Computerised type-setting equipment qualifies for higher depreciation where its real function is data processing, not ordinary printing machinery.

For income-tax depreciation, the real character and function of equipment prevail over its import classification or customs treatment. A comp set photo type setter with a mini-computer brain, memory, record/playback and editing functions, which controlled the full type-setting process up to camera-ready reproduction, was treated as a computerised data-processing system rather than an ordinary printing machine or electronic typewriter. It therefore fell within the computer/data-processing entry and qualified for depreciation at 20% instead of 10%, while the broader general machine or printing-machine entry was held inapplicable on the facts.

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Issues: Whether the assessee's comp set photo type setter computer was entitled to depreciation at 20% as a computer/data processing machine under item C(3) of sub-Part III of Part I of Appendix I to the Income-tax Rules, 1962, or only at 10% as a general machine.

Analysis: The item was found to have a mini-computer brain, memory, record/playback and editing functions, and to control the full type-setting process up to camera-ready reproduction. Its essential character was therefore that of a computerised printing system rather than an ordinary printing machine or an improved electronic typewriter. The earlier import classification or customs exemption was not treated as decisive for income-tax depreciation, and the broader printing-machine entry was held inapplicable on the facts.

Conclusion: The item fell within the computer/data-processing entry and qualified for depreciation at 20%, not 10%, in favour of the assessee.

Final Conclusion: The departmental challenge to the depreciation treatment failed, and the allowance of higher depreciation was sustained.

Ratio Decidendi: For depreciation purposes, the real character and function of the equipment prevails, and a computerised machine with a mini-computer and data-processing functions is to be classified under the computer/data-processing entry rather than as an ordinary machine.

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