Most of us might have used an iPad as a replacement for office computers while working from home. From writing emails to attending video calls for work, people used the iPad for several computing purposes. As a result, there was a lot of confusion about whether someone can claim tax depreciation on the iPad at the rates of PCs. Thus, the Income Tax Department issued a clarification and important update for taxpayers and stakeholders in this regard. Let us discuss the latest update of Income Tax Dept doesn’t consider iPad as a Computer in detail.
Query on whether an iPad is a Mobile or a Computer?
The assessee, M/s Kohinoor Indian recently raised the query to the Income Tax Department. The query was whether the iPad falls in the definition of computer or mobile phone. As per query, If an iPad falls in the definition of computer then a high rate of depreciation applies. However, if it is categorized under mobile phones then the lower rate of depreciation applies.
Income Tax Appellate Tribunal reply to iPad a Computer or not
The Amritsar bench of the Income Tax Appellate Tribunal (ITAT) clearly states that an iPad is a communication device and not a computer. Thus, the depreciation rate of 60%, which is the rate applicable for computers, doesn’t apply to iPads.
As a result, this restricts the depreciation claim up to only 15% that Kohinoor Indian can claim.
It is important to note that the term ‘computer’ has not been defined under the Income Tax (I-T) Act, but however, under the Information Technology (IT) Act, the features of drafting, sending, and receiving an email qualifies an Apple iPad as a computer.
Similarly, The Tribunal also mentions that the predominant purpose of the iPad is communication and not computing as its main features are email, WhatsApp, Facetime calls, calls, music, films, etc.
Consequences of Income tax Dept doesn’t consider iPad a Computer
The decision by ITAT generated detailed discussions among tax specialists. Ameya Kunte, a founder of Globalview Advisors, said, “In order to avoid future lawsuits, the depreciation rates should be reviewed with the realities of the post-Covid world.
Furthermore, ITAT asks in case the assessee wishes to claim that iPad is a computer and is required to have depreciation at a higher rate, then the assessee must prove that they are entitled to higher depreciation. In conclusion, the iPad is a tablet hence other tablets and mobile devices should not be treated as computers for income tax purposes and iPad users can claim only 15% depreciation.
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