COMMISSIONER OF INCOME TAX Vs. M L AGARWALLA

JUDGEMENT

(1.) IN compliance with the order dt. 11th Aug., 2000, passed by the Supreme Court in Civil Appeal No. 4560 of 2000 arising out of SLP (C) No. 4067 of 2000 directed against the judgment and order of this Court in Civil Rule No. 14(M) of 1988, the Revenue has formulated the following question of law and referred the same to this Court for decision :

(2.) THE assessee, Dr. M.L. Agarwalla, is a qualified radiologist engaged in the business of x ray diagnosis since the asst. year 1981 82. For the asst. year 1989 90, the assessee claimed deduction under S. 32A of the IT Act, 1961, in respect of plant and machinery purchased and installed by him in the aforesaid business. The AO rejected the claim of the assessee for investment allowance of Rs. 1,95,960 in respect of ultrasound medical diagnostic electrical equipment, air conditioner and servo voltage stabilizer on the ground that the assessee in the aforesaid business does not manufacture or produce any article or thing as envisaged in S. 32A(2)(b)(ii) of the Act. The aforesaid assessment order under S. 143(3) was reversed on appeal by the Dy. CIT(A) and the learned Tribunal also affirmed the aforesaid decision of the first appellate authority in IT Appeal No. 175 (Gauhati) of 1993.

(3.) THE reason available in Shaw Wallace and Co. Ltd.'s case (supra), is that having regard to the nature and function of the computer and the data processing a computer centre set up in an industry cannot be equated with office appliances. The Calcutta High Court held that a data processing machine is a complicated machine which has to be operated by a specially trained person and the final end product, namely, printed materials and the statements are entirely different from the articles initially fed into the computer. In CIT vs. Dr. V.K. Ramachandran (1981) 128 ITR 727 (Mad), the Madras High Court with regard to x ray machine observed that "even a professional activity could be tinged with a commercial character if the indicia of commerce are manifest in it. The way in which the assessee carried on the x ray activity was in noway different from a non qualified person carrying on a radiological institute. The mere fact that a professional man had, as an adjunct to his professional activities, such an institute did not disable him from running it as a commercial venture and earning income therefrom. The Tribunal was right in its view and the assessee was entitled to development rebate."