Bombay High Court
Commissioner Of Income-Tax vs Prudential Management And Services ... on 13 March, 2000
Equivalent citations: [2001]250ITR136(BOM)
Bench: S.H. Kapadia, A.P. Shah
JUDGMENT
1. Admit. The respondent waives service. By consent, the appeal taken up for final hearing.
2. Whether the assessee was entitled to avail of investment allowance and additional depreciation on data processing machines is the short question which arises for consideration in this appeal.
3. The facts giving rise to this appeal briefly are as follows :
The assessee is carrying on the business of data processing with the help of computers. The assessee derived income for the assessment year 1985-86 from computer hire. The assessee claimed investment allowance on the computers installed during the year. The Assessing Officer rejected the assessee's claim on the ground that there was no manufacture or production of an article in the case of data processing. Being aggrieved, the assessee went in appeal to the appellate authority. However, the appellate authority allowed the claim for investment allowance on computers on the ground that the print cuts were things produced by the assessee. The appellate authority also accepted the contentions of the assessee that the data processing machines constituted plant and machinery. Accordingly, the appellate authority allowed the claim of the assessee regarding additional depreciation on data processing machines installed during the year. Being aggrieved, the Department carried the matter in appeal to the Tribunal, which dismissed the Department's appeal on the ground that the computers constituted plant and machinery, which were used by the assessee in the business of manufacturing or producing articles. The Tribunal followed the decision of this court in the case of CIT v. I. B. M. World Trade Corporation [1981] 130 ITR 739 as also the decision of this court in the case of CIT v. International Computers Ltd. [1981] 131 ITR 1. Being aggrieved, the Department has come in appeal to this court under Section 260A of the Income-tax Act.
4. Mr. Desai, learned counsel appearing on behalf of the Revenue, contended that the assessee was not entitled to claim investment allowance as well as additional depreciation as there was no production of an article in data processing. He relied upon the judgment of this court in CIT v. R, Shroff Consultants P. Ltd, [1999] 238 ITR 1018. He contended that in the said judgment, this court has taken the view, that the statements prepared by the assessee with the help of the computer containing the result of data processing could not be regarded as articles or things within the meaning of the words used in Section 32A. He also relied upon the judgment of the Supreme Court in the case of CIT v. I. B. M. World Trade Corporation [1981] 130 ITR 739 as also the decision of this court in the case of CIT v. International Computers Ltd. [1981] 131 ITR 1CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412. He contended that the Tribunal had not considered the above two judgments. He contended that the judgment of this court in the case of CIT v. I. B. M. World Trade Corporation [1981] 130 ITR 739 has no application to the facts of this case. Hence, he contended that the Tribunal erred in granting investment allowance to the assessee.
5. Mr. Shetty, learned counsel appearing on behalf of the assessee, contended that the Tribunal was right in coming to the conclusion that data processing amounted to production of an article.
6. Having considered the rival contentions advanced, we are of the view that in this matter the Tribunal did not have the opportunity of considering the judgment of this court in CIT v. R. Shroff Consultants P. Ltd. [1999] 238 ITR 1018. It was contended on behalf of the assessee that the said judgment has no application to the facts of this case in view of the fact that in that matter the assessee carried on the business as business consultants. In the light of the above judgment in the case of CIT v. R. Shroff Consultants P. Ltd. [1999] 238 ITR 1018 (Bom), the Tribunal will have to consider whether the assessee-company which was in the business of data processing could be said to have been engaged in the manufacture of articles or things with the help of the computer. We do not wish to make any observation on the facts either way as we are of the view that the impugned order passed by the Tribunal should be set aside and the matter be remanded back to the Tribunal for fresh consideration of the matter in the light of the judgment of this court in the case of CIT v. R. Shroff Consultants P. Ltd. [1999] 238 ITR 1018. All contentions of both the sides are expressly kept open.
7. Accordingly, the appeal stands allowed. No order as to costs.