ITAT Allows 60% Depreciation On ATM machines As Applicable To Computer Software

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has allowed the 60% depreciation on ATM machines as applicable to computer software.

The two-member bench of Sonjoy Sharma (Judicial Member) and G. Manjunatha (Accountant Member) has observed that once the assessee is entitled to 60% of depreciation on ATM machines, the Assessing Officer has to work out the depreciation right from the beginning at 60% to compute WDV.

The appellant/assessee is in the business of providing automated teller machine (ATM) management services. The assessee filed its return of income for the assessment year 2017-18, admitting a total income of Rs. 81,42,210 and a book profit of Rs. 3,09,79,643 under section 115JB of the Income Tax Act, 1961. The assessment has been completed under section 143(3) and determines a total assessed income of Rs. 27,98,691 under normal provisions and a book profit of Rs. 3,09,79,643 under section 115JB.

On appeal, the CIT(A) dismissed the appeal filed by the assessee. The CIT(A) sustained the addition made by the Assessing Officer towards disallowance against depreciation on ATM machines and the addition of cessation of liability under section 41(1).

The issue raised was in respect of the disallowance of depreciation on ATMs.

The assessee submitted that the issue was squarely covered in favour of the assessee by the decision of the ITAT, Chennai in the assessee's own case for the assessment years 2013-14 onwards. The Tribunal has held that the ATM machines are eligible for depreciation at 60%, as applicable to computer software.

The department contended that the Assessing Officer had not made any addition towards disallowance of depreciation even though he had restricted the depreciation on ATM machines to 15% as against the 60% depreciation claimed by the assessee.

The ITAT directed the AO to allow depreciation at 60% and work out the opening WDV and compute the correct depreciation to be allowed for the assessment year.

Case Title: M/s. Financial Software and Systems Private Limited Versus The Deputy Commissioner of Income Tax

Citation: I.T.A. No.439/Chny/2022

Date: 24.08.2022

Counsel For Appellant: C.A. Ashik Shah

Counsel For Respondent: JCIT A.S. Sumanth

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