Semantic Analysis by spaCy
Medical Genetic Clinic and Laboratory Vs. Ito
Decided On : Jun-21-2000
Court : Mumbai
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Shroff Consultants', (int) 108 => 'the Honble Bombay High Court', (int) 109 => 'Departmental Representative', (int) 110 => 'ECG', (int) 111 => 'Income Tax', (int) 112 => 'Audit Report', (int) 113 => 'Income Tax', (int) 114 => 'Income Tax Appeal' ), 'MONEY' => array( (int) 0 => '15 per cent' ), 'PRODUCT' => array( (int) 0 => '845' ), 'NORP' => array( (int) 0 => 'Vadamalayan' ), 'FAC' => array( (int) 0 => 'Diagnostic Centre' ), 'EVENT' => array( (int) 0 => 'CCI-Wing' ), 'ORDINAL' => array( (int) 0 => 'first', (int) 1 => 'first' ) ), 'desc' => array( 'Judgement' => array( 'id' => '369304', 'acts' => '', 'appealno' => 'IT Appeal No. 249 (Mum) of 1996 21 June 2000 A.Y. 1989-90', 'appellant' => 'Medical Genetic Clinic and Laboratory', 'authreffered' => '', 'casename' => 'Medical Genetic Clinic and Laboratory Vs. Ito', 'casenote' => ' - BOMBAY STAMP ACT, 1958. Schedule 1, Article 36: [Y.R. Meena, CJ & D.A. Mehta & A.S. Dave, JJ] Deed of Mortgage Liability to pay stamp duty Held, Any instruments in respect of transactions, relating to loans and advances, loans and mortgages, cash credit or overdraft bonds, agreements of pawn or pledge and letters of hypothecation executed by farmers for agricultural and land development purposes in favour of all Commercial Bank etc. are entitled to remission of entire duty chargeable under the Stamp Act with effect on and from 1.4.1979 under Government Notification dated 23.3.1979. Thus, where loan was granted by Bank of India under Agricultural Finance Scheme towards purchase of Air Compressors, Drilling Rods and other Accessories. Use of the Air compressors, Drilling Rods and other Accessories in case of applicant who is a farmer can only be for purpose of drilling a bore-well for purpose of irrigation in process of carrying on agricultural activities. Thus, it is apparent that loan was availed of by applicant-farmer for agricultural and land development purposes because a bore-well would go to increase the utility of agricultural land by ensuring round the year irrigation. The instrument in question would therefore fall within scope of complete remission granted to instrument of mortgage under Government Notification dated 23.3.1979 and hence not liable to stamp duty under Article 36 of Schedule I of the Act. - A professional activity can also be characterised as an activity of carrying on business if it is carried on like a commercial activity. The purposes for which such machines which can be described as computers are used are well-known and in highly scientifically developed systems, they have their own roles to play and they cannot be equated with office appliances which would be of much simpler nature. In all these activities the assessee had to play an active role by co-ordinating its activities in a business-like manner. He submitted that processing is not covered under section 32A while in the present case, at best, it can be said that the basic activity is that of processing. It includes articles made in sit us as well as articles made in factory. Suresh Amin Family Trust (supra) has clearly laid down that the expression article or thing is capable of very wide meaning and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests in the pathological laboratory.', 'caseanalysis' => null, 'casesref' => '', 'citingcases' => '', 'counselplain' => ' V.H. Patil and Vipul Joshi, <i>for the Assessee </i>Naveen Chandra, <i>for the Revenue</i>', 'counseldef' => '', 'court' => 'Mumbai', 'court_type' => 'HC', 'decidedon' => '2000-06-21', 'deposition' => '', 'favorof' => null, 'findings' => null, 'judge' => '', 'judgement' => 'ORDER<p style="text-align: justify;">S.V Mehrotra, A.M.</p><p style="text-align: justify;">This appeal by the assessee is directed against the order of the Commissioner (Appeals)-XVII, Bombay, dated 19-10-1995 for the assessment year 1989-90.<p style="text-align: justify;">2. The assessee is a firm consisting of two partners, Dr. Hema Purandare and Dr. Amit Chakravarty. During the year the firm purchased one computer machine called 'Robotron Computer Aided Image Analyser'. The assessing officer noted that the assessee was not engaged in business nor is it engaged in the activity of construction, manufacture or production of any one or more of the articles or things other than those specified in the list in the Eleventh Schedule to the Income Tax Act so as to be entitled for investment allowance on this machinery. She noted that the assessee is engaged in professional activity and are consultant medical geneticist and is offering services mainly for prenatal diagnosis of hereditary diseases/defects. The instrument to be purchased being an advance model of machinery would reduce the required manual labour to 15 per cent. She also noted that the machinery will help to give report faster, accurate and it is a life-saving machine. The analysis of investigation done by this machinery will help the professional to decide the treatment required for their patients. She also observed that the analysis of the investigation is not a commercial commodity and it is not saleable to be traded. Accordingly, she disallowed the investment allowance of Rs. 2,11,361. She also noted that since the machinery is stated to be image analyser and is placed in the consultant room, it will come within the wider meaning given to items 10 and 22 of the Eleventh Schedule. The learned Commissioner (Appeals) applied the decision of the Honble Supreme Court in the case of CIT v. N.C. Budharaja & Co. : [1993]204ITR412(SC) and observed that the machinery in question is utilised for obtaining relevant data in relation to the stated the health of a patient and this activity cannot be said to be manufacture or production of an article in the sense in which it is understood in the commercial world. He also agreed with the contention of the assessing officer that the assessee was engaged in a professional activity and could not be said to be carrying out a business. The medical reports prepared by the assessee were of value only to the patients. These reports are not to be freely traded for money in the market. The learned Commissioner (Appeals) observed that at any rate the assessee cannot be construed to be an industrial undertaking, as is required for the purposes of deduction of investment allowance. Accordingly, he confirmed the order of the assessing officer.<p style="text-align: justify;">3. The learned counsel for the assessee adverted to page 23 of the paper book which contains the submissions made before the Commissioner (Appeals) in this regard. In the said submissions it has been pointed out that the assessing officer had disallowed the investment allowance on the ground that image analyser machine is not being used for commercial activity. However, it was submitted that this machine could be used for metallurgy, medical petrology and space science purposes. It translates visual image into quantitative information in report form. The assessee is running a clinical laboratory where this machine is used to get translated in report form visual image of blood, semen etc. This is being given to customers on every report fixed charges basis. It has been mentioned in the said submissions that the activity carried on by the assessee though grabbed as profession is really commercial or in any event, if the vocation of the assessee is an admixture of both, then the assessee will be entitled to relief for development rebate. The learned counsel for the assessee also adverted to page 21 of the paper book where a brochure in respect of this machinery is contained. In this brochure, as regards the utility of the machinery, it has been mentioned as under :</p><p style="text-align: justify;">'For simple observation of micro-structure analyst can see directly through the eyepiece of the microscope and draw the inference but for translation of a visual image into quantitative information Robotron Image Analyser has no substitute.</p><p style="text-align: justify;">Robotron Image Analyser is a computer aided and software oriented instrument suitable for wide field of application viz,</p><p style="text-align: justify;">a. Metallurgy</p><p style="text-align: justify;">b. Petrology</p><p style="text-align: justify;">c. Biology/Medical</p><p style="text-align: justify;">d. Space Science</p><p style="text-align: justify;">Being software oriented systems it is possible to use the same for various other purposes in future, which may not be in the immediate consideration of the morphologist.'</p><p style="text-align: justify;">The learned Commissioner (Appeals), it was submitted by the learned counsel for the assessee, wrongly relied on the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra). He emphasised that in this case, construction of dams and canals was held to be not construction of a thing or things. He further emphasised that article or thing should be seen in general law. He referred to various decisions which are discussed hereinbelow.</p><p style="text-align: justify;">(1) CIT v. Pressure Piling Co. (India) (P.) Ltd. : [1980]126ITR333(Bom) <p style="text-align: justify;">In this case, the meaning of manufacture or produce was considered. The assessee was carrying on business of laying pressure piling foundations for buildings by a specialised patented method. Concrete mixture was subjected to certain processes under pressure along- with iron bars in bores in site. It was held that Piles a new and independent product was brought into existence and it is an article. Thus it was held that the assessee is engaged in manufacture or production of an article.</p><p style="text-align: justify;">(2) CIT v. Trinity Hospital (1996) 225 ITR 178 <p style="text-align: justify;">In this case, the assessee-firm was running a hospital/nursing home for rendering efficient medical services to the patients. The assessee installed in its hospital various machines including (i) X-ray machine, (ii) an ultrasound scanner/ultra monographic machine, (iii) a fetal monitor, and (iv) air conditioning equipment, to ensure the proper working of these machines. It was held as under :</p><p style="text-align: justify;">'(i) that the photographs of various parts of the body obtained by these machines are the resultant product of work or activity. They are the result of efforts and activities and give a result in black and white regarding the internal position of the parts of the body and are helpful for 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 things under section 32A of the Act. The installation of these machines in the hospital by the assessee was for the purpose of the business of production of things. The Tribunal was, therefore, right in allowing investment allowance to the assessee;'</p><p style="text-align: justify;">The learned counsel for the assessee emphasised that this case has considered the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra).</p><p style="text-align: justify;">(3) CIT v. Upasana Hospital (1996) 225 ITR 845 <p style="text-align: justify;">In this case the firm was running a hospital and it was held that the firm carried on business and expenditure incurred by the firm on purchase of X-ray plant, ICCU and ECG equipment were entitled to investment allowance. In this case it was held that when a medical practitioner, without confining himself to his conventional function of examining patients and prescribing medicines, establishes an X-ray plant and machinery for augmenting his professional work, it cannot be said that he has no profit motive in such adventure. That means he is carrying on a business activity which attracts the investment allowance under section 32A of the Income Tax Act. Any venture or enterprise which a person individually or collectively undertakes to do and which has some industrial consequences would be an industrial undertaking. It must also be the result of organised activity resulting in manufacture or production of any article or thing. When raw X-ray film is exposed and processed, the resulting X-ray photograph is a production of a new article or thing. The article produced is a distinct and different article from raw film. The court held that the firm was entitled to investment allowance in respect of the X-ray plant and other accessories, the ICCU and ECG equipment and that the assessees unit of X-ray machine and accessories was a small scale industrial undertaking for the production of X-ray photographs coming within the ambit of section 32A(2)(b)(ii) of the Act.