TaxTMI 
TaxTMI 
TaxTMI 
1992 (4) TMI 114
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich the accounting year ended on 31-3-1984. A scrutiny of the balance sheet revealed that the assessee had purchased a PSI Micro-computer in March 1984 for Rs. 2,02,591 and investment allowance of Rs. 50,648 was claimed thereon as a deduction. 3. The Assessing Officer rejected the claim for the reasons that only if it is owned and used wholly for the purpose of business and it is installed for the purpose of business of generation and distribution of electricity or in a small scale industrial undertaking for the purpose of business of manufacture or production of any article and both the conditions were not satisfied in this case. Therefore, he disallowed the amount of Rs. 50,648 claimed as invesment allowance and determined the total inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Directorate of the Industries issued a certificate provisionally treating the assessee as a small scale industrial unit. He also gave complete details of the computer and stated that one full time programmer, data entry and console operator and one system analyst are separately employed for operating the computer. The nature of services undertaking is said to be writing assignment of one of the clients in the initial year, The output would be in the form of cash book, bank book, ledger, subsidiary ledger etc. Subsequently, the computer has been given on hire charges to Acfin Computer Systems Pvt. Ltd. and hire charges of Rs. 9,000 were received for the year ending March 1985 and Rs. 24,000 for the year ending March 1986 relevant for the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sentative, on the other hand, strongly supported the decision of the authorities. Further, it was contended that only duplication of audit and books of accounts are still retained and there was no industrial undertaking so as to be eligible for investment allowance. 7. We have duly considered the submissions of the counsels, written submissions of the assessee and the decisions cited. At the outset, it has to be observed that the decisions cited by the learned counsel for the assessee all related to firms and private limited company formed for carrying on business and used computer for different specialised services. In this case, we are concerned with the claim made by a firm of professional chartered accountants. Although the Micro-compu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ustrial undertaking. A firm of chartered accountants carrying on professional services cannot become partners of business of industrial undertaking. In the case laws cited, partnership firms carrying on business were rendering specialised computer services to customers. There could be no dispute regarding the fact that the term 'industry' is a term of wide import and pre-supposes systematic activity, organised by co-operation between employer and employee and for the production or distribution of goods and services calculated to satisfy human wants and wishes. Further, the word 'undertaking' is in actual effect an activity of man which, in commercial or business parlance, means an activity engaged in with a view to earn profit, vide decisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vity for the production of goods and services calculated to be satisfied by human wants and wishes. Therefore, there was no systematic activity or systematic production or distribution of goods and services during the short period 21st March, 1984 to 31st March, 1984. Further the definition of "undertaking" from the commercial or business parlance means an activity engaged in with a view to earn profits. During the short period of 11 days there was a solitary receipt of Rs. 2,000 vis-a-vis the claim of investment allowance of Rs. 50,648, and it could not be held to be an undertaking for the assessment year 1984-85 under consideration. However, for the assessment years 1985-86 and 1986-87 when the Micro-computer has been leased out, the test....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s activity during the interregnum 21st March, 1984 to 31st March, 1984 is only concocted so as to make it a separate business activity. This leads us to consider the crucial, point whether a period of 11 days, so to say, would constitute a previous year for the new business set up. In our considered view, the claim is not at all justified because there could be no previous year for 11 days and it would lead to absurdity. In the circumstances, we are satisfied that the Micro-computer was not wholly used for the purpose of business during the period 21st March, 1984 to 31st March, 1984. Further there is no evidence on record to show that the assessee had created the necessary reserve against the business income, if any, arising out of the Mic....