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TMI Blog1990 (12) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... coffee etc., to the visitors and customers. However, this expenditure was only Rs. 2,21,490. He upheld the disallowance to this extent. 4. On further appeal, it has been submitted before us that part of the expenditure is relatable to the members of the staff and so, to that extent, the entire disallowance would be unreasonable. He submitted that the expenditure relatable to the staff should be allowed. We, however, find that the submission that part of the expenditure relates to the staff has not been taken up at any of the earlier stages. It was submitted by the assessee that the position in this respect is similar to the assessment years 1980-81 and 1981-82, wherein the Tribunal has admitted the assessee's contentions and had referred the matter back to the assessing authority to verify the submission. We have gone through the Tribunal's order. It appears that, for these years also, this submission was taken up for the first time at the Tribunal's stage. The Tribunal observed in paragraph 4.4 of the order as under :-- "4.4. On this issue, we find considerable force in the argument of the DR and since the issue was never examined from the point of view, we are of the opinion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as only a dealer in books. He also pointed out that the Computer was not installed in the factory. It was only in the office premises. Further, it was working as a data processing machine, i.e., information in a raw form is not an article or thing. He, therefore, agreed that the assessee was not entitled to the allowance. 9. It was submitted before us that the company is maintaining a complete data centre. This company could have been registered as a small scale industry with the Government of India. He referred to the letter of the Ministry of Industry--Office of the Development Commissioner, Small Scale Industries, dated 12th August, 1980 which stated that a specialised type of operation including software servicing and data processing could be treated as industrial activity of a small scale industry for the purpose of registration as small scale industry. He then submitted that the value of plant and machinery did not exceed Rs. 20 lakhs. Therefore, the assessee satisfied the conditions of being treated as a small scale industry under the Income-tax Act also. Referring to the decision of the Bangalore Bench of the Tribunal in the case of Krishna Associates v. ITO [1987] 22 ITD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h more than Rs. 20 lakhs. We firmly reject the assessee's contention that we should look into only the cost of the data processing machines. We are unable to do so, because the section requires ascertainment of the aggregate value of the machinery and plant. The only item that should not be taken into account are the tools, jigs, dies and moulds. All the other items, should be taken into account. They are all plant and machinery as the definition of plant in section 43 itself makes it clear. Thus, the assessee cannot be treated as a small scale industry. 12. Therefore, it is necessary for the assessee to fulfil the conditions required in the section, i.e., the assessee should construct, manufacture or produce an article or thing other than what is specified in the Eleventh Schedule. 13. The assessee has given a list of things which are produced from the data processing machine. It is very difficult for us to say that they represent any article or thing. We must make it clear here that the article or thing produced must be a commercial commodity, i.e., it should be marketed and the assessee's business would depend upon marketing these goods. For this purpose, we would refer to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the position in the assessee's case here. So this decision has also no relevance. The decision of the Karnataka High Court in the case of Datacons (P.) Ltd. is easily distinguishable. That was a decision given under section 2(7)(c) of the Finance Act, 1977. The section required an assessee to be engaged in manufacture or processing of goods. Mark the word "processing". The High Court agreed that the assessee was processing goods there. The word 'processing' does not appear in section 32A. Besides, the assessee therein was doing all this work to their customers. This is clear at page 70, where the High Court observed : "It would be clear from these activities that the assessee receives vouchers and statements of accounts from the customers and they are converted into the required balance-sheet, stock account, sales analysis etc. They are got printed as per the requirements of the customer". It will be seen that the activity is like that of Ajay Printery works' case. 15. We will now consider the decision of the Tribunal in the assessee's own case for the year 1981-82. At paragraph 9(4), the Tribunal has observed as under :-- "On this issue we, therefore, feel that it requires r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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