TMI Blog2010 (6) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... EMBER J, Mathew Joseph for the Appellant. T.J. Vincent for the Respondent. ORDER Sanjay Arora, Accountant Member. This Appeal by the Assessee is arising out of the Order by the Commissioner of Income-tax (Appeals)-II,Kochi( CIT(A) ) for short) dated 31.7.2008, and the assessment year (A.Y.) under reference is 2005-06. 2. The appeal raises two issues, which we shall take up in seriatim. The first concerns the assessee s claim for depreciation allowance u/s. 32 of the Income-tax Act, 1961 ( the Act hereinafter), which stood made on the relevant plant machinery at Rs. 8,48,111/-, and restricted by the Assessing Officer (AO) vide assessment u/s. 143(3) of the Act, dated 24.12.2007, to Rs. 3,53,379/-, at which amount it stands confirmed vide the impugned Order. The details of the relevant machinery as also the depreciation claimed and allowed thereon, is tabulated hereunder for ready reference: (Amount in Rs.) Sl. No Name of the machinery Cost (Rs.) Depreciation Depreciation claimed allowed 1. Dainippon Screen 17,83,071 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light thereof The said equipment, therefore, cannot be considered as either computers or computer software. 4.2 The only issue, therefore, that would survive is the rate of depreciation exigible on items listed at Sl. Nos. 1, 4 and 5 of the Table at para 2 above. With regard to this, it would be, firstly, necessary to go by the meaning and scope of the term computer and computer software . The same, though defined in the Act, would, without doubt, have to conform to the common understanding of the said terms, being, in fact, one of common usage and application. The term Computer system , as defined in the Explanation to clause (xi) to s. 36(1) of the Act, means a device or collection of devices including input and output support devices and excluding calculators which are not programmable and capable of being used in conjunction with external files, or more of which contain computer programmes, electronic instructions, input data and output data, that performs functions including, but not limited to, logic, arithmetic, data storage and retrieval, communication and control. The study material on the paper on information technology issued by the Institute of Chartered Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the copy of the invoices as also the product catalogues as issued by the product manufacturers. We shall, for the purpose of our examination and analysis, go by the said material. 4.4 At this stage it would be relevant to take note of the assessee s business as well as the production process involved, i.e., in which the machinery under reference stands deployed. The assessee is in the printing business. The production process as delineated in the product catalogue from the supplier Dainippon Screen Mfg. Co. Ltd. ( DSML for short / HN Pg. 12) is as: Automatic Plate Recorder -ProcessorOver-bridge - Plate Processor - Stacker. Processor bridge automates transport of plates between the Plate Recorder and the Processor. Exposed thermal plates from the plate recorder onto the bridge and are then conveyed to the plate processor for inline processing. The movement of the plates to the press is from the stacker attached to the processor. 4.5 The description of the first machine in the relevant invoice (Hearing Note (HN), pg.9) reads as Dainippon Screen PT-R 8000II, Semi Automatic Thermal CTP complete with accessories. We have gone through the catalogue from DSML (HN Pg. 12); a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cameras, cell phones, washing machines, DVDs, to name some modern home appliances; in vehicles, as motor-car, aeroplanes, rockets, etc.; rather, in the entire range of industrial applications spread across different areas; the computers having permeated almost every sphere of human activity. This would not make them any less the machines they are known and functionally used as, i.e., as vehicles, cameras, washing machines, etc. Like-wise for the specialized machines imported by the assessee for undertaking distinct and independent jobs in relation to printing, as these continue to functionally remain so and used as such. It is precisely for this reason that it was observed by the Bench during the course of hearing itself if the relevant entry in the depreciation schedule speaks of (say) an electronic microprocessor based system , to, of course, an answer in the negative by the ld. A.R. 4.7 Coming to the decisions relied upon by the assessee; in the case of Rajasthan Patrika (P.) Ltd ( supra ), it was the case of the computer directly yielding print output so that it was held to be computer printing machine, i.e., a computer which yields print output, rejecting the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arately at that, different processes of the printing activity, would bear out the un-maintainability of the assessee s claim. The acid, and we consider the only, test, would be to examine, on a conspectus of the obtaining facts and circumstances, if the machine under reference is being used essentially for its computing capability or the same constitutes an element or ingredient of the activity which, if any, it is designed or geared to do or perform. This is as it is only where the machine is being used essentially and predominantly for its computing capability, and not being harnessed for other specialized industrial - be it mechanical, electric or electronic (or a composite thereof) - activity, that it could be rightly called a computer. 4.8 In view of the foregoing, we are of the considered view that the hardware under question, involved in the execution of the printing processes by the assessee, does not qualify to be categorized as computers and, thus, not eligible for a higher rate of depreciation in its respect and, accordingly, confirm the finding by the authorities below. 5. As regards the second issue, the assessee was found to have claimed labour charges in su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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