TMI Blog2001 (8) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax (Appeals) held that the issue as to whether the respondent was entitled to deduction under sections 80HH and 80-1 of the Act of 1961, had been decided by him in favour of the respondent by order dated May 8, 1998, in Appeal No. Guwa-101 of 1996-97 relating to the assessment year 1993-94 and since the facts for the assessment year 1994-95 were identical, the Commissioner held following his earlier decision that the respondent was an industrial undertaking and directed the Assessing Officer to allow relief as per the provisions of sections 80HH and 80-I of the Act of 1961. Aggrieved by the said order of the Commissioner of Income-tax (Appeals), the Income-tax Department went up in appeal before the Income-tax Appellate Tribunal, Guwahati Bench. The Income-tax Appellate Tribunal observed in its order dated August 17, 2000, that running of a hospital by the assessee was an industrial undertaking following the decision of the Kerala High Court in the case of CIT v. Upasana Hospital [1997] 225 ITR 845, the decision of the Rajasthan High Court in the case of CIT v. Trinity Hospital [19971 225 ITR 178, and also the decision of the apex court in CIT v. Dr. B. Venkata Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 225 ITR 845, on which great reliance has been placed by the Tribunal in the order under appeal were also the decisions under section 32A of the Act of 1961, and, therefore, were not applicable for the purpose of determining whether relief under sections 80HH and 80-I of the Act was available to hospitals. Mr. Bhuyan referred to the bare provisions of section 80HH and in particular sub-section (2) thereof to show that the section applies only to an industrial undertaking in a backward area in which the activities of manufacture and producing of articles take place. He also referred to the similar provisions in sub-section (2) of section 80-I of the Act of 1961, to show that the said section is also applicable to an industrial undertaking in which the activities of manufacture or producing of articles take place, and not otherwise. Mr. Bhuyan contended that since no article or thing is produced or manufactured in the hospital of the respondent-assessee, the hospital of the respondent-assessee cannot be considered to be an industrial undertaking, and the provisions of sections 80HH and 80-I of the Act of 1961, are not applicable to such hospital. He further argued that if the intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no discussion on the point as to whether a hospital or nursing home is an industrial undertaking. Hence, the said decision is of no assistance to the respondent-assessee in deciding the question as to whether a nursing home or a hospital is an industrial undertaking for the purpose of relief under sections 80HH and 80-1 of the Act of 1961. In Trinity Hospital's case [1997] 225 ITR 178 (Raj), the question for decision was whether investment allowance could be allowed on machines and equipment (x-ray machines, ultra sound scanner, foetal monitor and air conditioning equipment) installed in a nursing home under section 32A of the Act, and the Rajasthan High Court decided the question in favour of the assessee and against the Department by holding that the Tribunal was justified in directing that the investment allowance may be allowed on the x-ray machine, ultrasound scanner, foetal monitor and the air-conditioning equipment under section 32A(2)(b)(ii) read with section 32A(l) of the Act of 1961. Similarly, in the case of Upasana Hospital [1997] 225 ITR 845 (Ker), the question for decision before the Kerala High Court was whether the assessee-firm was entitled to investment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions mentioned therein and one of the conditions mentioned therein is that it has begun or begins to manufacture or produce articles after the date mentioned therein in any backward area. Thus, unless a clear finding is recorded by the Tribunal on the materials before it that some articles were manufactured or produced in the hospital of the respondent-assessee, in our considered opinion, reliefs under section 80HH of the Act of 1961, cannot be granted to the respondent-assessee. Similarly, sub-section (2) of section 80-I also provides that the section applies to any industrial undertaking which fulfils all the conditions mentioned therein, and one of the conditions mentioned therein is that it manufactures or produces any article or thing. Unless therefore a clear finding is recorded by the Tribunal that the respondent-assessee was producing or manufacturing any article or thing in its hospital, in our considered opinion, the respondent-assessee cannot be held to be entitled to deduction under section 80-I of the Act of 1961. In this context, we would like to refer to the decision of the Supreme Court in Union of India v. Delhi Cloth and General Mills Co. Ltd., AIR 1963 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... popular sense. The popular concept is that there must be production of a new or a different article or the process must be such as converts one kind of article into another kind..." The aforesaid decision of the Calcutta High Court succinctly defines the word "manufacture" with which we respectfully agree. In view of the aforesaid authorities on the question as to what amounts to "manufacture" of an article, a finding has to be recorded on the basis of the materials by the Tribunal that the activities carried on in the hospital of the respondent-assessee are or are not of the nature as described in the aforesaid decisions, and amount or do not amount to manufacture for the purpose of deciding whether an assessee was entitled to relief under section 80HH and section 80-I of the Act of 1961. In CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412, the question before the Supreme Court was as to whether the assessee in that case was entitled to relief under section 80HH of the Act of 1961, in respect of its activity of construction of a dam, and the Supreme Court referred to the provision of sub-section (2) of section 80HH of the Act, and after considering the judicial pronouncemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y determine any issue which is either not determined by the Tribunal or has-been wrongly determined by reason of a decision on the substantial question of law. But there are no relevant materials before this court to show that as a matter of fact manufacturing or production of articles or things was undertaken in the hospital of the respondent-assessee. Since the respondent-assessee was claiming the reliefs under sections 80HH and 80-1 of the Act, the respondent-assessee should have adduced all relevant materials to establish that it was an industrial undertaking manufacturing or producing articles or things during the previous year relevant to the assessment year 1994-95. We, however, make it clear that it will be open for the respondent-assessee to adduce materials in support of its claim of deduction under sections 80HH and 80-I of the Act of 1961, for the subsequent assessment years before the appropriate authority, and if such materials are adduced by the respondent-assessee, we have no doubt in our mind that the same will be considered by the appropriate authority under th6 Act, and a decision will be recorded as to whether things or articles are in fact manufactured or produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g authority for a decision. This decision again was a decision of the Supreme Court in respect of the power of the High Court under article 226 of the Constitution as it appears from a reading of the facts of the said decision that in a petition under article 226 of the Constitution the High Court had decided certain factual issues, and the Supreme Court had taken a view that such factual issue ought not to have been decided by the High Court. But so far as the present case is concerned, it is an appeal on certain substantial questions of law under section 260A of the Act of 1961, and the powers of the High Court in an appeal under section 260A of the Act are circumscribed by the provisions of the said section 260A of the Act of 1961. We are afraid, we cannot resort to the course suggested by Mr. Sahewalla, namely, to remand the matter to the Tribunal for a fresh decision in the light of the answer given by us to the substantial questions of law in this appeal. For the foregoing reasons, we answer question No. 1 in the negative, i.e., in favour of the Department and against the respondent-assessee ; question No. 2 in the affirmative, in favour of the Department and against the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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