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2012 (12) TMI 789 - HC - Income TaxDeduction u/s 80-IA - Diagnostic Centre - an industrial undertaking - assessee established a new MRI unit - ITAT allowed the claim - Held that:- A joint reading of Section 80IA and Section 33B states the first condition spelt out in sub-section (2) (iii) is that the industrial undertaking “manufactures or produces any article or thing”, the second condition is that the “article or thing” should not be listed in the Eleventh schedule. The third aspect is that Section 33-B contains a somewhat wider definition of “industrial undertaking”, it posits that the unit should be an “undertaking which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining”. As decided in Insight Diagnostic and Oncological Research Institute P. Ltd. v. DCIT [2003 (4) TMI 79 - BOMBAY HIGH COURT] the CT scan machine as installed in a diagnostic centre is not an industrial undertaking for the purpose of business manufacture. In this connection, one must read the expression “industrial undertaking” in the context of the Income Tax Act and not in the context of the Industrial Disputes Act and, if so read, it is clear that the activity should be of production of any article or thing and any activity which primarily concerns production of any article or thing would fall in the category of industrial undertaking…… - the report of patients coming from the CT scan machine did not amount to manufacture or production of article or thing and therefore, one of the basic tests laid down in CIT v Shaan Finance Pvt. Ltd (1998 (3) TMI 8 - SUPREME COURT) is not satisfied The unit or undertaking must engage in production of an article or thing – be it in the context of Section 32A or Section 10 (15). Such consideration is equally important and relevant for applicability of Section 80-IA by virtue of Sub-section (2) (iii) of that provision. What emerges from all these decisions, and the relevant provisions – i.e. Sections 80-IA and 33-B that the unit or activity is deemed an industrial undertaking, if it is involved in production of goods or articles - as in the present case there is no change of the article, the intention of the service provider is not to produce the article – the film is the medium in which what is recorded is made available for interpretation by the physician or doctor. If it can be more conveniently given in a pen drive or even over the internet, the question of production of goods or article would not arise - in favour of the revenue While the benefit which might flow to the general public if diagnostic facilities are deemed industrial undertakings is undeniable, as it would probably result in lower cost of diagnosis of diseases and conditions, yet that result cannot be achieved by doing violence to the statute, in the guise of interpretation. The remedy (to this perceived mischief) is clearly elsewhere.
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