DCIT, Circle-1, LTU Vs International Tractor Ltd. (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) delivered a consolidated order in a batch of cross appeals filed by the Revenue and International Tractors Ltd. concerning assessment years 2010-11 to 2013-14. The matters involved depreciation claims, treatment of software expenditure, deduction under section 80JJAA, research and development (R&D) expenditure, provision for warranty, prior period expenses, disallowance under section 14A, and penalty proceedings.
The case originated from assessments completed under section 143(3) of the Income Tax Act, 1961, in which the Assessing Officer (AO) made several additions and disallowances. Both the assessee and the Revenue challenged different aspects before the Commissioner of Income Tax (Appeals) [CIT(A)], and the ITAT was eventually called upon to adjudicate.
Revenue’s Appeal – ITA No. 2618/Del/2015 (AY 2010-11)
1. Depreciation on UPS
The AO restricted depreciation on Uninterrupted Power Supply (UPS) equipment to 15%, treating it as plant and machinery. The CIT(A), however, held UPS to be a computer accessory, eligible for 60% depreciation.
The ITAT referred to BSES Yamuna Power Ltd. v. ITO (2010-TIOL-636-ITAT-DEL) and similar rulings where UPS was held integral to computer systems. Respectfully following these precedents, the Tribunal upheld the CIT(A)’s view and dismissed the Revenue’s ground.
