COMMISSIONER OF INCOME TAX Vs. POLYCLINIC PRIVATE LIMITED

JUDGEMENT

(1.) AT the instance of the Revenue, the Income-tax Appellate Tribunal has referred the following question of law for the decision of this court :

(2.) THE respondent/assessee is a limited company. It is running a clinical laboratory, X-ray unit and pharmacy. We are concerned with the assessment years 1980-81 and 1983-84. THE assessee claimed investment allowance under Section 32A(2) of the Income-tax Act for the X-ray plant installed during the relevant accounting year. THE Income-tax Officer declined to grant the relief for both the years. According to him, the X-ray plant is not used for the production or manufacture of a thing or article. THE assessment orders are dated July 21, 1981, and April 25, 1984. THE appeal filed before the Commissioner of Income-tax (Appeals), for the year 1980-81, was disposed of on August 23, 1984. THE appeal filed for the year 1983-84 was disposed of by the Commissioner of Income-tax (Appeals) on August 10, 1987. THE Commissioner of Income-tax (Appeals), by relying on the decision of the Income-tax Appellate Tribunal, Bangalore Bench, in the case of first ITO v. Dr. P. Vittal Bhat [1984] 16 Taxman 8, held that, when a raw film is exposed, the resultant X-ray photograph is an article produced by the X-ray machine and hence the business should be treated as one producing an article or thing for the purpose of granting investment allowance. THE Revenue filed appeals as I. T. A. No. 872/(Coch) of 1984 and I. T. A. No. 1168/(Coch) of 1987, before the Income-tax Appellate Tribunal, Cochin Bench, and assailed the order passed by the Commissioner of Income-tax (Appeals). THE issue involved in both the appeals was the same. THE Tribunal posed the question thus :

(3.) WE shall extract Section 32A(1), 2(b)(ii) and (iii) and the Eleventh Schedule, item No. 10, of the Income-tax Act :