Depreciation allowed on new server, storage and accessories procured during the year on lease

DCIT Vs BSE Ltd. (ITAT Mumbai)

Facts- Briefly the facts are, in course of assessment proceedings, the AO noticed that the assessee had claimed depreciation of Rs.1,14,26,646/- on a server taken on financial lease. Noticing that similar claim made by the assessee in Assessment Year 2012-13 was disallowed, the AO called upon the assessee to explain why similar disallowance should not be made. Though, the assessee objected to the proposed disallowance; however, the AO, relying upon the decision of Hon’ble Supreme Court in the case of ICDS Ltd, held that the assessee not being the owner of the asset, depreciation cannot be allowed. Though, the assessee contested the aforesaid disallowance before learned Commissioner of Income Tax (Appeals), however, it was unsuccessful.

Conclusion- Where assessee claimed depreciation on new server, storage and accessories procured during the year on lease and the assessee incurred cost of such asset and was also paying interest on lease; the assessee would be eligible to claim such depreciation.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

1. By way of this appeal, the Assessing Officer has challenged correctness of the order dated 21^st November 2019, passed by the learned CIT(A) in the matter of under section 143(3) of the Income Tax Act 1961, for the assessment year 2015-16.

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