TMI Blog1996 (12) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... n of that X-ray machine under section 32A of the Income-tax Act, 1961, as it stood at the relevant time. The Income-tax Officer was of the view that section 32A reveals that for allowing deduction on account of investment allowance, three preliminary conditions are a must-namely, (1) plant and machinery should be used in the industrial undertaking, (2) it should be manufacturing some article, and (3) the item manufactured should not be listed in the relevant Schedule. He further came to the conclusion that the nursing home of a radiologist cannot be treated as an industrial undertaking and it does not produce anything and, therefore, it does not fulfil the conditions Nos. 1 and 2 and rejected the assessee's claim. This view of the Income-tax Officer was affirmed by the Commissioner of Income-tax (Appeals) on appeal. On further appeal before the Tribunal, the assessee brought to the notice of the Tribunal another decision of the Nagpur Bench of the Tribunal and a decision of the Madras High Court in CIT v. Dr. V. K. Ramachandran [1981] 128 ITR 727, for the purpose of showing that another Bench of the Tribunal has held the exposed X-ray film as a manufactured article entitling invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. The photographs or the graphs obtained from X-ray machine which are the result of human efforts and activity, therefore, cannot but be a thing produced by the use of X-ray machine. It is also to be noticed that in order to treat a product to be saleable it need not be a product saleable in open market for the use of general people. A thing may be produced for being sold to a particular person or for the use of a particular person. In that sense if we look at the activity it is clear that after producing the photograph of internal part of the body of the person concerned, money is charged from that patient recovering the cost of such production and the profit which the producer of that photograph desires to obtain out of it. It is not the requirement of the provision nor can it be read in the context of the provision that in order to fulfil the condition that a machinery or plant must have been installed in an industrial undertaking for the purpose of manufacture or production of any article or thing, it must be related to production of such article or thing which is saleable in the open market as a common marketable commodity only. We are, therefore, of the opinion that so far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the wife was derived directly or indirectly from a firm of which her husband was a partner. Mere membership in the firm in which the husband was also a partner, on the part of the wife attracted the provision. Making a departure from this wide provision, in the 1961 Act, the expression membership in a firm has been replaced by membership in a firm carrying on business. Noticing this vital difference which the Legislature has brought about in enacting the new provision replacing the old one, the court came to the conclusion that the expression " business " has been employed by the Legislature in order to emphasise the distinction between a business and a profession for the purposes of that provision. Thereafter, their Lordships after looking to the object of the provision further concluded " the raison detre for clubbing together the income of non-professionals does not exist in the case of professionals ". However, the matter was not left at that. It was not held as a matter of abstract proposition of law that a doctor who is a professional by qualification or a firm of doctors cannot be said in any circumstances to be carrying on a business. The final conclusions reached by their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the various other aspects determining the question whether a person is carrying on business or profession for the purposes of the provision with which such question arises. In Dr. Devendra M. Surti's case [1968] 34 FJR 376 ; AIR 1969 SC 63, the question was about the meaning of a commercial establishment within the meaning of the Bombay Shops and Establishments Act, 1948. The court was concerned with the issue whether a private dispensary of a doctor can be treated to be a commercial establishment so as to be subjected to the provisions of the said Act. It may be noticed that that was a case arising in the context of the authority of the Inspector appointed under the commercial Shops and Establishments Act, to visit the commercial establishments, find necessary details about the requirement of records concerned of the employees, etc., and whether any breach of the Rules and Regulations under the said Act has been committed by the owner of the establishment. Though in that connection their Lordships were of the opinion that ordinarily an establishment like a private dispensary run by a doctor cannot be treated to be a shop and commercial establishment, none the less p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of industrial undertaking under the Income-tax Act, as the expression is used in the context in which the provisions are set, the meaning of industrial undertaking in the set up of the Income-tax Act takes its colour from the activity for which the new plant or machinery is set up. The activity is of production of any article or thing. Therefore, any activity which primarily concerns the production of any article or thing would fall in the category of industrial undertaking for that purpose ; may be that activities carried on by a trader or any person carrying on any business or profession. The primary object of the provisions of section 32A is that a person carrying on business if he instals a new machinery or plant in any relevant previous year is entitled to claim a part of the cost as deduction as investment allowance, provided such plant and machinery is used by him in manufacture or production of any article or thing or in an activity of construction. The decision in K. K. Shah's case [1982] 135 ITR 146 (Guj) does not detract from the aforesaid principle. In this connection, we are amused to notice that while the Revenue authorities have sought to distinguish the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neric sense of a regular activity of earning income simpliciter and in each case where a claim for investment allowance or development rebate is to be made, its primary condition is that the assessee must be carrying on a business as distinct from profession. If he is carrying on business, then the question of a new machinery or plant being installed for the purpose of manufacture or production of an article or thing giving the establishment the colour of an industrial undertaking would arise, but unless it is found whether the assessee is carrying on a business as distinct from profession the further questions would not arise. However, the test of whether a person is carrying on a business or profession for the purposes of sections 33 and 32A cannot be different. We are, therefore, of the opinion that decisions of the Madras High Court referred to by the Revenue authorities and sought to be distinguished, cannot be distinguished on the ground that they are given in the context of section 32 and cannot govern the interpretation of section 32A. In V. K. Ramachandran's case [1981] 128 ITR 727, 731 (Mad), it was contended by the Revenue that there being a dichotomy between business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at High Court may in its greater wisdom consider the above aspect regarding the volume, extent and nature of the activity for deciding the question of professional or business activity, should an opportunity be presented to it. We, however, in this position must bow in deference to the said decision of the Gujarat High Court and accordingly hold that the activities of the assessee are not business but professional activities and that, therefore, he is not entitled to the development rebate claimed by him." From the aforesaid it is abundantly clear that while holding that the Gujarat High Court did not rule out the professional activity as commercial activity, it abdicated its obligation to dwell on and decide this basic fact. The Tribunal instead of deciding that issue by examining the facts after giving opportunity to the assessee, if necessary facts were not on the record for the simple reason that this question had not been considered by the lower authorities, jumped to conclusion with reference to a decision of the Gujarat High Court in K. K. Shah's case [1982] 135 ITR 146, that the assessee was carrying on a profession and the question whether in the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
