Income Tax Appellate Tribunal - Jaipur
Deputy Commissioner Of Income-Tax vs Rajasthan Patrika (P.) Ltd. on 25 February, 1992
Equivalent citations: [1992]41ITD349(JP)
ORDER
V.P. Elhence, Judicial Member
1. The question raised in this appeal, filed by the Department for the assessment year 1982-83, is as to whether on the "comp set Photo Type Setter Computer" the assessee was entitled to depreciation @ 10% under the general entry or at the rate of 20 per cent under item C(3) of sub-Part-III of Part I of Appendix I of the Depreciation Schedule given in the Income-tax Rules, 1962, i.e., "Data processing machines including computers (N.E.S.A.)".
2. In the original order, the Inspecting Assistant Commissioner (Assessment) had allowed 10% depreciation and in appeal the learned Commissioner of Income-tax (Appeals) vide his order dated 6-3-1987 set aside the matter to him for verification and allowance of correct depreciation. Again the Inspecting Assistant Commissioner, vide his order dated 31-3-1987 held that only 10% depreciation was allowable. The Inspecting Assistant Commissioner noticed that the assessee had claimed exemption of import duty under Notification No. 114-CUS dated 19-6-1980 issued by the Customs Department under Section 25(1) of the Customs Act, 1962 as falling under S .No. 2 of Notification, namely, "Photo Composing machines with Key-Boards". The learned Inspecting Assistant Commissioner also found that item in question had been imported by the assessee under part "A" of the Import Policy for 1980-81 as declared by the Ministry of Commerce, Govt. of India on 'OGL' basis incorporated in Appendix to the said Policy. In Part 'A' of the said Policy, it was included under sub-item 2 of item 11 at page 47 which reads as follows:
Item-11 Printing Machinery items:
2. Photo Composing/typing setting machines and ancillaries key boards, editing terminal and film/paper processors.
The assessee explained before the learned Inspecting Assistant Commissioner (Assessment) vide its letter dated 30-4-1987 that the Comp set in question was no doubt a printing machine, but it was a computer printing machine and not an ordinary printing machine. The assessee company furnished before the learned Inspecting Assistant Commissioner (Assessment) a copy of the brochure, published by the Printers House Pvt. Ltd., 10, Scindia House, PO Box 273, New Delhi, Sole Distributors for India of M/s A.M. International of Australia along with a copy of the purchase Bill dated 24-9-1980 and relevant documents relating to import duty etc. The assessee emphasised the fact that in the said brochure, the item in question was described as a "Mini Computer". The Inspecting Assistant Commissioner (Assessment) noticed that it was classified as printing machine and that in the Pamphlet, it was referred to as a "type setter machine". It was mentioned, inter alia, there that a mini-computer brain of up to 60K is at the heart of the comp set 3560/4560 to control all type setting functions from original keyboarding through play back and editing to final camera ready (reproduction). The learned Inspecting Assistant Commissioner took the view that the item was, in fact, a photo type setting machine devised for use in the printing industry and used as such a printing machine. He took the view that sub-item C(3) of sub-Part III of Part I of Appendix I of the Income-tax Rules, 1962 did not include computer printing machine. He also took the view that the scope could not be enlarged. As already mentioned above, he, therefore, held that the assessee was. not entitled to any more than 10% depreciation.
3. In appeal, the learned Commissioner (Appeals) took the view that the item in question was a computerised system and, therefore, was to be treated as a computer and not as an ordinary machine. Holding that the comp set machine in question was to be treated as a computer, he held that the assessee was entitled to depreciation @ 20%.
4. We have considered the rival submissions. The order of the learned Commissioner quotes the functioning of the comp set as explained by the assessee before him on the basis of brochure as follows:-
Mini-computer brain of up to 60K is at the heart of the comp set 3560/4560 to control all typesetting functions from original keyboarding through play back and editing to final camera ready repro. And all of this combined with very high speed and amazing simplicity of operation.
Comp set 4560 gives you real typesetting flexibility with 1120 fonts on line, freely inter mixable type sizes from 5 1/2 to 74 point selected at the touch of a key from the four type-dics. The mini-computer programme handles all the subtleties of typesetting for different languages - and offers a special reverse leading option of up to 16 inches that enables you to compose complete tabular and other formats direct from the keyboard. The big video screen displays format and job instructions plus 512 characters of copy as it is entered.
The floppy diskette Record/Playback module built into comp/set 4560 enables you t6 tap the memory capacity direct from the keyboard. You can set and record play backit and update entire or part jobs at any time. A simple key board command will find any item you need in seconds. Just one diskette stores up to 75 different jobs and up to 250 pages of tax thus eliminating the costly need to re-keyboard entire jobs just to correct or edit a small portion.
The optional Dual-diskette Record/Playback module expands your productivity still further with the ability to store format data or duplicate diskettes automatically. An alternative option is available for paper tape record/playback.
The assessee had explained before the leaned Commissioner of Income-tax (Appeals) that the comp set was fully computerised and that its main function was to settle the printing matter before it went for printing, through a computerised system and, therefore, for all practical purposes, it was a computer and, therefore, entitled to depreciation @ 20%.
Leaving aside the question as to under what head the assessee imported the comp set and got exemption from Import duty thereon, the question which falls for our consideration is whether it falls under the entry quoted above for which 20 per cent depreciation has been prescribed. The above extracted explanation regarding the functioning of the comp set shows that at its heart is a mini-computer brain to control all type setting functions from original key boarding through play back and editing through the camera ready reproduction. The big video screen displays format and job instructions plus 512 characters of copies as it is entered. The floppy diskette Record/ Playback module built into the comp set enables taping of the memory capacity direct from the key board. It is possible to set and record, play back, edit and update entire or part jobs at any time. One diskette stores up to 75 different jobs and up to 250 pages of text. The optional Dual-Diskette Record/Playback module expands the productivity still further with the ability to store format data or duplicate diskettes automatically. An alternative option is also available for paper tape record/playback. Having regard to the above function, it is clear that it is a computer printing machine having mini-computer brain and memory which is treatable as a computer and it would, therefore, fall under the entry referred to above, for which 20% depreciation is allowable. We do not accept the submission made on behalf of the Department by Shri S.K. Kundra, the learned Departmental Representative that the item in question is merely a machine or an improved electronic typewriter and, therefore, it should fall under the general entry. It was also incidentally submitted by Shri Singhvi for the subsequent assessment year, the Assessing Officer had himself granted 20% depreciation on this item. An attempt was made on behalf of the assessee by Shri H.M. Singhvi to say that even in terms of entry C(1)(a) of Sub-Part III of Part I of Appendix to the Depreciation Schedule, 20% depreciation was allowable to the assessee since that entry refers to "printing machine" also. However, we are of the view that this entry cannot be taken advantage of by the assessee because it relates to "cinematograph films - machinery used in the production and exhibition of cinematograph films" and, therefore, would have reference to printing machines of that type. However, as we have already seen above, the assessee was entitled to 20% depreciation under entry C(3) as detailed above. We are, therefore, of the view that the learned Commissioner (Appeals) was eminently justified in upholding the assessee's claim. We uphold his order.
5. In the result the appeal filed by the Department fails and is dismissed.