</p><p style="text-align: justify;">(4) Natvarlal Ambalal Dave v. CIT (1996) 225 ITR 936 <p style="text-align: justify;">In this case it was observed that photographs of various parts of the human body obtained by an X-ray machine are the end result of effort and activity carried on with the machine by human endeavour which is helpful for the proper and efficient diagnosis of the patient. Photographs or graphs obtained cannot but be a thing produced by the use of X-ray machine. It was further held that it is not the requirement of section 32A of the Income Tax Act, 1961, 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 an article or thing, that such article or thing must be saleable in the open market as a common marketable commodity only. A thing may be produced for being sold to a particular person or for the use of a particular person. Therefore an X-ray machine satisfies the condition in section 32A that it is plant and machinery through which an article or thing could be produced. It was further observed that merely because a person happens to be a professionally qualified doctor, it cannot be said that such persons activity cannot be treated as an activity of carrying on of business. A professional activity can also be characterised as an activity of carrying on business if it is carried on like a commercial activity. In this case the meaning of 'industrial undertaking' was also considered by the Honble High Court and it was held that 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.</p><p style="text-align: justify;">(5) CIT v. Dr. V.K. Ramachandran : [1981]128ITR727(Guj) <p style="text-align: justify;">In this case, the assessee was a medical practitioner and purchased an X-ray machine. It was held 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 no way 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.</p><p style="text-align: justify;">(6) Dr. (P.) Vadamalayan v. CIT : [1969]74ITR94(Mad) <p style="text-align: justify;">In this case it was held that the carrying on of the nursing home by the assessee as part of his profession was of a commercial nature and the combined activities of the assessee constituted business and the assessee was entitled to development rebate. If an assessee who is a professional and an expert contemporaneously carries on a trade which is annexed to the exercise of such a profession and if by doing so he can take advantage of a provision in the fiscal Act by claiming an allowance or rebate and if such a claim carries a lighter burden of tax, then he has the right to take advantage of the same. The definition of 'business' being an inclusive definition and not being exhaustive is indicative of extension and expansion and not restriction.</p><p style="text-align: justify;">(7) Dr. Suresh Amin Family Trust v. CIT (1995) 125 CTR (Ahd) 421<p style="text-align: justify;">In this case it was held that Diagnostic Centre (pathological laboratory) is covered by the expression industrial undertaking and the words production or produce cover all or any activity which brings into existence no article or thing by a process which may or may not amount to manufacture. Similarly the expression article or thing is very wide and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests. Such reports would thus constitute an article or thing. Accordingly, the assessee was held to be entitled to investment allowance on items of plant and machinery.</p><p style="text-align: justify;">(8) CIT v. M.L. Agarwala <p style="text-align: justify;">In this case ultra-sound equipment with air conditioner and voltage stabiliser was held to be eligible for investment allowance. It was observed that the resulting print is an article which is manufactured. The court held that a special type of film or material is to be fed which is blank but after the processing it is obtained with the photographs/prints of the organs and the data related to such organs. It is not the same as fed into the machine as raw materials and, therefore, investment allowance was admissible under section 32A.</p><p style="text-align: justify;">(9) CIT v. R. Shroff Consultants (P) Ltd. : [1999]238ITR1018(Bom) <p style="text-align: justify;">In this case the assessee was engaged in business consultancy and a part thereof undertaking data processing through computers. In this case it was held that preparation of statements was not manufacture or production of an article or thing and the assessee is not entitled to investment allowance, on computer. The learned counsel for the assessee, Shri V.H. Patil, emphasised that this was an ex parte judgment and does not consider the decision of the Honble Rajasthan High Court in the case of Trinity Hospital (supra) and, therefore, it should not be followed as it has not complete binding effect.<p style="text-align: justify;">4. In regard to the proposition whether the assessees establishment comes within the purview of the term 'industrial undertaking', the learned counsel for the assessee argued that the section does not define industrial undertaking and so help has to be taken from other sections. He referred to Explanation to section 33B in which 'industrial undertaking has been defined, inter alia, as an undertaking engaged in the manufacture or processing of goods. He submitted that a whether commercially a different article or thing comes into existence is the basic test. He emphasised that the machine prepare the report and the opinion given by the doctor is an article. He submitted that a sample of blood is fed into the Analyser and blood report is obtained. What a doctor can do by human element is done by the Analyser. He further submitted that the balance sheet preparation by a computer has been held to be allowable for investment allowance, as balance sheet is a different article or thing. He, submitted that the Robotron Image Analyser is also a computer-aided machine, as is clear from the sanction obtained from Department of Electronics (CCI-Wing), Computer Development Division, New Delhi, in F. No. 4 (489)/Comp./88-01-04/01 dated 12-1-1988, a copy of which appears at page 16 of the paper book. In support of his contention, the learned counsel for the assessee also relied upon the decision of the Honble Karnataka High Court in the case of CIT v. Data Cons (P) Ltd. : [1985]155ITR66(KAR) . In this case, the meaning of the term 'processing of goods' was considered and it was held that conversion of data furnished by customers into balance sheet, stock account etc., amounts to processing of goods and the assessee is entitled to concessional rate of tax. It was held that in all these activities the assessee had to play an active role by coordinating the activities and collecting information on such activities amounted to processing of goods. The assessee was therefore an industrial company entitled to concessional rate of tax. Reliance was also placed by the learned counsel for the assessee on the following decisions :</p><p style="text-align: justify;">(a) CIT v. Peerless Consultancy Services (P.) Ltd. (1991) 186 ITR 609In this case, the term industrial company' has been described as a company engaged in the processing of goods. The word 'processing' has not been defined in the Act and so it has to be assigned its dictionary meaning, according to which it refers to the treatment to which a commodity is subjected in order to prepare it for the market. The nature and extent of processing may vary from case to case. In one case the processing may be slight and in another, it may be extensive. In the light of this discussion it was held that the assessee which carried on the business of providing technical and industrial consultancy on the basis of computers and of undertaking electronic data processing was an industrial undertaking.</p><p style="text-align: justify;">(b) CIT v. Shaw Wallace & Co. Ltd. : [1993]201ITR17(Cal) In this case it was held that computer is a complicated machine and not an office appliance. it was observed that the word 'production' has not been defined in the Act. The expression 'production of an article' means, among other things, that which is produced, a thing that results from any action, process or effort, a product, a product of human activity or effort. The word 'manufacture' has also not been defined in the Act. The expression 'manufacture' is generally understood to mean bringing into existence a new substance and does not mean merely to produce some change in a substance. Having regard to the nature and function of the computer and the data processing system, it cannot be said that they are office appliances. The purposes for which such machines which can be described as computers are used are well-known and in highly scientifically developed systems, they have their own roles to play and they cannot be equated with office appliances which would be of much simpler nature. The final end products, viz., printed materials and the statements are entirely different articles or things from the data which are fed into the computer and are transformed into instructions and computations through a series of programmes and processing and the same amounts to manufacture of an article or thing.</p><p style="text-align: justify;">(c) CIT v. Fort Gloster Industries Ltd. : [1996]219ITR223(Cal) In this case it was held that computer is used for processing raw materials, data, stray data and salary payments etc., and also for monitoring details of production entitled to investment allowance.</p><p style="text-align: justify;">(d) CIT v. Computerised Accounting & Management Service (P) Ltd. (1998) 99 Taxman 101 (Ker.)The assessee-company was doing business in computerised accounting and management services by using computers. Raw technical and commercial data were fed into computers as inputs as per requirements of various customers and the data were processed to get necessary informations, computations and statements as outputs. It was held to be an industrial undertaking and the computations and statements that a computer brings out are entirely different in contents from the inputs fed into the computer and, therefore, the assessee-company can be said to be engaged in the production of mechanically prepared information which is collected from the raw data being fed into the computer and hence entitled for investment allowance.</p><p style="text-align: justify;">(e) CIT v. Dr. L.C. Mitra (1998) 96 Taxman 568 (Pat.)In this case the main dispute was whether parts of X-ray machine could be considered as machinery or not and it was held that they could be considered as plant and as such the assessee, a doctor, was entitled to investment allowance in respect of certain parts added to the existing X-ray machine.</p><p style="text-align: justify;">(f) CIT v. Oswal Data Processors : [1997]223ITR735(MP) It was held that the work of data processing was an industrial activity and the assessee is entitled to investment allowance on computers installed by it.<p style="text-align: justify;">5. The learned counsel for the assessee also submitted that publishing amounts to manufacture and relied on the following decisions :</p><p style="text-align: justify;">(a) CIT v. Commercial Laws of India (P.) Ltd : [1977]107ITR822(Mad) In this case it was held that folding and stitching of the printed sheets constitute processing of goods and hence the assessee comes within the term 'industrial company'.</p><p style="text-align: justify;">(b) Orient Longman Ltd. v. CIT : [1981]130ITR477(Delhi) In this case also the assessee carried on the business of publication, purchase and sale of books. It was held that though the assessee as a publisher would not be doing more than getting the manuscript and preparing the same for printing and book binding, yet the fact that printing and book binding was done by someone else did not imply that the someone else was the manufacturer. It was the business of the assessee to get the books manufactured by getting the manuscript, designing the nature of the book, finishing the anticipated product and then selling the product after getting it made. Therefore, the assessee was an industrial company and entitled to concessional rate of tax in accordance with the provisions of the Act.</p><p style="text-align: justify;">(c) Addl. CIT v. A. Mukherjee & Co. (P.) Ltd. : [1978]113ITR718(Cal) The assessee in this case was a publisher of books. The assessees Job was to get the manuscript for publication, hit upon a suitable format for the book, get it printed as per its requirements under its supervision, get the book bound after suitable changes and then put out the publication for sale. In all these activities the assessee had to play an active role by co-ordinating its activities in a business-like manner. It was held that the assessee was engaged in the activity of manufacturing and also of processing of books, which are also goods.