High obsolescence of Mobile Phones-Depreciation

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M P Arun (Querist)
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01 October 2007 Sir,
With the obsolescence rates of Mobile Phones coming down alomost every month, would still the depreciation rates for them are 15% only?
Is there any support of case law circular to claim more than 15% rate on them?
Since the cost of mobile phones themselves are some times less than Rs.5000, what is the view on depreciation and the value at which they should be carried in the balance sheet?
Is Rs.5000 criteria applies both in the Companies Act and the Income Tax Act?
Pls provide me answer keeping both the Income Tax act and the Companies Act

CA Prasanna Krishnan V

CA Prasanna Krishnan V (Expert)
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02 October 2007 Dear Sir

Both the statutes are clear enough.

You take a stand to write off your low price mobile phones in the year of purchase itself if is prudent from the management's view. But in Income Tax Act, such expediency need not be entertained. You may have to capitalise an asset if the same has got economic benefit embodied thereto for a lengthier period.

However in practice again it is matter of expediency. Your turnover and actual use mobile phone decide the same. It is not advisable to 'program' ones mind one the basis of one line direction.