1992 (4) TMI 114 - AT - Income Tax

Appeal dismissed for investment allowance claim on Micro-computer not solely used for business.

Joshi And Sahney. Versus Income-Tax Officer.

The appeal was dismissed, and the order of the CIT(A) disallowing the investment allowance claim on the Micro-computer by the professional firm of ... A Firm, Financial Year, Industrial Undertaking, Investment Allowance Issues:Claim for investment allowance on a Micro-computer by a professional firm of chartered accountants.Detailed Analysis:The appeal was filed by the assessee against the order of the CIT(A) upholding the disallowance of investment allowance claimed on a Micro-computer. The assessee, a firm of professional chartered accountants, purchased a PSI Micro-computer for Rs. 2,02,591 in March 1984 and claimed an investment allowance of Rs. 50,648. The Assessing Officer rejected the claim stating that the conditions for claiming investment allowance were not satisfied as the computer was not wholly used for business purposes related to electricity generation or small-scale industrial activities. The total income was determined at Rs. 1,95,988. On appeal, the CIT(A) upheld the Assessing Officer's decision, emphasizing that the firm was not engaged in any business activities qualifying for investment allowance.During the hearing, the assessee's counsel argued that computer servicing constituted an independent industrial undertaking, citing the Directorate of Industries' provisional certificate treating the assessee as a small-scale industrial unit. The counsel provided details of the computer's operations and referred to relevant case laws supporting the claim for investment allowance. The departmental representative supported the authorities' decision, contending that no separate industrial undertaking existed.The Tribunal observed that the cited case laws pertained to firms and private limited companies engaged in specialized computer services, unlike the professional firm in question. The Tribunal found discrepancies in the assessee's claim that business commenced on 21st March 1984, as machinery components were purchased until the end of the financial year. The Tribunal noted the lack of independent evidence demonstrating a separate business entity and the absence of systematic production or distribution of goods and services during the short period in question.Furthermore, the Tribunal highlighted that the professional firm's services rendered using the Micro-computer were not distinct from its regular activities, and no separate business activity was established. While acknowledging the possibility of claiming depreciation, the Tribunal concluded that the conditions for investment allowance were not met. The Tribunal upheld the CIT(A)'s decision, dismissing the appeal and rejecting the grounds put forth by the assessee.In conclusion, the appeal was dismissed, and the order of the CIT(A) disallowing the investment allowance claim on the Micro-computer by the professional firm of chartered accountants was upheld.