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TMI Blog2003 (4) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... incorporated on January 31, 1989. Its main object was to run a diagnostic centre in Mumbai. The assessee filed its return of income for the year ending March 31, 1990, returning a loss of Rs. 44.90 lakhs. During the year, the assessee had bought a CT scan machine at the cost of Rs. 83.89 lakhs. In its computation of income, the assessee had claimed a deduction of investment allowance under section 32A of the Act at the rate of 20 per cent. amounting to Rs. 16.77 lakhs on the aforestated machine after debiting the reserve as per section 32A(4) of the Act. The assessment was completed under section 143(3) of the Act vide order dated April 24, 1992, determining the loss on account of unabsorbed depreciaton at Rs. 26.90 lakhs which was allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rating reports from the CT scan machine did not amount to manufacture or production of article or thing?" Arguments: Mr. Pramod Vaidya, the learned advocate for the assessee, submitted that the activity of the assessee was a business activity. That, the CT scan machine was used to X-ray internal parts of the human body and to locate the diseases and, therefore, the CT scan machine resulted in manufacturing or producing articles/things. That, taking the photographs was the main activity of the machine. He relied upon several judgments of the various High Courts in support of his contention that the assessee was entitled to deduction of investment allowance of Rs. 16.77 lakhs on the CT scan machine installed and used by the assessee during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess carried on by the assessee and that such plant or machinery should be installed in an industrial undertaking for the purpose of business of manufacture or production of an article or thing. It is this last pre-condition which is not fulfilled in this case. The CT scan machine is installed in a diagnostic centre. That diagnostic centre is not an industrial undertaking for the purpose of business of 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation contained in section 32A(2). In the present case, the reports of patients coming out 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] 231 ITR 308 (SC), is not satisfied. In the case of CIT v. Dr. P.K. Thamaskar (HUF) decided on October 20, 1992, vide Income-tax Reference No. 155 of 1984, it has been held that x-ray films cannot be treated as manufactured articles or things as contemplated by section 32A(2)(b)(iii). That, the exposed film is not an article or thing having any commercial value. That, it is only a media for the purposes of knowing the ailments in the human body. That, the fees charged is not t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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