Commissioner of Income Tax vs Radla Machinery Export

These two references u/s 256(1) of the Income Tax Act, 1961, are at the instance of the Department in respect of the same assessee for the assessment years 1982-83 and 1983-84. In Reference No. 17 of 1991 the following question of law has been referred:

Whether, on the facts and in the circumstances of the case, the Tribunal was, in law, justified in holding that the assessee''s claim of investment allowance u/s 32A on computer was allowable ?

Whereas in Reference No. 251 of 1992 the following question of law has been referred:

Whether, on the facts and in the circumstances of the case, the Tribunal was, in law, justified in holding that the assessee''s claim for investment allowance u/s 32A as well as additional depreciation on computer was allowable ?

The assessee is a registered firm and was engaged in the business of pumps and electrical motors and was sole distributor of Jyoti Pump and most of its supplies were made to the Government Department. It installed a computer. During the assessment year 1982-83 it claimed that the computer is a plant and would qualify for investment allowance u/s 32A of the Income Tax Act. The said claim was rejected by the assessing authority. In appeal the authority came to the conclusion that the assessee had installed the computer mainly for offering services to the outsiders and in the years to come substantial receipts have been disclosed for the services rendered. The Commissioner of Income Tax (Appeals) held that the computer constitutes plant and machinery within the meaning of Section 32 of the Income Tax Act, 1961, and, therefore, the assessee was entitled to get investment allowance in respect of the computer. This order was confirmed in further appeal filed by the Department before the Tribunal.

Heard learned Counsel for the parties and perused the record.

Today we have held in I. T. R. No. 68 of 1987 connected with I. T. R. No. 275 of 1991, The Commissioner of Income Tax Vs. Bajrang Dal Mills, that "ultrasound machine" and "X-ray machine", etc., are plant and produce "article or things".

Respectfully following the aforesaid decision we answer the aforesaid question referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue, in both the references. There will be, however, no order as to costs.