COMMISSIONER OF INCOME TAX Vs. OSWAL DATA PROCESSORS

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Indore Bench, Indore, has under Section 256(1) of the Income -tax Act, 1961 (for short, 'the Act'), referred the following questions said to be of law arising out of its order dated May 10, 1991, in I. T. A. No. 440/(Ind) of 1986 : ' (i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the business of data processing with the help of computers is an industrial undertaking entitled to deduction under Section 80J ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the computer machines do not constitute office appliance and are entitled to investment allowance ?'

(2.) THE facts material for the purpose of this reference are these : The year of assessment involved is 1982 -83, previous ending June 30, 1981. The assessee is a registered firm carrying business of data processing with the help of computers. It claimed investment allowance on computers and also the deduction under Section 80J. The assessing authority, vide its order dated July 27, 1985 (annexure 'A'), disallowed the claims holding that the work of data processing is not an industrial activity. On appeal, the Commissioner of Income -tax (Appeals) allowed both the aforesaid claims of the assessee, vide its order dated February 19, 1980 (annexure 'B'). The Department then came in appeal before the Tribunal which also endorsed the order of the Commissioner of Income -tax (Appeals). The order of the Tribunal is annexure 'C'.

(3.) WE have heard Shri D.D. Vyas, learned counsel for the applicant -Department, and Shri S.S. Samvatsar, learned counsel for the non -applicant/assessee.