<p style="text-align: justify;">6. Relying thus on all the aforementioned case laws, the learned counsel for the assessee submitted that the firm managed by renowned professional doctors comes within the purview of the term 'industrial undertaking' as blood and semen samples are processed to get a report which is an article or thing as contemplated under section 32A(2)(b)(iii). The machine is computer-aided machine and apart from being utilised for generation of reports, it can be utilised for other purposes such as Metallurgy, Petrology, Biology/Medical and Space Science and since it is a software oriented system, it is possible to use the same for various other purposes in future, which may not be in the immediate consideration of the morphologist. The learned counsel for the assessee vehemently argued that on the same analogy on which X-ray machines, ECG machine, ICCU are entitled to investment allowance, Robotron Image Analyser, which is practically performing the same functions, should be held to be entitled for investment allowance. He emphasised that the assessee is not using it only for consultancy purposes butt for other purposes also, as is evident from the income and expenditure statement. The assessee has derived income from testing fees, investigation charges, consultancy charges and miscellaneous income. He further submitted that as the name of the assessee itself suggests that it is a laboratory, the basic activity of which implies processing, there is no reason why this machinery should not be allowed investment allowance.<p style="text-align: justify;">7. The learned Departmental Representative submitted that the assessee is a firm of two doctors. Doctors are professionals and for imparting consultancy services, they are basically using this instrument. He submitted that, first of all, the firm does not come within the term 'industrial undertaking' as it is not manufacturing any article or thing. It was submitted that hospital is altogether different where many activities are carried on. In this case, the assessees activities are very limited and what the machine has done has, in substance, reduced the time taken for final diagnosis. The learned Departmental Representative submitted that the machine serves only the purpose as is served by a blood pressure instrument. He wondered if blood pressure instrument could be said to produce any article or thing when it simply measures the blood pressure. He relied upon the decision of the Honble Bombay High Court in the case of CIT v. Sterling Foods (Goa) (1995) 213 ITR 811 in which it was held that processing is a much wider term than manufacture. He submitted that processing is not covered under section 32A while in the present case, at best, it can be said that the basic activity is that of processing. He referred to the decision of the Honble Supreme Court in the case of N.C Budharaja & Co. (supra) and submitted that, as observed by the learned Commissioner (Appeals), the Honble Supreme Court held that the word 'article' employed in section 32A must be understood in the sense in which it is understood in the commercial world. The word 'article' cannot comprehend or take within its ambit a dam, a bridge, a building, a road, a canal and so on. He submitted that the learned Commissioner (Appeals) has rightly relied on the principles laid down in the case of A.C. Budharaja & Co. (supra). He further submitted that the learned Commissioner (Appeals) observed that the machinery in question is utilised for obtaining the relevant data in relation to the health of a patient and this activity cannot be said to be manufacture or production of an article in the sense in which it is understood in the commercial world. He submitted that the computer-aided machine cannot be equated with computer as it is not producing anything. The learned Departmental Representative submitted that in the assessees case these facts have to be kept in mind while deciding the issue. He emphasised that the assessee is basically a consultant and providing consultancy. He referred to section 32A and submitted that the installation of plant and machinery should be 'for the purpose of manufacture.........' He submitted that in Explanation to section 33B, the words used are 'manufacture or processing' whereas the word 'processing' is conspicuously missing in section 32A. He further submitted that the word 'processing' is much wider than the word 'manufacture' and unless something different from the original that is fed into the plant comes out, an activity cannot come within the term 'manufacture'. He referred to the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra) and that of the Honble Bombay High Court in the case of CIT v. Boots Co. (I) Ltd. : [1995]214ITR175(Bom) and submitted that no liberal construction should be adopted if the language of the section is clear. It is only when the language of the provision is ambiguous that the construction beneficial to the assessee may be adopted. He referred to the decision of the Honble Supreme Court in Deputy CST v. Pio Food Packers (1980) 46 STC 63 in which, he submitted, it was held that the original commodity must change its character for an activity to come within the purview of 'manufacture'. He also relied on the decision of the Honble Bombay High Court in the case of Sterling Foods (Goa) (supra) wherein it was observed that the expressions 'processing', 'manufacture' and 'production' used in various taxing statutes are not interchangeable expressions. Though used in juxtaposition, they convey different concepts and refer to different activities. The term 'processing' is much wider. The nature and extent of processing may vary from case to case. Every process does not tantamount to manufacture. It is only when the process results in the emergence of a new and different article having a distinctive name, character or use that manufacture can be said to have taken place.</p><p style="text-align: justify;">Similarly, production is wider than manufacture. As a result, every production need not amount to manufacture, though every manufacture can be characterised as production. Accordingly, he submitted, it was held by the Honble Bombay High Court in the above case that processing of prawns does not amount to manufacture or production of an article and the assessee is not entitled to special deduction under section 80HH. The learned Departmental Representative emphasised that in the present case, blood is put into the machine and analysed. No processing or no manufacturing activity is done. Sample remains what it was earlier. He also relied upon the decision of the Honble Bombay High Court in the case of R. Shroff Consultants P. Ltd. (supra) and submitted that the said judgment, through an ex parte judgment, is, nonetheless a judgment of the jurisdictional High Court and binding on the Tribunal. The learned Departmental Representative submitted that no liberal construction of the taxing statute has to be adopted when the language is clear.<p style="text-align: justify;">8. In the rejoinder, the learned counsel for the assessee submitted that there is no dispute that there is difference between 'manufacture' and 'processing'. He submitted that in the case of the assessee, receipts are of four/five types and consultancy is only incidental.<p style="text-align: justify;">9. We have considered the rival submissions of the learned parties. The basic ingredients of section 32A are the following :</p><p style="text-align: justify;">(1) There should be a ship or aircraft or machinery or plant, in short, equipment, which is owned by the assessee and is wholly used for the purpose of the business carried on by him.</p><p style="text-align: justify;">(2) The equipment should be installed in an industrial undertaking.</p><p style="text-align: justify;">(3) There should be manufacture or production of an article or thing, not being an article or thing specified in the list in Eleventh Schedule.</p><p style="text-align: justify;">As far as the first ingredient is concerned, there is no dispute that the Robotron Image Analyser comes within the term 'machinery'. As regards the term 'industrial undertaking', the same has not been defined in the section, and, therefore, guidance has to be taken from the meaning given in the different sections of the Income Tax Act and the meaning of 'industrial undertaking' as understood in common parlance has to be considered. As per Explanation to section 33B, 'industrial undertaking' means any undertaking which, inter alia, is engaged in the manufacture or processing of goods. As has been seen in different judicial pronouncements discussed above, nursing home, hospitals, pathology labs, computer divisions etc., are all entitled for investment allowance and hence they come within the term 'industrial undertaking'. In the present case, the processing is done in the laboratory of the assessee for proper analysis of blood in the Robotron Image Analyser for obtaining relevant data in relation to the state of health of a patient and the medical reports are prepared. Thus we hold that the assessees laboratory comes within the term 'industrial undertaking' for the purposes of section 32A. In Halsburys Laws of England, 'manufacture' has been defined as follows :</p><p style="text-align: justify;">'It has been said that a manufacture must have some reference to trade or commerce and that it must be for, or have as its product, something of a material nature. These conditions, however, if necessary, are certainly not sufficient. One test for manufacture is whether a vendible product is produced, improved, restored or preserved, and whilst this test is somewhat narrow, absence of a vendible product ordinarily negates patentability. Not all vendible products, however, are produced by manufacture, which is concerned only with the useful as distinct from the fine arts, and with industry as distinct from agriculture and other such applications of natural processes. Manufacture has been defined as a manner of adapting natural materials by the hands of man or by man-made devices or machinery, and as the making of an article or material by physical labour or applied power; but the practice is to accept as manufacture a wider range of industrial activities than such a definition would suggest. It includes articles made in sit us as well as articles made in factory.'</p><p style="text-align: justify;">Das J. observed in North Bengal Stores Ltd. v. Board of Revenue 1 STC 157 (Cal) that '. . . the essence of manufacturing is that something is produced or brought into existence which is different from that out of which it is made, in the sense that the thing produced is by itself commercial commodity which is capable as such of being sold or supplied. It does not mean that the materials with which the thing is manufactured must necessarily lose their identity or be transformed in their basic or essential properties'. The following activities are held as 'manufacture' or 'processing of goods' :</p><p style="text-align: justify;">(1) Book publishing (Circular No. 347 dated 7-7-1982)</p><p style="text-align: justify;">(2) Mixing different types of tea to arrive at a desired blend G.A. Randevian Ltd. v. CIT (1983) 12 Taxman 160 (Cal).<p style="text-align: justify;">(3) Production of cinematographic films (Circular No. 24 dated 23-7-1969)</p><p style="text-align: justify;">(4) Tailoring clothes Nu-Look P. Ltd v. CIT (1985) 23 Taxman 39 (Delhi).<p style="text-align: justify;">(5) Conversion of computer cash vouchers, invoices etc., into balance sheet, stock account etc.