iPad not a computer, won’t depreciate at 60%: ITAT

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The Amritsar bench of the Income Tax Appellate Tribunal (ITAT) recently held that an iPad is a communication device and not a computer and thus, can’t be depreciated at 60%, which is the rate applicable for computers.

In terms of claiming tax depreciation, the rate for a computer is 60% while for the rest of the gadgets is 15%. ITAT thus restricted the depreciation that Jalandhar-based company Kohinoor Indian could claim to 15%, according to a  report in The Times of India. It was further slashed to 7.5% after taking into account the date of purchase of the asset, the report added.

The term ‘computer’ has not been defined under the Income Tax (I-T) Act, but however, under the Information Technology (IT) Act, the function of drafting, sending and receiving an email qualifies an Apple iPad as a computer. The bench of ITAT concluded that the iPad is in fact a communication device and not a computer or a laptop, according to the report.

The ruling has sparked debate among tax professionals. “To avoid future litigation, the depreciation rates should be revised considering the reality of the post-Covid world,” said Ameya Kunte, founder of Globeview Advisors.

The Income Tax Appellate Tribunal (ITAT), while hearing an appeal in the Indiabulls Venture Ltd case, in July 2020, had allowed 60% depreciation for computers and computer software. The tribunal held that on computers and computer software the assessee is eligible for deduction of 60%, according to Taxscan. “If assessee wishes to claim, there is no fetter on the right of the assessee, but the claim should be in accordance with the law,” said the tribunal passing the order.