ITAT: Software Used in ATM Machines Eligible for 60% Depreciation

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

The two-member bench of Sonjoy Sharma (Judicial Member) and G. Manjunatha (Accountant Member sees that once the taxpayer would be qualified for 60% of the depreciation on ATM machines, the Assessing Officer mandated the depreciation right from the beginning at 60% to compute WDV.

The taxpayer would be in the business of furnishing the automated teller machine (ATM) management services. under section 115JB of the Income Tax Act, 1961 the taxpayer has furnished its income return 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. The assessment has been achieved under income tax section 143(3) and specifies a total assessed income of Rs. 3,09,79,643.

The taxpayer’s appeal was refused by CIT(A). The CIT(A) upheld the addition incurred via the assessing officer for the disallowance against depreciation on ATM machines and the addition of cessation of liability under section 41(1).

The problem was asked for the disallowance of depreciation on ATMs.

The problem was covered in the taxpayers’ favour via the decision of ITAT, Chennai in the assessee’s own case for the assessment years 2013-14 onwards. The Tribunal ruled that the ATM machines are qualified for depreciation at 60%, as relevant to computer software.

The council, no addition has been incurred via assessing officer for the disallowance of depreciation even though he had prohibited the depreciation on ATM machines to 15% as opposed to the 60% depreciation that the taxpayer claimed.

ITAT recommended AO for permitting the depreciation at 60% and work on the opening WDV and calculate the accurate depreciation to be permitted for the assessment year.