<p style="text-align: justify;">Data Cons case (supra)</p><p style="text-align: justify;">It has been held in the case of Dr. Y.K. Ramachandran by the Honble Madras High Court (supra) that professional activity carried on by an assessee will not deprive him of investment allowance. In the present case, the assessee is having income from different sources along with income from consultancy services, and on this ground alone it cannot be denied investment allowance, as held in the aforementioned case. Thus we have to examine whether any new commodity coming within the purview of the term 'article or thing' is produced by the assessee or not. The assessees activities consist of obtaining blood sample, putting it into the Analyser and getting the relevant data in the form of medical report for forming an opinion by the doctor. The Ahmedabad Bench of the Tribunal in the case of Dr. Suresh Amin Family Trust (supra) has clearly laid down that the expression article or thing is capable of very wide meaning and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests in the pathological laboratory. These reports are all no doubt useful for the concerned patient and are not freely marketable but as held in various judicial pronouncements, X-ray plants are entitled for investment allowance though X-ray films are only used for the concerned patient. This report was definitely not in existence before the blood was put into the Analyser and it has subsequently come out after proper analysis of the blood in the form of definite report on the basis of which the doctor will form an opinion about the state of health of the patient. It is similar to the ECG machines in which also a graph of the working of the heart is obtained with the help of machinery and the judicial approach is to allow investment allowance in respect of ECG machine also, as held by the Honble Kerala High Court in the case Upasana Hospital (supra), though the word 'processing' has not been used in section 32A but the generation of report by the image analyser will definitely come within the purview of 'manufacture or production of any article or thing' as contemplated under section 32A. The article or thing as contemplated under section 32A means a new thing which can be perceived by a person. It need not necessarily be marketable. Here Report generated by Robotron Image Analyser is a new thing generated by the use of machine. This interpretation is also in consonance with the series of judicial pronouncements discussed above. The case of R. Shroff Consultants (P.) Ltd. (supra) decided by the Honble Bombay High Court, relied upon by the learned Departmental Representative, is a case of business consultancy firm undertaking data processing through computers and is not a case of nursing home or diagnostic centre, and, therefore, not applicable to the facts of the case before us. As is seen from the income and expenditure account, the assessee is not any imparting consultancy services, as was the case in the above cited case. Thus the ratio laid down in the said case cannot squarely be applied to the facts of the present case. If ECG machines, X-ray machines and other instruments used in diagnostic centres, the basic function of which is to analyse the data fed into them, to give desired reports which are useful for the person for whom it is generated are entitled for investment allowance, we do not see any reason why Robotron Image Analyser, which also is a machine generating useful reports, should not be entitled for investment allowance. We are therefore of the considered opinion that the assessee is entitled to grant of investment allowance on the Robotron Image Analyser.<p style="text-align: justify;">10. The following two grounds taken by the assessee were not pressed at the time of hearing :</p><p style="text-align: justify;">'2. The learned Commissioner of Income Tax is wrong in disallowing alternate claim under section 32AB although Audit Report under section 32AB has submitted before him. The learned Commissioner of Income Tax should have considered facts which were submitted before him.</p><p style="text-align: justify;">3. The learned Commissioner of Income Tax Appeal erred in confirming addition on account of disallowable Rs. 10,000 without any reasonable basis. Same may be allowed.'</p><p style="text-align: justify;">These grounds are therefore dismissed as not pressed.<p style="text-align: justify;">11. In the result, the appeal is partly allowed.<p style="text-align: justify;"></p><p style="text-align: justify;">', 'observations' => null, 'overruledby' => null, 'prhistory' => '', 'pubs' => '[2001]79ITD14(Mum)', 'ratiodecidendi' => '', 'respondent' => 'ito', 'sub' => 'Direct Taxation', 'link' => null, 'circuit' => null ) ), 'args' => array( (int) 0 => '369304' ) ) $title_for_layout = 'Medical Genetic Clinic and Laboratory Vs. Ito Semantic Analysis' $shops = array( 'LAW' => array( (int) 0 => 'the Income Tax Act', (int) 1 => 'the Income Tax Act', (int) 2 => 'the Income Tax Act', (int) 3 => 'the Income Tax Act', (int) 4 => 'the Income Tax Act', (int) 5 => 'The Ahmedabad Bench' ), 'PERSON' => array( (int) 0 => 'ORDERS.V Mehrotra', (int) 1 => 'Hema Purandare', (int) 2 => 'Amit Chakravarty', (int) 3 => 'Robotron Image Analyser', (int) 4 => 'Robotron Image Analyser', (int) 5 => 'a. Metallurgyb', (int) 6 => 'Ambalal Dave v.', (int) 7 => 'Photographs', (int) 8 => 'V.K. Ramachandran', (int) 9 => 'Suresh Amin Family Trust', (int) 10 => 'M.L. Agarwala', (int) 11 => 'Shri V.H. Patil', (int) 12 => 'Analyser', (int) 13 => 'Analyser', (int) 14 => 'L.C. Mitra', (int) 15 => 'Addl', (int) 16 => 'Job', (int) 17 => 'Robotron Image Analyser', (int) 18 => 'J.', (int) 19 => 'Delhi).(5', (int) 20 => 'Y.K. 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Budharaja & Co.', (int) 5 => 'the Commissioner (Appeals', (int) 6 => 'Biology/Medicald', (int) 7 => 'Commissioner (Appeals', (int) 8 => 'the Honble Supreme Court', (int) 9 => 'N.C. Budharaja & Co.', (int) 10 => 'CIT', (int) 11 => 'Pressure Piling Co.', (int) 12 => 'CIT', (int) 13 => 'Trinity Hospital', (int) 14 => 'ITR', (int) 15 => 'Tribunal', (int) 16 => 'the Honble Supreme Court', (int) 17 => 'N.C. Budharaja & Co.', (int) 18 => 'CIT', (int) 19 => 'Upasana Hospital', (int) 20 => 'ITR', (int) 21 => 'ICCU', (int) 22 => 'ECG', (int) 23 => 'ICCU', (int) 24 => 'ECG', (int) 25 => 'Act.(4', (int) 26 => 'CIT', (int) 27 => 'ITR', (int) 28 => 'the Honble High Court', (int) 29 => 'CIT', (int) 30 => 'CIT', (int) 31 => 'CIT', (int) 32 => 'CTR', (int) 33 => 'CIT', (int) 34 => 'fed', (int) 35 => 'CIT', (int) 36 => 'R. Shroff Consultants', (int) 37 => 'Trinity Hospital', (int) 38 => 'inter alia', (int) 39 => 'the Robotron Image Analyser', (int) 40 => 'Department of Electronics', (int) 41 => 'Computer Development Division', (int) 42 => 'CIT v. Data Cons', (int) 43 => 'Reliance', (int) 44 => 'CIT', (int) 45 => 'Peerless Consultancy Services', (int) 46 => 'ITR', (int) 47 => 'CIT', (int) 48 => 'Shaw Wallace & Co. Ltd.', (int) 49 => 'fed', (int) 50 => 'CIT', (int) 51 => 'Fort Gloster Industries Ltd.', (int) 52 => 'CIT', (int) 53 => 'Computerised Accounting & Management Service', (int) 54 => 'fed', (int) 55 => 'fed', (int) 56 => 'fed', (int) 57 => 'CIT', (int) 58 => 'CIT', (int) 59 => 'Oswal Data Processors', (int) 60 => 'it.5', (int) 61 => 'CIT', (int) 62 => 'Orient Longman Ltd.', (int) 63 => 'CIT', (int) 64 => 'CIT', (int) 65 => 'A. Mukherjee & Co.', (int) 66 => 'Metallurgy', (int) 67 => 'Petrology, Biology/Medical and Space Science', (int) 68 => 'ECG', (int) 69 => 'ICCU', (int) 70 => 'Departmental Representative', (int) 71 => 'Departmental Representative', (int) 72 => 'the Honble Bombay High Court', (int) 73 => 'CIT v. Sterling Foods (Goa', (int) 74 => 'the Honble Supreme Court', (int) 75 => 'N.C Budharaja & Co.', (int) 76 => 'the Honble Supreme Court', (int) 77 => 'A.C. Budharaja & Co.', (int) 78 => 'Departmental Representative', (int) 79 => 'the Honble Supreme Court', (int) 80 => 'N.C. Budharaja & Co.', (int) 81 => 'CIT v. Boots Co.', (int) 82 => 'the Honble Supreme Court', (int) 83 => 'CST', (int) 84 => 'Pio Food Packers', (int) 85 => 'the Honble Bombay High Court', (int) 86 => 'Sterling Foods (Goa', (int) 87 => 'the Honble Bombay High Court', (int) 88 => 'Departmental Representative', (int) 89 => 'the Honble Bombay High Court', (int) 90 => 'R. Shroff Consultants P. Ltd.', (int) 91 => 'High Court', (int) 92 => 'Tribunal', (int) 93 => 'Departmental Representative', (int) 94 => 'the Robotron Image Analyser', (int) 95 => 'inter alia', (int) 96 => 'the Robotron Image Analyser', (int) 97 => 'North Bengal Stores Ltd.', (int) 98 => 'Board of Revenue 1', (int) 99 => 'G.A. Randevian Ltd.', (int) 100 => 'CIT', (int) 101 => 'CIT', (int) 102 => 'Data Cons', (int) 103 => 'ECG', (int) 104 => 'ECG', (int) 105 => 'the Honble Kerala High Court', (int) 106 => 'Upasana Hospital', (int) 107 => 'R. Shroff Consultants', (int) 108 => 'the Honble Bombay High Court', (int) 109 => 'Departmental Representative', (int) 110 => 'ECG', (int) 111 => 'Income Tax', (int) 112 => 'Audit Report', (int) 113 => 'Income Tax', (int) 114 => 'Income Tax Appeal' ), 'MONEY' => array( (int) 0 => '15 per cent' ), 'PRODUCT' => array( (int) 0 => '845' ), 'NORP' => array( (int) 0 => 'Vadamalayan' ), 'FAC' => array( (int) 0 => 'Diagnostic Centre' ), 'EVENT' => array( (int) 0 => 'CCI-Wing' ), 'ORDINAL' => array( (int) 0 => 'first', (int) 1 => 'first' ) ) $desc = array( 'Judgement' => array( 'id' => '369304', 'acts' => '', 'appealno' => 'IT Appeal No. 249 (Mum) of 1996 21 June 2000 A.Y. 1989-90', 'appellant' => 'Medical Genetic Clinic and Laboratory', 'authreffered' => '', 'casename' => 'Medical Genetic Clinic and Laboratory Vs. Ito', 'casenote' => ' - BOMBAY STAMP ACT, 1958. Schedule 1, Article 36: [Y.R. Meena, CJ & D.A. Mehta & A.S. Dave, JJ] Deed of Mortgage Liability to pay stamp duty Held, Any instruments in respect of transactions, relating to loans and advances, loans and mortgages, cash credit or overdraft bonds, agreements of pawn or pledge and letters of hypothecation executed by farmers for agricultural and land development purposes in favour of all Commercial Bank etc. are entitled to remission of entire duty chargeable under the Stamp Act with effect on and from 1.4.1979 under Government Notification dated 23.3.1979. Thus, where loan was granted by Bank of India under Agricultural Finance Scheme towards purchase of Air Compressors, Drilling Rods and other Accessories. Use of the Air compressors, Drilling Rods and other Accessories in case of applicant who is a farmer can only be for purpose of drilling a bore-well for purpose of irrigation in process of carrying on agricultural activities. Thus, it is apparent that loan was availed of by applicant-farmer for agricultural and land development purposes because a bore-well would go to increase the utility of agricultural land by ensuring round the year irrigation. The instrument in question would therefore fall within scope of complete remission granted to instrument of mortgage under Government Notification dated 23.3.1979 and hence not liable to stamp duty under Article 36 of Schedule I of the Act. - A professional activity can also be characterised as an activity of carrying on business if it is carried on like a commercial activity. The purposes for which such machines which can be described as computers are used are well-known and in highly scientifically developed systems, they have their own roles to play and they cannot be equated with office appliances which would be of much simpler nature. In all these activities the assessee had to play an active role by co-ordinating its activities in a business-like manner. He submitted that processing is not covered under section 32A while in the present case, at best, it can be said that the basic activity is that of processing. It includes articles made in sit us as well as articles made in factory. Suresh Amin Family Trust (supra) has clearly laid down that the expression article or thing is capable of very wide meaning and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests in the pathological laboratory.', 'caseanalysis' => null, 'casesref' => '', 'citingcases' => '', 'counselplain' => ' V.H. Patil and Vipul Joshi, <i>for the Assessee </i>Naveen Chandra, <i>for the Revenue</i>', 'counseldef' => '', 'court' => 'Mumbai', 'court_type' => 'HC', 'decidedon' => '2000-06-21', 'deposition' => '', 'favorof' => null, 'findings' => null, 'judge' => '', 'judgement' => 'ORDER<p style="text-align: justify;">S.V Mehrotra, A.M.</p><p style="text-align: justify;">This appeal by the assessee is directed against the order of the Commissioner (Appeals)-XVII, Bombay, dated 19-10-1995 for the assessment year 1989-90.