITA No. 7821/Mum/2011
Before PM Jagtap, A.M. and Amit Shukla, J.M.
Decided on May 11, 2012
Relevancy of the case: Whether UPS can be considered under the definition of a computer?
Statutes & Provisions Involved
- The Information Technology Act, 2000 (Section 2(1)(i))
Relevant Facts of the Case
- The appeal is directed against the order dated 19-10- 2011, passed by the Assistant Commissioner of Income Tax, Circle 3(3), Mumbai under Section 143(3) read with Section 144C(13) for the assessment year 2007-2008.
- The concerned ground of appeal on which the assessee has raised the issue is the application of depreciation 60% on UPS instead of 15%.
- The assessee had purchased UPS of 120 KVA + 40 KVA for the purpose of using the same for the unit which was eligible for exemption under Section 10A, for various office items, data centre equipment, networking equipment, computers routers, switches, emergency lights, IT infrastructure and various other office equipment.
Opinion of the Bench
- From the details and material placed on record, it is seen that the UPS has been used for various kinds of office equipment and plant and machinery.
- This issue has been discussed and dealt with by the ITAT Delhi Bench in the case of Nestle India Ltd, wherein following findings have been given with regard to depreciation of computer and depreciation of UPS –
“The expression “computer” has not been defined in the Act. However, it has been defined by s.2(1)(i) of the Information Technology Act, 2000. As per the said Act, “computer” means any electronic, magnet, optical or other high-speed data processing device or system which performs logical, arithmetic and memory functions by manipulation of electronics or magnetic or optical impulses and include all input-output processing, storage, computer software or communication facilities which are connected or related to the computer in a computer system or computer network.
Whereas the UPS, is defined by Webopedia Computer Dictionary, stands for uninterruptible power supply. Thus, the UPS mainly ensures uninterrupted power supply to a computer network and also regulates the flow of power to avoid any kind of damage to the computer network.
- The UPS is also not inbuilt in the computer as a battery in the laptop to make it an integral part of the computer system. It merely gives external aid to the computer system by ensuring the uninterrupted power supply in emergency and in regulating the flow of power.
- It is worthwhile to note here that the computer system can function independently without the UPS and even the UPS generally can be used to ensure uninterrupted power supply to other equipment besides a computer. It is, thus, not the integral part of the computer system like printer and scanner, which being output devices of the computer system are its integral part.
Respectfully following the aforesaid decision, the court held that the UPS which has been used for the office equipment and plants and machinery, the depreciation is to be allowed at the rate of 15%.