1998 (10) TMI 15

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..... ic prohibition under section 32A(1)(a) against the deduction in respect of the plant and machinery installed in office premises ?" The assessment year is 1985-86 : The assessee is engaged in the business of processing data with computers and the preparation of balance-sheets and financial accounts, etc., for its customers. Investment allowance was claimed by the assessee for the computers installed for the purpose of its business. That claim was disallowed by the Income-tax Officer on the ground that a computer is only a processor and no manufacture or production of article or thing is involved when that process is performed by the computers. The Commissioner rejected the assessee's appeal. The Tribunal having allowed further appeal of th .....

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..... ocessing and therefore capable of being regarded as part of the process or production. The balance-sheets, sales analysis, statements, etc., obtained as a result of processing are movables and are different from the data that was initially fed into the computer though based upon the data so fed in. The use to which the end-product is put is different from the one to which the raw data is put at the time it is fed into a computer. The end-products obtained as a result of data processing such as balance-sheets, etc., are therefore capable of being regarded as new articles. The data processing activity is an organised activity. The machines have to be operated by employing persons trained for that purpose. The employee and employer relationsh .....

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..... he requirements of the customers, processing was involved and, therefore, the data processing company is an industrial company entitled to the concessional rate of taxation under section 2(7)(c) of the Finance (No. 2) Act, 1977. The court further observed that the activities involved in a data processing company would clearly fall within the concept of goods, though not manufacture of goods. In the case of CIT v. Peerless Consultancy Services (Pvt.) Ltd. [1990] 186 ITR 609, the Calcutta High Court also held that a data processing company is an industrial company for the purpose of the Finance Act, 1981. We, therefore, answer the question referred to us in favour of the assessee and against the Revenue.
Case laws, Decisions, Judgements .....

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