<p style="text-align: justify;">2. The assessee is a firm consisting of two partners, Dr. Hema Purandare and Dr. Amit Chakravarty. During the year the firm purchased one computer machine called 'Robotron Computer Aided Image Analyser'. The assessing officer noted that the assessee was not engaged in business nor is it engaged in the activity of construction, manufacture or production of any one or more of the articles or things other than those specified in the list in the Eleventh Schedule to the Income Tax Act so as to be entitled for investment allowance on this machinery. She noted that the assessee is engaged in professional activity and are consultant medical geneticist and is offering services mainly for prenatal diagnosis of hereditary diseases/defects. The instrument to be purchased being an advance model of machinery would reduce the required manual labour to 15 per cent. She also noted that the machinery will help to give report faster, accurate and it is a life-saving machine. The analysis of investigation done by this machinery will help the professional to decide the treatment required for their patients. She also observed that the analysis of the investigation is not a commercial commodity and it is not saleable to be traded. Accordingly, she disallowed the investment allowance of Rs. 2,11,361. She also noted that since the machinery is stated to be image analyser and is placed in the consultant room, it will come within the wider meaning given to items 10 and 22 of the Eleventh Schedule. The learned Commissioner (Appeals) applied the decision of the Honble Supreme Court in the case of CIT v. N.C. Budharaja & Co. : [1993]204ITR412(SC) and observed that the machinery in question is utilised for obtaining relevant data in relation to the stated the health of a patient and this activity cannot be said to be manufacture or production of an article in the sense in which it is understood in the commercial world. He also agreed with the contention of the assessing officer that the assessee was engaged in a professional activity and could not be said to be carrying out a business. The medical reports prepared by the assessee were of value only to the patients. These reports are not to be freely traded for money in the market. The learned Commissioner (Appeals) observed that at any rate the assessee cannot be construed to be an industrial undertaking, as is required for the purposes of deduction of investment allowance. Accordingly, he confirmed the order of the assessing officer.<p style="text-align: justify;">3. The learned counsel for the assessee adverted to page 23 of the paper book which contains the submissions made before the Commissioner (Appeals) in this regard. In the said submissions it has been pointed out that the assessing officer had disallowed the investment allowance on the ground that image analyser machine is not being used for commercial activity. However, it was submitted that this machine could be used for metallurgy, medical petrology and space science purposes. It translates visual image into quantitative information in report form. The assessee is running a clinical laboratory where this machine is used to get translated in report form visual image of blood, semen etc. This is being given to customers on every report fixed charges basis. It has been mentioned in the said submissions that the activity carried on by the assessee though grabbed as profession is really commercial or in any event, if the vocation of the assessee is an admixture of both, then the assessee will be entitled to relief for development rebate. The learned counsel for the assessee also adverted to page 21 of the paper book where a brochure in respect of this machinery is contained. In this brochure, as regards the utility of the machinery, it has been mentioned as under :</p><p style="text-align: justify;">'For simple observation of micro-structure analyst can see directly through the eyepiece of the microscope and draw the inference but for translation of a visual image into quantitative information Robotron Image Analyser has no substitute.</p><p style="text-align: justify;">Robotron Image Analyser is a computer aided and software oriented instrument suitable for wide field of application viz,</p><p style="text-align: justify;">a. Metallurgy</p><p style="text-align: justify;">b. Petrology</p><p style="text-align: justify;">c. Biology/Medical</p><p style="text-align: justify;">d. Space Science</p><p style="text-align: justify;">Being software oriented systems it is possible to use the same for various other purposes in future, which may not be in the immediate consideration of the morphologist.'</p><p style="text-align: justify;">The learned Commissioner (Appeals), it was submitted by the learned counsel for the assessee, wrongly relied on the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra). He emphasised that in this case, construction of dams and canals was held to be not construction of a thing or things. He further emphasised that article or thing should be seen in general law. He referred to various decisions which are discussed hereinbelow.</p><p style="text-align: justify;">(1) CIT v. Pressure Piling Co. (India) (P.) Ltd. : [1980]126ITR333(Bom) <p style="text-align: justify;">In this case, the meaning of manufacture or produce was considered. The assessee was carrying on business of laying pressure piling foundations for buildings by a specialised patented method. Concrete mixture was subjected to certain processes under pressure along- with iron bars in bores in site. It was held that Piles a new and independent product was brought into existence and it is an article. Thus it was held that the assessee is engaged in manufacture or production of an article.</p><p style="text-align: justify;">(2) CIT v. Trinity Hospital (1996) 225 ITR 178 <p style="text-align: justify;">In this case, the assessee-firm was running a hospital/nursing home for rendering efficient medical services to the patients. The assessee installed in its hospital various machines including (i) X-ray machine, (ii) an ultrasound scanner/ultra monographic machine, (iii) a fetal monitor, and (iv) air conditioning equipment, to ensure the proper working of these machines. It was held as under :</p><p style="text-align: justify;">'(i) that the photographs of various parts of the body obtained by these machines are the resultant product of work or activity. They are the result of efforts and activities and give a result in black and white regarding the internal position of the parts of the body and are helpful for 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 things under section 32A of the Act. The installation of these machines in the hospital by the assessee was for the purpose of the business of production of things. The Tribunal was, therefore, right in allowing investment allowance to the assessee;'</p><p style="text-align: justify;">The learned counsel for the assessee emphasised that this case has considered the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra).</p><p style="text-align: justify;">(3) CIT v. Upasana Hospital (1996) 225 ITR 845 <p style="text-align: justify;">In this case the firm was running a hospital and it was held that the firm carried on business and expenditure incurred by the firm on purchase of X-ray plant, ICCU and ECG equipment were entitled to investment allowance. In this case it was held that when a medical practitioner, without confining himself to his conventional function of examining patients and prescribing medicines, establishes an X-ray plant and machinery for augmenting his professional work, it cannot be said that he has no profit motive in such adventure. That means he is carrying on a business activity which attracts the investment allowance under section 32A of the Income Tax Act. Any venture or enterprise which a person individually or collectively undertakes to do and which has some industrial consequences would be an industrial undertaking. It must also be the result of organised activity resulting in manufacture or production of any article or thing. When raw X-ray film is exposed and processed, the resulting X-ray photograph is a production of a new article or thing. The article produced is a distinct and different article from raw film. The court held that the firm was entitled to investment allowance in respect of the X-ray plant and other accessories, the ICCU and ECG equipment and that the assessees unit of X-ray machine and accessories was a small scale industrial undertaking for the production of X-ray photographs coming within the ambit of section 32A(2)(b)(ii) of the Act.</p><p style="text-align: justify;">(4) Natvarlal Ambalal Dave v. CIT (1996) 225 ITR 936 <p style="text-align: justify;">In this case it was observed that photographs of various parts of the human body obtained by an X-ray machine are the end result of effort and activity carried on with the machine by human endeavour which is helpful for the proper and efficient diagnosis of the patient. Photographs or graphs obtained cannot but be a thing produced by the use of X-ray machine. It was further held that it is not the requirement of section 32A of the Income Tax Act, 1961, 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 an article or thing, that such article or thing must be saleable in the open market as a common marketable commodity only. A thing may be produced for being sold to a particular person or for the use of a particular person. Therefore an X-ray machine satisfies the condition in section 32A that it is plant and machinery through which an article or thing could be produced. It was further observed that merely because a person happens to be a professionally qualified doctor, it cannot be said that such persons activity cannot be treated as an activity of carrying on of business. A professional activity can also be characterised as an activity of carrying on business if it is carried on like a commercial activity. In this case the meaning of 'industrial undertaking' was also considered by the Honble High Court and it was held that 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.</p><p style="text-align: justify;">(5) CIT v. Dr. V.K. Ramachandran : [1981]128ITR727(Guj) <p style="text-align: justify;">In this case, the assessee was a medical practitioner and purchased an X-ray machine. It was held 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 no way 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.</p><p style="text-align: justify;">(6) Dr. (P.) Vadamalayan v. CIT : [1969]74ITR94(Mad) <p style="text-align: justify;">In this case it was held that the carrying on of the nursing home by the assessee as part of his profession was of a commercial nature and the combined activities of the assessee constituted business and the assessee was entitled to development rebate. If an assessee who is a professional and an expert contemporaneously carries on a trade which is annexed to the exercise of such a profession and if by doing so he can take advantage of a provision in the fiscal Act by claiming an allowance or rebate and if such a claim carries a lighter burden of tax, then he has the right to take advantage of the same. The definition of 'business' being an inclusive definition and not being exhaustive is indicative of extension and expansion and not restriction.</p><p style="text-align: justify;">(7) Dr. Suresh Amin Family Trust v. CIT (1995) 125 CTR (Ahd) 421<p style="text-align: justify;">In this case it was held that Diagnostic Centre (pathological laboratory) is covered by the expression industrial undertaking and the words production or produce cover all or any activity which brings into existence no article or thing by a process which may or may not amount to manufacture. Similarly the expression article or thing is very wide and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests. Such reports would thus constitute an article or thing. Accordingly, the assessee was held to be entitled to investment allowance on items of plant and machinery.</p><p style="text-align: justify;">(8) CIT v. M.L. Agarwala <p style="text-align: justify;">In this case ultra-sound equipment with air conditioner and voltage stabiliser was held to be eligible for investment allowance. It was observed that the resulting print is an article which is manufactured. The court held that a special type of film or material is to be fed which is blank but after the processing it is obtained with the photographs/prints of the organs and the data related to such organs. It is not the same as fed into the machine as raw materials and, therefore, investment allowance was admissible under section 32A.</p><p style="text-align: justify;">(9) CIT v. R. Shroff Consultants (P) Ltd. : [1999]238ITR1018(Bom) <p style="text-align: justify;">In this case the assessee was engaged in business consultancy and a part thereof undertaking data processing through computers. In this case it was held that preparation of statements was not manufacture or production of an article or thing and the assessee is not entitled to investment allowance, on computer. The learned counsel for the assessee, Shri V.H. Patil, emphasised that this was an ex parte judgment and does not consider the decision of the Honble Rajasthan High Court in the case of Trinity Hospital (supra) and, therefore, it should not be followed as it has not complete binding effect.