The engagement in data processing qualifies as industrial undertaking, allowing for investment allowance under specified provisions of the Income Tax Act.

1. The Income Tax Appellate - Tribunal, Cochin Bench, referred the following questions under S.256(1) of the Income Tax Act, 1961, (briefly 'the Act') for the opinion of this Court:
 "1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the assessee is an "industrial undertaking" and is not the above finding wrong, unreasonable and unsupported by materials,
 2. Whether on the facts and in the circumstances of the case, -
 (a)(i) did the Tribunal find that the assessee is manufacturing or producing article or thing?
 (ii) (if found) is not the finding of manufacture or production of article or thing wrong, unreasonable,  unsupported by materials and based on a wrong interpretation of relevant provisions?
 (b) should not the Tribunal have considered and found the assessee to have manufactured or produced an  article or thing to be entitled to claim the benefit of S.32A(2)(b)(iii) of the I.T. Act?
 (c) In the absence of a necessary finding of 'construction' or 'manufacture' or 'production' or article or  thing, the assessee is entitled to the benefit of S.32A(2)(b)(iii) of the Income Tax Act?
 (d) Should not the Tribunal have considered the claim of the assessee in the light of the Eleventh Schedule to the Income Tax Act and is not the order vitiated for not considering the claim, in all its aspects under S.32A(2)(b)(iii) of the Income Tax Act?"

2. Respondent - assessee company is doing business in computerised accounting and management services by using computers. For the assessing year 1981-82, the assessing officer treated the assessee company as a non Industrial undertaking holding that the duty of the company does not involve manufacture or production of any article or thing and that the computer itself can be considered as an office appliance and hence the assessee is not entitled to the deduction under S.32A and S.80J. The assessee company, claiming itself to be a new industrial undertaking, claimed deductions under S.32A and S.80J of the Act. The assessing officer found as under:
"The services rendered by the assessee in preparing final accounts from the data furnished to the computer is merely rendering of services. It is like the services of an accountant. There is no finished product........."
This is how the assessing officer refused to allow deductions as claimed by the assessee. The assessee then carried the dispute before the Commissioner of Income Tax (Appeals), who relying on the decisions of the various Income Tax Appellate Tribunals and High Courts, held that the data processing machines owned by the assessee are not office appliances and the assessee is entitled to investment allowance under S.32A and deduction under S.80J of the Act. Aggrieved, the Revenue appealed to the Income Tax Appellate Tribunal. Before the Appellate Tribunal; the representative of the assessee submitted that the assessee rendered services of development or manufacture of software or programmes and also processed the data for various customers like the Federal Bank Ltd., the South Indian Bank Ltd., the erstwhile Bank of Cochin Ltd. etc., and that presently doing the same work for State Bank of India, Federal Bank Ltd. etc. and therefore, the assessee is entitled to investment allowance because the assessee is engaged in production.

3. The Appellate Tribunal relying on Commissioner of Income Tax. v. Shaw Wallace & Co. Ltd. ((1993) 201 ITR 17) held that the assessee is an industrial undertaking and hence is entitled to invest allowance on computer division.

4. The learned standing counsel for the Revenue submits before us that the case of the assessee is h