ORDER
& KULSHRESHTHA, J:
At the instance of the CIT, Jabalpur, the following question of law has been referred by the Tribunal, Nagpur Bench, Nagpur, under the provisions of s. 256(1) of the IT Act, 1961, for the opinion of this Court :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the computer installed by the assessee- company is not an office appliance but a plant which qualifies for investment allowance thereby cancelling the order under s. 263 of the CIT ?”
2. The matter arises out of the assessment of the respondent-assessee for the year 1982-83 for the previous year ending on 31st March, 1982. The assessee-company carries on the business of manufacturing of steel castings at Bhilai. It had installed a computer valued at Rs. 3,93,479 in the relevant account year and had claimed investment allowance which was allowed by the ITO. Proceedings were initiated by the CIT under the provisions of s. 263 of the IT Act, in which, in pursuance of the notice dt. 25th Feb., 1985, issued by the CIT, assessee had filed the reply dt. llth March, 1985. After considering the contentions raised by the assessee in support of its claim for the investment allowance, the CIT, Jabalpur, by his order dt. 13th March, 1985 disallowed the claim of the assessee- company for deduction under s. 32A of the IT Act, 1961, and directed the ITO to recompute the total income accordingly. Against the order of CIT, Jabalpur, appeal was preferred to the Tribunal, Nagpur Bench, Nagpur and the Tribunal by its order dt. 18th Aug., 1986 allowed the appeal and set aside the order passed by the CIT and restored that of the ITO. Accordingly, at the instance of the CIT, Jabalpur, the said question has been referred for opinion to this Court.
3. Sec. 32A of the IT Act makes provision for “investment allowance” in respect of a ship or an aircraft or machinery or plant specified in sub-s. (2) thereof, which is owned by the assessee and is wholly used for the purposes of the business carried on by him, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed.
The second proviso to s. 32A, however, does not permit any such deduction if the machinery or plant is installed in any office premises or any residential accommodation or in respect of any office appliance or road transport vehicles.
4. The machinery and plant referred to in sub-s. (1) of s. 32A is specified in sub-s. (2) thereof to be a new machinery or plant installed after the 31st March, 1976, in any 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.
It is, thus, clear that for making a claim for investment allowance, the assessee is required to demonstrate and satisfy the authorities concerned that the machinery or the plant was installed after 31st March, 1976, for the purpose of construction, manufacture or production of any article or thing.
5. In support of the deduction, the assessee in his letter dt. 11th March, 1985, claimed in the following terms :
“(a) It would be erroneous to hold that the said “machine is installed in any office prernises.”
The date processing machines are actually installed in date processing section
of factory premises and the said section by no reason is office premises. Therefore, proviso (a) to s. 32A(1) is not attracted. In this connection, it may be further observed that the very working of date processing machine is a technical matter and qualified and semi-qualified engineers are involved in the process of storage, control and processing of information, facts and figure in a technical manner. The very operations require specialised formation of the place of operations. As such presumption of any of the same being installed in any office premises or residential accommodation is wrong. As the facts stand, the said machines are installed in the technical section of factory prettiness.”
From the above claim made, the CIT, Jabalpur came to the conclusion that the requirement of its use for the purposes enumerated in s. 32A(2) was not satisfied and since the same was installed in the office premises with no evidence about its use in the manufacture or production of any article or thing, the ITO had erred in allowing deduction under s. 32A of the IT Act, 1961. Though the Tribunal in its order dt. 18th Aug., 1986 has allowed the appeal and set aside the order of CIT and restored that of the ITO, we do not find anything in the order of the Tribunal to suggest that the computer for which investment allowance was being claimed was being used for the purposes of manufacture or production of any article or thing.
6. Our attention has been drawn to the decision of Calcutta High Court in the case of CIT vs. Techinco Enterprises Pvt. Ltd. (1994) 119 CTR (Cal) 25 : (1994) 206 ITR 36 (Cal) laying down that even if the computer is taken outside the ambit of office appliance, the assessee cannot get investment allowance unless it is established that the computer is used for the purposes of business of manufacture or production of any article or thing.
7. We find that the assessee had not been able to discharge this burden and the Tribunal was not right in setting aside the order of CIT, Jabalpur. Accordingly, we find that the Tribunal was not right in holding that the computer installed by the assessee-company was a plant qualifying for investment allowance and in setting aside the order of CIT passed under s. 263 of the IT Act, 1961.
8. In the result, the reference is answered in favour of the Revenue and against the assessee but in the facts and circumstances of the case, we leave the parties to bear their own costs.
OPEN