<p style="text-align: justify;">4. In regard to the proposition whether the assessees establishment comes within the purview of the term 'industrial undertaking', the learned counsel for the assessee argued that the section does not define industrial undertaking and so help has to be taken from other sections. He referred to Explanation to section 33B in which 'industrial undertaking has been defined, inter alia, as an undertaking engaged in the manufacture or processing of goods. He submitted that a whether commercially a different article or thing comes into existence is the basic test. He emphasised that the machine prepare the report and the opinion given by the doctor is an article. He submitted that a sample of blood is fed into the Analyser and blood report is obtained. What a doctor can do by human element is done by the Analyser. He further submitted that the balance sheet preparation by a computer has been held to be allowable for investment allowance, as balance sheet is a different article or thing. He, submitted that the Robotron Image Analyser is also a computer-aided machine, as is clear from the sanction obtained from Department of Electronics (CCI-Wing), Computer Development Division, New Delhi, in F. No. 4 (489)/Comp./88-01-04/01 dated 12-1-1988, a copy of which appears at page 16 of the paper book. In support of his contention, the learned counsel for the assessee also relied upon the decision of the Honble Karnataka High Court in the case of CIT v. Data Cons (P) Ltd. : [1985]155ITR66(KAR) . In this case, the meaning of the term 'processing of goods' was considered and it was held that conversion of data furnished by customers into balance sheet, stock account etc., amounts to processing of goods and the assessee is entitled to concessional rate of tax. It was held that in all these activities the assessee had to play an active role by coordinating the activities and collecting information on such activities amounted to processing of goods. The assessee was therefore an industrial company entitled to concessional rate of tax. Reliance was also placed by the learned counsel for the assessee on the following decisions :</p><p style="text-align: justify;">(a) CIT v. Peerless Consultancy Services (P.) Ltd. (1991) 186 ITR 609In this case, the term industrial company' has been described as a company engaged in the processing of goods. The word 'processing' has not been defined in the Act and so it has to be assigned its dictionary meaning, according to which it refers to the treatment to which a commodity is subjected in order to prepare it for the market. The nature and extent of processing may vary from case to case. In one case the processing may be slight and in another, it may be extensive. In the light of this discussion it was held that the assessee which carried on the business of providing technical and industrial consultancy on the basis of computers and of undertaking electronic data processing was an industrial undertaking.</p><p style="text-align: justify;">(b) CIT v. Shaw Wallace & Co. Ltd. : [1993]201ITR17(Cal) In this case it was held that computer is a complicated machine and not an office appliance. it was observed that the word 'production' has not been defined in the Act. The expression 'production of an article' means, among other things, that which is produced, a thing that results from any action, process or effort, a product, a product of human activity or effort. The word 'manufacture' has also not been defined in the Act. The expression 'manufacture' is generally understood to mean bringing into existence a new substance and does not mean merely to produce some change in a substance. Having regard to the nature and function of the computer and the data processing system, it cannot be said that they are office appliances. The purposes for which such machines which can be described as computers are used are well-known and in highly scientifically developed systems, they have their own roles to play and they cannot be equated with office appliances which would be of much simpler nature. The final end products, viz., printed materials and the statements are entirely different articles or things from the data which are fed into the computer and are transformed into instructions and computations through a series of programmes and processing and the same amounts to manufacture of an article or thing.</p><p style="text-align: justify;">(c) CIT v. Fort Gloster Industries Ltd. : [1996]219ITR223(Cal) In this case it was held that computer is used for processing raw materials, data, stray data and salary payments etc., and also for monitoring details of production entitled to investment allowance.</p><p style="text-align: justify;">(d) CIT v. Computerised Accounting & Management Service (P) Ltd. (1998) 99 Taxman 101 (Ker.)The assessee-company was doing business in computerised accounting and management services by using computers. Raw technical and commercial data were fed into computers as inputs as per requirements of various customers and the data were processed to get necessary informations, computations and statements as outputs. It was held to be an industrial undertaking and the computations and statements that a computer brings out are entirely different in contents from the inputs fed into the computer and, therefore, the assessee-company can be said to be engaged in the production of mechanically prepared information which is collected from the raw data being fed into the computer and hence entitled for investment allowance.</p><p style="text-align: justify;">(e) CIT v. Dr. L.C. Mitra (1998) 96 Taxman 568 (Pat.)In this case the main dispute was whether parts of X-ray machine could be considered as machinery or not and it was held that they could be considered as plant and as such the assessee, a doctor, was entitled to investment allowance in respect of certain parts added to the existing X-ray machine.</p><p style="text-align: justify;">(f) CIT v. Oswal Data Processors : [1997]223ITR735(MP) It was held that the work of data processing was an industrial activity and the assessee is entitled to investment allowance on computers installed by it.<p style="text-align: justify;">5. The learned counsel for the assessee also submitted that publishing amounts to manufacture and relied on the following decisions :</p><p style="text-align: justify;">(a) CIT v. Commercial Laws of India (P.) Ltd : [1977]107ITR822(Mad) In this case it was held that folding and stitching of the printed sheets constitute processing of goods and hence the assessee comes within the term 'industrial company'.</p><p style="text-align: justify;">(b) Orient Longman Ltd. v. CIT : [1981]130ITR477(Delhi) In this case also the assessee carried on the business of publication, purchase and sale of books. It was held that though the assessee as a publisher would not be doing more than getting the manuscript and preparing the same for printing and book binding, yet the fact that printing and book binding was done by someone else did not imply that the someone else was the manufacturer. It was the business of the assessee to get the books manufactured by getting the manuscript, designing the nature of the book, finishing the anticipated product and then selling the product after getting it made. Therefore, the assessee was an industrial company and entitled to concessional rate of tax in accordance with the provisions of the Act.</p><p style="text-align: justify;">(c) Addl. CIT v. A. Mukherjee & Co. (P.) Ltd. : [1978]113ITR718(Cal) The assessee in this case was a publisher of books. The assessees Job was to get the manuscript for publication, hit upon a suitable format for the book, get it printed as per its requirements under its supervision, get the book bound after suitable changes and then put out the publication for sale. In all these activities the assessee had to play an active role by co-ordinating its activities in a business-like manner. It was held that the assessee was engaged in the activity of manufacturing and also of processing of books, which are also goods.<p style="text-align: justify;">6. Relying thus on all the aforementioned case laws, the learned counsel for the assessee submitted that the firm managed by renowned professional doctors comes within the purview of the term 'industrial undertaking' as blood and semen samples are processed to get a report which is an article or thing as contemplated under section 32A(2)(b)(iii). The machine is computer-aided machine and apart from being utilised for generation of reports, it can be utilised for other purposes such as Metallurgy, Petrology, Biology/Medical and Space Science and since it is a software oriented system, it is possible to use the same for various other purposes in future, which may not be in the immediate consideration of the morphologist. The learned counsel for the assessee vehemently argued that on the same analogy on which X-ray machines, ECG machine, ICCU are entitled to investment allowance, Robotron Image Analyser, which is practically performing the same functions, should be held to be entitled for investment allowance. He emphasised that the assessee is not using it only for consultancy purposes butt for other purposes also, as is evident from the income and expenditure statement. The assessee has derived income from testing fees, investigation charges, consultancy charges and miscellaneous income. He further submitted that as the name of the assessee itself suggests that it is a laboratory, the basic activity of which implies processing, there is no reason why this machinery should not be allowed investment allowance.<p style="text-align: justify;">7. The learned Departmental Representative submitted that the assessee is a firm of two doctors. Doctors are professionals and for imparting consultancy services, they are basically using this instrument. He submitted that, first of all, the firm does not come within the term 'industrial undertaking' as it is not manufacturing any article or thing. It was submitted that hospital is altogether different where many activities are carried on. In this case, the assessees activities are very limited and what the machine has done has, in substance, reduced the time taken for final diagnosis. The learned Departmental Representative submitted that the machine serves only the purpose as is served by a blood pressure instrument. He wondered if blood pressure instrument could be said to produce any article or thing when it simply measures the blood pressure. He relied upon the decision of the Honble Bombay High Court in the case of CIT v. Sterling Foods (Goa) (1995) 213 ITR 811 in which it was held that processing is a much wider term than manufacture. He submitted that processing is not covered under section 32A while in the present case, at best, it can be said that the basic activity is that of processing. He referred to the decision of the Honble Supreme Court in the case of N.C Budharaja & Co. (supra) and submitted that, as observed by the learned Commissioner (Appeals), the Honble Supreme Court held that the word 'article' employed in section 32A must be understood in the sense in which it is understood in the commercial world. The word 'article' cannot comprehend or take within its ambit a dam, a bridge, a building, a road, a canal and so on. He submitted that the learned Commissioner (Appeals) has rightly relied on the principles laid down in the case of A.C. Budharaja & Co. (supra). He further submitted that the learned Commissioner (Appeals) observed that the machinery in question is utilised for obtaining the relevant data in relation to the health of a patient and this activity cannot be said to be manufacture or production of an article in the sense in which it is understood in the commercial world. He submitted that the computer-aided machine cannot be equated with computer as it is not producing anything. The learned Departmental Representative submitted that in the assessees case these facts have to be kept in mind while deciding the issue. He emphasised that the assessee is basically a consultant and providing consultancy. He referred to section 32A and submitted that the installation of plant and machinery should be 'for the purpose of manufacture.........' He submitted that in Explanation to section 33B, the words used are 'manufacture or processing' whereas the word 'processing' is conspicuously missing in section 32A. He further submitted that the word 'processing' is much wider than the word 'manufacture' and unless something different from the original that is fed into the plant comes out, an activity cannot come within the term 'manufacture'. He referred to the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra) and that of the Honble Bombay High Court in the case of CIT v. Boots Co. (I) Ltd. : [1995]214ITR175(Bom) and submitted that no liberal construction should be adopted if the language of the section is clear. It is only when the language of the provision is ambiguous that the construction beneficial to the assessee may be adopted. He referred to the decision of the Honble Supreme Court in Deputy CST v. Pio Food Packers (1980) 46 STC 63 in which, he submitted, it was held that the original commodity must change its character for an activity to come within the purview of 'manufacture'. He also relied on the decision of the Honble Bombay High Court in the case of Sterling Foods (Goa) (supra) wherein it was observed that the expressions 'processing', 'manufacture' and 'production' used in various taxing statutes are not interchangeable expressions. Though used in juxtaposition, they convey different concepts and refer to different activities. The term 'processing' is much wider. The nature and extent of processing may vary from case to case. Every process does not tantamount to manufacture. It is only when the process results in the emergence of a new and different article having a distinctive name, character or use that manufacture can be said to have taken place.