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TMI Blog1990 (11) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 32A(2)(b)(iii) of the Income-tax Act, 1961 ? " Shortly stated, the facts are that the assessee-company claimed investment allowance on new plant and machinery installed in the computer division of the assessee-company. A sum of Rs. 99,006 consisting of Rs. 89,762 being the investment allowance was claimed in respect of Madras Computer Centre and Rs. 9,244 relating to the machinery installed in the Calcutta Computer Division. The Income-tax Officer, following the assessment order for the assessment year 1975-76, held that the computer being in the nature of an office appliance is not entitled to the investment allowance under section 32A(2)(b) of the Act. The Commissioner of Income-tax (Appeals), while agreeing with the Income-tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rning centre. It rendered services to outside customers also. It was registered as a factory under the relevant law. On the aforesaid facts, the Tribunal held that the services which the assessee rendered in the computer division are in relation to a profitable venture and as such it was an industrial undertaking. The Tribunal has recorded its finding that it cannot be disputed that the computations and statements that a computer brings about after processing of the technical and commercial data which are fed into the computer as inputs are entirely different in content from such inputs. The Tribunal, therefore, came to the conclusion that the business carried on by the assessee in its computer division with the aid of computer system is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of articles or things not specified in the Eleventh Schedule. The word " production " has not been defined in the Act. So the dictionary meaning has to be preferred. The Supreme Court in Chrestien Mica Industries Ltd. v. State of Bihar [1961] 12 STC 150 adopted the meaning assigned to the word " production " in the Oxford English Dictionary. The expression " production of an article " means, among other things, that which is produced ; a thing that results from any action, process or effort, a product ; a product of human activity or effort. The final end product, viz., printed materials and the statements, are entirely different articles or things different from the data which are fed into the computer and are transformed into instruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to existence a new substance and does not mean merely to produce some changes in substance whether one takes into account the wider or narrower meaning of the word " manufacture ", the expression " manufacture " means bringing into existence a new substance. The pamphlet or the balance-sheet or the share certificate is an article quite different from the raw materials, viz., paper and ink, from which they are made, the use of which would be different from the use of the raw materials used in producing them. Similarly, the printed materials and the statements would give rise to an article which is totally different from the raw data which is fed into the computer and would amount to " manufacture In Narne Tulaman Manufacturers Pvt. Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the finding of the Tribunal as to whether it was an industrial company engaged in the manufacture or processing of goods was a finding of fact. In this case also, the finding of the Tribunal is that the assessee-company is an industrial company engaged in the manufacture of articles or things which is a finding of fact and the court should not ordinarily interfere with the finding in the absence of any evidence raising the perversity of the finding. The question as to whether a computer is an office appliance within the meaning of section 32A(1)(b) of the Act has been considered by the Bombay High Court in CIT v. International Computers Ltd. [1981] 131 ITR 1. In that case, data processing machinery was let out to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported decision of this court in CIT v. Peerless Consultancy Services (Pvt.) Ltd. ( since reported in [1990] 186 ITR 609 ) in Income-tax Reference No. 23 of 1985, where the judgment was delivered on January 9, 1990. The Division Bench held that the assessee-company in that case which carried on the business of providing technical and industrial consultancy on the basis of computers and which also undertook electronic data processing was an industrial company within the meaning of section 2(7)(c) of the Finance Act, 1981. Investment allowance is admissible in respect of machinery or plant installed in any industrial undertaking for the purpose of business of construction, manufacture or production of any article or thing not being an art ..... X X X X Extracts X X X X X X X X Extracts X X X X
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