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software which does not mean a manufacturing activity. The AO further found that the provision of subsection (4) to section 32AC of the Act has defined the term "New Assets" and as per the definition, computer and computer software are not included under the purview of "new assets". Thus, the assessee did not satisfy the condition to claim the investment allowances. Therefore, the AO disallowed the claim of the assessee and added the same to the total income.

14. On the other hand, the learned DR vehemently supported the order of the authorities below.

15. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the assessee has claimed investment allowance under section 32AC of the Act on account of purchases of computers. The revenue authorities disallowed the assessee claim for 2 reasons. The first reason being the assessee not engaged in the business of manufacture or production of any article or thing and the second reason being the computer or computer software not included in the definition of "New Assets" as per the provision of section 32AC(4)(iii) of the Act.

(iii) any office appliances including computers or computer software;

(iv) any vehicle; or

(v) any plant or machinery, the whole of the actual cost of which is allowed as deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head "Profits and gains of business or profession" of any previous year."

15.3 The relevant clause in present case is clause (iii) according to which any office appliance including the computer or computer software shall not be included in the "New asset" for purpose of this section. On careful perusal of the impugned clause, it transpired that what is excluded from the term "new asset" is office appliance .

which may include computer and computer. In other words, computer or computer software installed as office appliances are excluded and not the computer installed for the purpose of the production of article or things. Hence, the computer installed by the assessee for the purpose of development of software activity which is held by us production of article or things shall be available for investment allowances under the provision of section 32AC of the Act whereas no allowance shall be allowed on the computer installed for administrative purposes.