</p><p style="text-align: justify;">Similarly, production is wider than manufacture. As a result, every production need not amount to manufacture, though every manufacture can be characterised as production. Accordingly, he submitted, it was held by the Honble Bombay High Court in the above case that processing of prawns does not amount to manufacture or production of an article and the assessee is not entitled to special deduction under section 80HH. The learned Departmental Representative emphasised that in the present case, blood is put into the machine and analysed. No processing or no manufacturing activity is done. Sample remains what it was earlier. He also relied upon the decision of the Honble Bombay High Court in the case of R. Shroff Consultants P. Ltd. (supra) and submitted that the said judgment, through an ex parte judgment, is, nonetheless a judgment of the jurisdictional High Court and binding on the Tribunal. The learned Departmental Representative submitted that no liberal construction of the taxing statute has to be adopted when the language is clear.<p style="text-align: justify;">8. In the rejoinder, the learned counsel for the assessee submitted that there is no dispute that there is difference between 'manufacture' and 'processing'. He submitted that in the case of the assessee, receipts are of four/five types and consultancy is only incidental.<p style="text-align: justify;">9. We have considered the rival submissions of the learned parties. The basic ingredients of section 32A are the following :</p><p style="text-align: justify;">(1) There should be a ship or aircraft or machinery or plant, in short, equipment, which is owned by the assessee and is wholly used for the purpose of the business carried on by him.</p><p style="text-align: justify;">(2) The equipment should be installed in an industrial undertaking.</p><p style="text-align: justify;">(3) There should be manufacture or production of an article or thing, not being an article or thing specified in the list in Eleventh Schedule.</p><p style="text-align: justify;">As far as the first ingredient is concerned, there is no dispute that the Robotron Image Analyser comes within the term 'machinery'. As regards the term 'industrial undertaking', the same has not been defined in the section, and, therefore, guidance has to be taken from the meaning given in the different sections of the Income Tax Act and the meaning of 'industrial undertaking' as understood in common parlance has to be considered. As per Explanation to section 33B, 'industrial undertaking' means any undertaking which, inter alia, is engaged in the manufacture or processing of goods. As has been seen in different judicial pronouncements discussed above, nursing home, hospitals, pathology labs, computer divisions etc., are all entitled for investment allowance and hence they come within the term 'industrial undertaking'. In the present case, the processing is done in the laboratory of the assessee for proper analysis of blood in the Robotron Image Analyser for obtaining relevant data in relation to the state of health of a patient and the medical reports are prepared. Thus we hold that the assessees laboratory comes within the term 'industrial undertaking' for the purposes of section 32A. In Halsburys Laws of England, 'manufacture' has been defined as follows :</p><p style="text-align: justify;">'It has been said that a manufacture must have some reference to trade or commerce and that it must be for, or have as its product, something of a material nature. These conditions, however, if necessary, are certainly not sufficient. One test for manufacture is whether a vendible product is produced, improved, restored or preserved, and whilst this test is somewhat narrow, absence of a vendible product ordinarily negates patentability. Not all vendible products, however, are produced by manufacture, which is concerned only with the useful as distinct from the fine arts, and with industry as distinct from agriculture and other such applications of natural processes. Manufacture has been defined as a manner of adapting natural materials by the hands of man or by man-made devices or machinery, and as the making of an article or material by physical labour or applied power; but the practice is to accept as manufacture a wider range of industrial activities than such a definition would suggest. It includes articles made in sit us as well as articles made in factory.'</p><p style="text-align: justify;">Das J. observed in North Bengal Stores Ltd. v. Board of Revenue 1 STC 157 (Cal) that '. . . the essence of manufacturing is that something is produced or brought into existence which is different from that out of which it is made, in the sense that the thing produced is by itself commercial commodity which is capable as such of being sold or supplied. It does not mean that the materials with which the thing is manufactured must necessarily lose their identity or be transformed in their basic or essential properties'. The following activities are held as 'manufacture' or 'processing of goods' :</p><p style="text-align: justify;">(1) Book publishing (Circular No. 347 dated 7-7-1982)</p><p style="text-align: justify;">(2) Mixing different types of tea to arrive at a desired blend G.A. Randevian Ltd. v. CIT (1983) 12 Taxman 160 (Cal).<p style="text-align: justify;">(3) Production of cinematographic films (Circular No. 24 dated 23-7-1969)</p><p style="text-align: justify;">(4) Tailoring clothes Nu-Look P. Ltd v. CIT (1985) 23 Taxman 39 (Delhi).<p style="text-align: justify;">(5) Conversion of computer cash vouchers, invoices etc., into balance sheet, stock account etc.<p style="text-align: justify;">Data Cons case (supra)</p><p style="text-align: justify;">It has been held in the case of Dr. Y.K. Ramachandran by the Honble Madras High Court (supra) that professional activity carried on by an assessee will not deprive him of investment allowance. In the present case, the assessee is having income from different sources along with income from consultancy services, and on this ground alone it cannot be denied investment allowance, as held in the aforementioned case. Thus we have to examine whether any new commodity coming within the purview of the term 'article or thing' is produced by the assessee or not. The assessees activities consist of obtaining blood sample, putting it into the Analyser and getting the relevant data in the form of medical report for forming an opinion by the doctor. The Ahmedabad Bench of the Tribunal in the case of Dr. Suresh Amin Family Trust (supra) has clearly laid down that the expression article or thing is capable of very wide meaning and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests in the pathological laboratory. These reports are all no doubt useful for the concerned patient and are not freely marketable but as held in various judicial pronouncements, X-ray plants are entitled for investment allowance though X-ray films are only used for the concerned patient. This report was definitely not in existence before the blood was put into the Analyser and it has subsequently come out after proper analysis of the blood in the form of definite report on the basis of which the doctor will form an opinion about the state of health of the patient. It is similar to the ECG machines in which also a graph of the working of the heart is obtained with the help of machinery and the judicial approach is to allow investment allowance in respect of ECG machine also, as held by the Honble Kerala High Court in the case Upasana Hospital (supra), though the word 'processing' has not been used in section 32A but the generation of report by the image analyser will definitely come within the purview of 'manufacture or production of any article or thing' as contemplated under section 32A. The article or thing as contemplated under section 32A means a new thing which can be perceived by a person. It need not necessarily be marketable. Here Report generated by Robotron Image Analyser is a new thing generated by the use of machine. This interpretation is also in consonance with the series of judicial pronouncements discussed above. The case of R. Shroff Consultants (P.) Ltd. (supra) decided by the Honble Bombay High Court, relied upon by the learned Departmental Representative, is a case of business consultancy firm undertaking data processing through computers and is not a case of nursing home or diagnostic centre, and, therefore, not applicable to the facts of the case before us. As is seen from the income and expenditure account, the assessee is not any imparting consultancy services, as was the case in the above cited case. Thus the ratio laid down in the said case cannot squarely be applied to the facts of the present case. If ECG machines, X-ray machines and other instruments used in diagnostic centres, the basic function of which is to analyse the data fed into them, to give desired reports which are useful for the person for whom it is generated are entitled for investment allowance, we do not see any reason why Robotron Image Analyser, which also is a machine generating useful reports, should not be entitled for investment allowance. We are therefore of the considered opinion that the assessee is entitled to grant of investment allowance on the Robotron Image Analyser.<p style="text-align: justify;">10. The following two grounds taken by the assessee were not pressed at the time of hearing :</p><p style="text-align: justify;">'2. The learned Commissioner of Income Tax is wrong in disallowing alternate claim under section 32AB although Audit Report under section 32AB has submitted before him. The learned Commissioner of Income Tax should have considered facts which were submitted before him.</p><p style="text-align: justify;">3. The learned Commissioner of Income Tax Appeal erred in confirming addition on account of disallowable Rs. 10,000 without any reasonable basis. Same may be allowed.'</p><p style="text-align: justify;">These grounds are therefore dismissed as not pressed.<p style="text-align: justify;">11. 