The main legal point established is that the processing of data using computers and related electronic equipment can qualify as an industrial activity, entitling the assessee to investment allowance.

BHAGABATI PRASAD BANEEJEE, J.

( 1 ) THE following two questions of law have been referred to this court by the Tribunal under Section 256 (1) of the income-tax Act, 1961 :" (1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was an industrial company within the meaning of Section 2 (7) (c) of the Finance Act, 1981. (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing the Income-tax Officer to grant investment allowance in respect of a generator installed by the assessee-company. "

( 2 ) THE assessment year involved in this case is the assessment year 1981-82 for which the relevant period of account is the year ending on June 30, 1980.

( 3 ) THE facts of this case, in short, are as follows : the assessee carries on the business of providing technical and industrial consultancy on the basis of computers and also undertakes electronic data processing. The Commissioner of Income-tax (Appeals) found it as a fact that "the services provided by the appellant are mainly arrived at with the help of computers and other ancillary machineries". In the instant case, technical and industrial problems are referred to the appellant- company which processes this information on the basis of inputs prepared from various types of data. These are thereafter fed into the computer which, through a series of programmes, generates the desired output as per the instructions of the programmes on a high speed printing machine on a preassigned format. Not only that the results are thus printed, the computer also handles the input data through its various types of machines such as magnetic tape drives or disc drives and stores the relevant data on magnetic tapes or discs. During the processing, it can sort out the input data on some relevant key and also can compare or compute through different types of instructions. In short, here is a process where inputs are processed and transformed into different outputs.

( 4 ) ON the basis of the aforesaid facts, the Commissioner of Income-tax (Appeals) held that the assessee was an industrial company and that the generator in question was entitled to investment allowance in terms of Section 32a.

( 5 ) THE matter was brought before the Tribunal. The Tribunal, after considering the contentions of the rival parties, held as follows :"we have given careful consideration to the rival submissions and to the facts of the case. According to us, the decision of the learned Commissioner of Income-tax (Appeals) is entirely correct. The activity undertaken by the assessee is not only intellectual activity, based on mere speculation and the exercise of the brain, but in the undertaking of it, the assessee has to take the help of machines including computers and related electronic equipment. A process in which mechanical help is taken would, in our opinion, be an industrial activity and it will not cease to be an industrial activity only because the activity in question was also intellectual in nature. In fact, no industrial activity can take place without the exercise of intellect, The order of the learned Commissioner of Income-tax (Appeals) appears to us to be entirely correct and as such we uphold it. "

( 6 ) IN support of the contention that the business activity of the assessee is industrial in nature, reliance has been placed on a decision of the Karnataka High Court in the case of CIT v. Datacons (P.) Ltd. [1985] 155 ITR 66, where it was held that the term "industrial company" has been described as including a company engaged in the processing of goods. The word ''processing" has not been defined and, therefore, it must be interpreted according to the dictionary meaning according to which, where a commodity is subjected to a process or treatment with a view to its development or preparation for the market, as for example, by sorting and repacking fruits and vegetables, it would amount to processing of

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