NXP India Pvt. Ltd Vs DCIT (ITAT Bangalore)
ITAT Bangalore based on the judgement of Datacraft India Ltd. held that if the networking equipment is used as a part of the computer in its functions, then the same will be classified as computers for the purpose of depreciation.
Facts-
The assessee is among the top 5 MNC employers in the semiconductor space and is a major force in the Indian Semiconductor space and as a contract development service organization. The core areas of the assessee’s activities in India include development, design and sales agent support services. The assessee creates semiconductor related system solutions and software that deliver better sensory experience in mobile phones, personal media players, identification applications, cars and a wide range of other electronic devices.
Notably, the assessee acquired certain networking equipment during the year under consideration and the same have considered as addition to 60% depreciation block of assets. The AO held that the networking equipment cannot be classified as Computers and therefore allowed the depreciation at 15% instead of 60% and made the addition for the difference. The DRP confirmed the addition on the same ground.
Conclusion-
Special Bench of Hon’ble ITAT Mumbai in the case of Datacraft India Ltd. held that when a device is used as a part of the computer in its functions, then it would be termed as a computer.
We remand the issue back to the file of the Assessing Officer for fresh consideration with a direction to take into account the decision of the special bench in the case of Datacraft India Ltd, after affording the assessee adequate opportunity of being heard and to file details / submissions required. It is ordered accordingly.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal by the assessee is against the final assessment order passed by Assessing Officer, National e-Assessement Centre, Delhi u/s. 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income-tax Act, 1961 [the Act] dated 23.04.2021 for the assessment year 2016-17.
2. The assessee is among the top 5 MNC employers in the semiconductor space and is a major force in the Indian Semiconductor space and as a contract development service organization. The core areas of the assessee’s activities in India include development, design and sales agent support services. The assessee creates semiconductor related system solutions and software that deliver better sensory experience in mobile phones, personal media players, identification applications, cars and a wide range of other electronic devices.
3. The assessee’s Associated Enterprise (AE) formulates the overall strategy in respect of assessee’s customers in India and South East Asia and lays down the guidelines, procedures and rules to be implemented by the assessee in respect of sales agent support services the assessee renders to its AE. The assessee within the overall marketing strategy developed by its AE is responsible for identifying prospective customers, generating customers lead information and educating the prospective customers about its AEs products and services within the target industry on the following services:-
