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TMI Blog1990 (10) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... on the business leasing out of its Computer on a monthly rent and, therefore, it was entitled to claim investment allowance. The Income-tax Officer after going through the claim by the assessee and after calling for certain other particulars allowed the assessee's claim. In this process he allowed an investment allowance of Rs. 1,84,872. The Commissioner of Income-tax who examined the assessment record of the assessee formed an opinion that the Income-tax Officer had come to a wrong conclusion in that the assessee was carrying on business by leasing out the Computer on hire. According to him, such a leasing could not amount to carrying out of business. The income derived by way of hire should have been assessed under the head 'other sources' and not under the head 'business'. He was also of the opinion that even if the leasing out of the Computer could be held to be business, still the investment allowance could not be allowed because the assessee in order to claim investment allowance should carry on the business of working the Computer by itself, and should not lease it out. So, according to the Commissioner of Income-tax, the Assessing Officer was not justified in allowing the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sultan Bros. (P.) Ltd. v. CIT [1964] 51 ITR 353, that the Income-tax Officer had not properly and adequately investigated into the facts whether the leasing out of the Computer would amount to carrying on of business or whether the income derived from hire charges should be assessed as income from other sources. This investigation is essential for the purpose of this case. The Commissioner of Income-tax was, therefore, justified in directing the Assessing Officer to investigate into the matter. Nevertheless, since the assessee had not worked out the Computer on its own but leased it out, the requirements of section 32A were not complied with and, therefore, the investment allowance was not allowable at all. Placing reliance upon the words "wholly used" used in section 32A of the Income-tax Act, the learned Departmental Representative submitted that the use of the machinery must be exclusive by the assessee and if it is leased out, it would not satisfy the requirement of using it wholly by the assessee and, therefore, investment allowance becomes inadmissible. The Commissioner of Income-tax was, therefore, justified in holding that the assessment made by the Income-tax Officer allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Tribunal in the case of Softek (P.) Ltd. v. ITO [1990] in 32 ITD 540 (Delhi) it was held that Computers are entitled to investment allowance under section 32A of the Income-tax Act. In this decision several other decisions of the Tribunal were considered to arrive at the finding that Computers are entitled to investment allowance within the meaning of section 32A of the Income-tax Act. We are in respectful agreement with this view and following with respect this decision we hold that the Computer in the present case is also entitled to investment allowance. The next question that remains is whether leasing out of machinery, i.e., computer would amount to carry on of business. A similar question had come up for consideration perhaps for the first time before the Tribunal in the case of First Leasing Co. of India Ltd. The Bench held: " Section 32A(1) lays down the quantifications for the allowance of investment allowance, viz., firstly the machinery or plant must be such as specified in sub-section (2), secondly, it must be owned by the assessee ; finally, it must be wholly used for the purpose of the business carried on by the assessee. The conditions mentioned in sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That sub-section prescribes three conditions to be satisfied for the allowance of investment allowance. The third of the conditions is mentioned in sub-section (iii) and is in the following words : " (iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule. " This requires that the machinery, i.e., Computer must be used in an industrial undertaking for the purpose of business of (deleting the words not necessary for our present purpose) production of any article or thing not being an article or thing specified in the list in the Eleventh Schedule. The argument of the Departmental Representative is that M/s Tata Consultancy Services is not an industrial undertaking. We cannot accept this contention for two reasons. One is, this is not the reason given by the Commissioner of Income-tax in his order or in the notice given by him to the assessee calling for his explanation. Secondly, there is no evidence to show that M/s Tata Consultancy Services was not an industrial undertaking. On the other hand, the proceedings have gone ..... X X X X Extracts X X X X X X X X Extracts X X X X
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