60% depreciation was allowable on ATM machines

Financial Software and Systems Pvt. Ltd. Vs DCIT (ITAT Chennai)

Conclusion: Higher rate of depreciation was allowable on ATM machines as these machines was to be treated as “Computers” for the purpose of Section 32 of the Income Tax Act, 1961.

Held: AO allowed depreciation on ATM machines @15% as against the claim of the assessee at 60%, rejecting the contention of the assessee that ATM machine falling within the meaning of “computer” qualifying for depreciation @60% by placing reliance on the decision of Honble Karnataka High Court in the case of Diebold Systems (P) Ltd vs. Commissioner of C.T. (2006) 144 STC 59, under Karnataka VAT Act, 2003. It was held that in the matter of interpretation of an entry under the sales tax laws ‘Trade Test’ or ‘Common Parlance Test’ is applied while considering whether a particular item/goods fall in an entry or not, whereas under the Income-tax Act, 1961, particularly when considering whether an item is to be considered as ‘plant and machinery’ and/or ‘building’ or any of the items specified in the Appendix to the Income tax Rules, 1962, functional test is the decisive test, as ruled by the Honble Supreme Court of India in numerous cases, one such being CIT vs. Anand Theatres (2000) 244 ITR 192/110 Taxman 338. The issue was already decided in favour of the assessee in assessee own case by the Co-ordinate Bench of the Tribunal and hence, AO was directed to allow depreciation @60% as claimed by assessee.

FULL TEXT OF THE ITAT JUDGEMENT

These are appeals filed by the assessee directed against common order of Id. Commissioner of Income Tax (Appeals)-6, Chennai, (‘CIT(A)’ for short) dated 29.04.2019 for the Assessment Years 2015-2016 and 2016-2017.

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