NATVARLAL AMBALAL DAVE Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS case pertains to asst. yr. 1980 -81. The assessee is a doctor and is specialist of radiology. He also operates an x -ray clinic of his own where the x -ray films are also exposed of the patients for which charges are required to be paid by the persons coming there. From the profit and loss account it is apparent that the assessee has shown the charges received from customers for exposing x -ray films as 'x -ray revenue' by deducting the total expenditure including the raw -films, other materials, salary and emoluments paid to staff and other expenses in connection with the running of the clinic, including interest on loans etc. It has not been shown as an income from fees. The assessee had, during that year purchased an x -ray machine. Apart from claiming depreciation thereon, the assessee also claimed investment allowance on the cost of acquisition of that x -ray machine under s. 32A of the IT Act, 1961, as it stood at the relevant time. The ITO was of the view that s. 32A reveals that for allowing deduction on account of investment allowance, three preliminary conditions are must namely (1) plant and machinery should be used in industrial undertakings, (2) it should be manufacturing some article and (3) item manufactured should not be listed in relevant schedule. He further came to the conclusion that 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 ITO was affirmed by the CIT(A) 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 vs. Dr. V. K. Ramachandran : [1981]128ITR727(Guj) for the purpose of showing that another Bench of the Tribunal has held the exposed x -ray film as a manufactured article entitling investment allowance by fulfilling the second condition and the Madras High Court has taken the view that a medical practitioner practicing and purchasing an x -ray machine is entitled to development rebate under s. 33. The Tribunal apparently, as it appears from the order, did not decide the issue of allowability of investment allowance on investment in x -ray machine, took into consideration arguments advanced by the learned Departmental Representative for the first time before the Tribunal that investment allowance can be claimed only in respect of business activity and not in respect of professional activity. The decision of the Gujarat High Court in CIT vs. Dr. K. K. Shah : [1982]135ITR146(Guj) was also relied upon.

(2.) THE two -fold questions that are embraced in the question referred to us are, firstly whether the ITO and CIT(A) were right in holding that two conditions namely that the assessee is not an industrial undertaking and is not manufacturing anything inasmuch as no new commercial productions come out in the form of exposed x -ray films to fall within the meaning of manufacture though raised before the Tribunal but were not decided by it and secondly that the assessee is not carrying on business, but carrying on profession.

(3.) IN our this conclusion we are fortified by a decision of Rajasthan High Court in CIT vs. Trinity Hospital (1996) 87 Taxman 127 (Raj), wherein, after referring to a large number of decisions and examining the dictionary meaning of 'manufacture', 'production', 'produce', 'article' and 'things', it was opined that the photographs of various parts of the body obtained by these machines are the resultant product of the work or activity. They are the end result of efforts and activities and give result in black and white regarding the internal position of the parts of the body and are helpful for the proper and efficient diagnosis. The photographs or the graphs obtained from these machines, which are the result of efforts or activity, therefore, can be said to be a 'thing' as used in s. 32A. We are in respectful agreement with the conclusions and the reasons stated therein.