TMI Blog2008 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... e under Section 256(1) of the Income Tax Act, 1961 (for short the Act), the following question of law has been referred for our opinion: "Whether on the facts and in the circumstances of the case, the ITAT was correct in law in directing the ITO to grant investment allowance to the assessee in terms of Section 32A of the Income-tax Act, 1961?" 2. The Assessee is a practicing Radiologist and he had installed an X-ray machine on which he claimed a deduction by way of an investment allowance under Section 32A of the Act. This was disallowed by the Assessing Officer and also by the Commissioner of Income Tax (Appeals). However, the Income Tax Appellate Tribunal (for short the Tribunal) while relying upon an order passed by the Nagpur Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that an issue similar to the present, had arisen in several High Courts and all the High Courts except the Bombay High Court have taken a view that in a clinic or a hospital or a diagnostic centre, such machinery or plant would be entitled to the benefit of investment allowance. Unfortunately, we are not in agreement with the High Courts other than the Bombay High Court. 8. In Commissioner of Income Tax v. Trinity Hospital, [1997] 225 ITR 178, the Rajasthan High Court dealt with X-ray machines, ultrasound scanner etc. installed in a hospital/nursing home. The Rajasthan High Court proceeded to consider whether an X-ray machine, ultrasound scanner etc. produces or manufactures any article or thing. This question was answered in the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 110 held that an X-ray machine produces a different article from what is put into the machine, namely, an X-ray film and, therefore, the Assessee in that case would be entitled to the benefit of investment allowance since the machine is used for the manufacture or production of an article or thing. 12. The Gauhati High Court in Commissioner of Income Tax v. Dr. M.L. Agarwalla, [2002] 258 ITR 102 followed the view expressed by the aforesaid three High Courts as well as the view expressed by the Madras High Court in Commissioner of Income Tax v. Prasad Productions (P.) Ltd., [2001] 247 ITR 445. The same view has been expressed by the Kerala High Court in Mar Gregorious Memorial Muthood Medical Centre v. Commissioner of Income Tax, [2003] 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f it fulfills the financial requirements, it cannot be deemed to be a small scale industrial undertaking. Therefore, what is to be first seen is whether a unit is an industrial undertaking or not. If the answer is in the negative then the deeming provision cannot be invoked. 15. In our opinion the expression industrial undertaking is to be used in the context in which it is used in the Income Tax Act and not in the context in which it is used in other laws such as the Industrial Disputes Act. If so understood, it cannot be said by any stretch of imagination or by the use of common English language, that a hospital or a clinic or a diagnostic centre or any such unit is an industrial undertaking. It may be that a machine or a plant within a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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