The Amritsar bench of the Income Tax Appellate Tribunal (ITAT) in its recent ruling in the case of M/s Kohinoor Indian while upholding the order of CIT(Appeals) has inter-alia ruled that 60% Depreciation is not allowable on iPad as it is not a Computer.
Facts of the Case:
The assessee, M/s Kohinoor Indian has filed against the order of CIT(A) which had upheld the order of AO in restricting the depreciation to a general rate of 15% instead of 60% as claimed and as applicable to Computers.
As per the assessee i-pad is basically a small / tablet computer and depreciation applicable to a computer is to be allowed for an i-pad / tablet.
Order of ITAT: Deliberation and Ruling
AAR admitted that an assessee is entitled to depreciation on building, machinery plant, or furniture if it is wholly or partly owned by the assessee and is used by the assessee for the purpose of business or profession.
The Tribunal noted that the predominant purpose of the iPad is communication and not a computing device, as its main features are email, WhatsApp, Facetime calls, calls, music, films, etc through the iPad may discharge some of the functions of computers.
AAR stated that the iPad is not a substitute for a computer/ laptop, which has various utilities /functions, though some functions may be common with Ipad. In common parlance also, the iPad is considered as a communicating device with some additional features of computer and lastly, Apple store does not sell Ipad as a computer device rather it is selling it as communicating /entertainment device.
The Tribunal further added that the iPad is a communication device, as it is having an IMEI number, though the assessee had denied having the IMEI number, in the subject matter of the iPad, however, no concrete evidence has been produced on record in this regard.
AAR was of opinion that in case the assessee wishes to claim that iPad is a computer and is required to have depreciation the higher rate, then, the onus is on the assessee to prove that the assessee is entitled to higher depreciation and merely on the basis of deduction/assumption it cannot be held that the iPad is a computer.
In view of the above deliberations the Coram of Accountant Member, Dr. M.L.Meena, and Judicial Member, Lalit Kumar upheld the order of CIT (A), dismissed the appeal, and held that iPad is not a computer hence depreciation at low rate is applicable.
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