Investment allowance for data-processing computers accepted where processed printouts were treated as production under section 32A.

Investment allowance under section 32A was available where a computer used in data processing generated processed printouts treated as an article or thing produced. The wider expression "production" was applied, so the activity did not need to amount to manufacture in the strict sense. Because the computer was used in an industrial undertaking to produce the processed output, the statutory condition was satisfied and the assessee was entitled to the allowance claimed.

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Issues: Whether the assessee was entitled to investment allowance under section 32A of the Income-tax Act, 1961 for a computer used in data processing, on the footing that the processed and printed-out data amounted to an article or thing produced.

Analysis: The allowance under section 32A depends on the machinery being installed in an industrial undertaking for the purpose of construction, manufacture or production of an article or thing. Even if the activity did not amount to manufacture in the strict sense, the wider expression "production" covered the processed data printouts generated and printed by the computer. The processed output was treated as a thing produced by the assessee, and the activity was held sufficient to satisfy the statutory condition. The reasoning also drew support from the distinction between manufacture and production and from authority treating printing activity as manufacturing or productive activity.

Conclusion: The assessee satisfied the requirements of section 32A and was entitled to the investment allowance claimed.

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