TMI Blog2015 (10) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... dvocate for the appellant. Therefore the question no.1 is answered in the affirmative, against the Revenue and in favour of the assessee. Expenses incurred for replacing non-Y2K compliant computer with Y2K compliant computer - whether can be claimed as a deduction under section 36(1)(xi)? - Held that:- From a reading of the definition of “computer system” it is evident that it is a device or collection of devices which includes input and output support devices and is capable of being used in conjunction with external files or more which contain computer programmes, electronic instructions, input data and output data. In the instant case the Tribunal, being the ultimate fact finding authority, found that “Therefore, on the basis of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under section 36(1)(xi) of the Act ? Mr. Abhratosh Majumdar, learned advocate for the respondent submits that the first question is covered in favour of the assessee in view of the judgment of the Supreme Court of India in Deputy Commissioner of Income-tax Vs. Core Health Care Ltd. : [2008] 298 ITR 194 (SC), particularly the principles of law laid down in paragraphs 11, 13 and 14 thereof, which is not disputed by Mrs. Soma Chatterjee, learned Advocate for the appellant. Therefore, in view of the judgment in Deputy Commissioner of Income-Tax Vs. Core Health Care Ltd. (supra), the question no.1 is answered in the affirmative, against the Revenue and in favour of the assessee. So far as the question no.2 is concerned, it is submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt computer system : Provided that no such deduction shall be allowed in respect of such expenditure under any other provisions of this Act : Provided further that no such deduction shall be admissible unless the assessee furnishes in the prescribed form, along with the return of income, the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this clause: Explanation.-For the purposes of this clause,- (a) computer system 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 conjunct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on with external files or more which contain computer programmes, electronic instructions, input data and output data. In the instant case the Tribunal, being the ultimate fact finding authority, found that Therefore, on the basis of the facts and circumstances as brought on record, we are of the view that the capital expenditure required to replace the entire computer but within a network system should be allowed as an expenditure as was the intention of the legislation in the Finance Act, 1999 by inserting section 36(1)(xi). Thus the expenditure was for replacement of a system within a larger system which is permissible in law. Hence, the Tribunal was justified in allowing the claim of the appellant. The judgment in CIT vs. Asian Paints ..... X X X X Extracts X X X X X X X X Extracts X X X X
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