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Shroff Consultants', (int) 108 => 'the Honble Bombay High Court', (int) 109 => 'Departmental Representative', (int) 110 => 'ECG', (int) 111 => 'Income Tax', (int) 112 => 'Audit Report', (int) 113 => 'Income Tax', (int) 114 => 'Income Tax Appeal' ), 'MONEY' => array( (int) 0 => '15 per cent' ), 'PRODUCT' => array( (int) 0 => '845' ), 'NORP' => array( (int) 0 => 'Vadamalayan' ), 'FAC' => array( (int) 0 => 'Diagnostic Centre' ), 'EVENT' => array( (int) 0 => 'CCI-Wing' ), 'ORDINAL' => array( (int) 0 => 'first', (int) 1 => 'first' ) ), 'desc' => array( 'Judgement' => array( 'id' => '369304', 'acts' => '', 'appealno' => 'IT Appeal No. 249 (Mum) of 1996 21 June 2000 A.Y. 1989-90', 'appellant' => 'Medical Genetic Clinic and Laboratory', 'authreffered' => '', 'casename' => 'Medical Genetic Clinic and Laboratory Vs. Ito', 'casenote' => ' - BOMBAY STAMP ACT, 1958. Schedule 1, Article 36: [Y.R. Meena, CJ & D.A. Mehta & A.S. Dave, JJ] Deed of Mortgage Liability to pay stamp duty Held, Any instruments in respect of transactions, relating to loans and advances, loans and mortgages, cash credit or overdraft bonds, agreements of pawn or pledge and letters of hypothecation executed by farmers for agricultural and land development purposes in favour of all Commercial Bank etc. are entitled to remission of entire duty chargeable under the Stamp Act with effect on and from 1.4.1979 under Government Notification dated 23.3.1979. Thus, where loan was granted by Bank of India under Agricultural Finance Scheme towards purchase of Air Compressors, Drilling Rods and other Accessories. Use of the Air compressors, Drilling Rods and other Accessories in case of applicant who is a farmer can only be for purpose of drilling a bore-well for purpose of irrigation in process of carrying on agricultural activities. Thus, it is apparent that loan was availed of by applicant-farmer for agricultural and land development purposes because a bore-well would go to increase the utility of agricultural land by ensuring round the year irrigation. The instrument in question would therefore fall within scope of complete remission granted to instrument of mortgage under Government Notification dated 23.3.1979 and hence not liable to stamp duty under Article 36 of Schedule I of the Act. - A professional activity can also be characterised as an activity of carrying on business if it is carried on like a commercial activity. The purposes for which such machines which can be described as computers are used are well-known and in highly scientifically developed systems, they have their own roles to play and they cannot be equated with office appliances which would be of much simpler nature. In all these activities the assessee had to play an active role by co-ordinating its activities in a business-like manner. He submitted that processing is not covered under section 32A while in the present case, at best, it can be said that the basic activity is that of processing. It includes articles made in sit us as well as articles made in factory. Suresh Amin Family Trust (supra) has clearly laid down that the expression article or thing is capable of very wide meaning and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests in the pathological laboratory.', 'caseanalysis' => null, 'casesref' => '', 'citingcases' => '', 'counselplain' => ' V.H. Patil and Vipul Joshi, <i>for the Assessee </i>Naveen Chandra, <i>for the Revenue</i>', 'counseldef' => '', 'court' => 'Mumbai', 'court_type' => 'HC', 'decidedon' => '2000-06-21', 'deposition' => '', 'favorof' => null, 'findings' => null, 'judge' => '', 'judgement' => 'ORDER<p style="text-align: justify;">S.V Mehrotra, A.M.</p><p style="text-align: justify;">This appeal by the assessee is directed against the order of the Commissioner (Appeals)-XVII, Bombay, dated 19-10-1995 for the assessment year 1989-90.<p style="text-align: justify;">2. The assessee is a firm consisting of two partners, Dr. Hema Purandare and Dr. Amit Chakravarty. During the year the firm purchased one computer machine called 'Robotron Computer Aided Image Analyser'. The assessing officer noted that the assessee was not engaged in business nor is it engaged in the activity of construction, manufacture or production of any one or more of the articles or things other than those specified in the list in the Eleventh Schedule to the Income Tax Act so as to be entitled for investment allowance on this machinery. She noted that the assessee is engaged in professional activity and are consultant medical geneticist and is offering services mainly for prenatal diagnosis of hereditary diseases/defects. The instrument to be purchased being an advance model of machinery would reduce the required manual labour to 15 per cent. She also noted that the machinery will help to give report faster, accurate and it is a life-saving machine. The analysis of investigation done by this machinery will help the professional to decide the treatment required for their patients. She also observed that the analysis of the investigation is not a commercial commodity and it is not saleable to be traded. Accordingly, she disallowed the investment allowance of Rs. 2,11,361. She also noted that since the machinery is stated to be image analyser and is placed in the consultant room, it will come within the wider meaning given to items 10 and 22 of the Eleventh Schedule. The learned Commissioner (Appeals) applied the decision of the Honble Supreme Court in the case of CIT v. N.C. Budharaja & Co. : [1993]204ITR412(SC) and observed that the machinery in question is utilised for obtaining relevant data in relation to the stated the health of a patient and this activity cannot be said to be manufacture or production of an article in the sense in which it is understood in the commercial world. He also agreed with the contention of the assessing officer that the assessee was engaged in a professional activity and could not be said to be carrying out a business. The medical reports prepared by the assessee were of value only to the patients. These reports are not to be freely traded for money in the market. The learned Commissioner (Appeals) observed that at any rate the assessee cannot be construed to be an industrial undertaking, as is required for the purposes of deduction of investment allowance. Accordingly, he confirmed the order of the assessing officer.<p style="text-align: justify;">3. The learned counsel for the assessee adverted to page 23 of the paper book which contains the submissions made before the Commissioner (Appeals) in this regard. In the said submissions it has been pointed out that the assessing officer had disallowed the investment allowance on the ground that image analyser machine is not being used for commercial activity. However, it was submitted that this machine could be used for metallurgy, medical petrology and space science purposes. It translates visual image into quantitative information in report form. The assessee is running a clinical laboratory where this machine is used to get translated in report form visual image of blood, semen etc. This is being given to customers on every report fixed charges basis. It has been mentioned in the said submissions that the activity carried on by the assessee though grabbed as profession is really commercial or in any event, if the vocation of the assessee is an admixture of both, then the assessee will be entitled to relief for development rebate. The learned counsel for the assessee also adverted to page 21 of the paper book where a brochure in respect of this machinery is contained. In this brochure, as regards the utility of the machinery, it has been mentioned as under :</p><p style="text-align: justify;">'For simple observation of micro-structure analyst can see directly through the eyepiece of the microscope and draw the inference but for translation of a visual image into quantitative information Robotron Image Analyser has no substitute.</p><p style="text-align: justify;">Robotron Image Analyser is a computer aided and software oriented instrument suitable for wide field of application viz,</p><p style="text-align: justify;">a. Metallurgy</p><p style="text-align: justify;">b. Petrology</p><p style="text-align: justify;">c. Biology/Medical</p><p style="text-align: justify;">d. Space Science</p><p style="text-align: justify;">Being software oriented systems it is possible to use the same for various other purposes in future, which may not be in the immediate consideration of the morphologist.'</p><p style="text-align: justify;">The learned Commissioner (Appeals), it was submitted by the learned counsel for the assessee, wrongly relied on the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra). He emphasised that in this case, construction of dams and canals was held to be not construction of a thing or things. He further emphasised that article or thing should be seen in general law. He referred to various decisions which are discussed hereinbelow.</p><p style="text-align: justify;">(1) CIT v. Pressure Piling Co. (India) (P.) Ltd. : [1980]126ITR333(Bom) <p style="text-align: justify;">In this case, the meaning of manufacture or produce was considered. The assessee was carrying on business of laying pressure piling foundations for buildings by a specialised patented method. Concrete mixture was subjected to certain processes under pressure along- with iron bars in bores in site. It was held that Piles a new and independent product was brought into existence and it is an article. Thus it was held that the assessee is engaged in manufacture or production of an article.</p><p style="text-align: justify;">(2) CIT v. Trinity Hospital (1996) 225 ITR 178 <p style="text-align: justify;">In this case, the assessee-firm was running a hospital/nursing home for rendering efficient medical services to the patients. The assessee installed in its hospital various machines including (i) X-ray machine, (ii) an ultrasound scanner/ultra monographic machine, (iii) a fetal monitor, and (iv) air conditioning equipment, to ensure the proper working of these machines. It was held as under :</p><p style="text-align: justify;">'(i) that the photographs of various parts of the body obtained by these machines are the resultant product of work or activity. They are the result of efforts and activities and give a result in black and white regarding the internal position of the parts of the body and are helpful for 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 things under section 32A of the Act. The installation of these machines in the hospital by the assessee was for the purpose of the business of production of things. The Tribunal was, therefore, right in allowing investment allowance to the assessee;'</p><p style="text-align: justify;">The learned counsel for the assessee emphasised that this case has considered the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra).</p><p style="text-align: justify;">(3) CIT v. Upasana Hospital (1996) 225 ITR 845 <p style="text-align: justify;">In this case the firm was running a hospital and it was held that the firm carried on business and expenditure incurred by the firm on purchase of X-ray plant, ICCU and ECG equipment were entitled to investment allowance. In this case it was held that when a medical practitioner, without confining himself to his conventional function of examining patients and prescribing medicines, establishes an X-ray plant and machinery for augmenting his professional work, it cannot be said that he has no profit motive in such adventure. That means he is carrying on a business activity which attracts the investment allowance under section 32A of the Income Tax Act. Any venture or enterprise which a person individually or collectively undertakes to do and which has some industrial consequences would be an industrial undertaking. It must also be the result of organised activity resulting in manufacture or production of any article or thing. When raw X-ray film is exposed and processed, the resulting X-ray photograph is a production of a new article or thing. The article produced is a distinct and different article from raw film. The court held that the firm was entitled to investment allowance in respect of the X-ray plant and other accessories, the ICCU and ECG equipment and that the assessees unit of X-ray machine and accessories was a small scale industrial undertaking for the production of X-ray photographs coming within the ambit of section 32A(2)(b)(ii) of the Act.</p><p style="text-align: justify;">(4) Natvarlal Ambalal Dave v. CIT (1996) 225 ITR 936 <p style="text-align: justify;">In this case it was observed that photographs of various parts of the human body obtained by an X-ray machine are the end result of effort and activity carried on with the machine by human endeavour which is helpful for the proper and efficient diagnosis of the patient. Photographs or graphs obtained cannot but be a thing produced by the use of X-ray machine. It was further held that it is not the requirement of section 32A of the Income Tax Act, 1961, 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 an article or thing, that such article or thing must be saleable in the open market as a common marketable commodity only. A thing may be produced for being sold to a particular person or for the use of a particular person. Therefore an X-ray machine satisfies the condition in section 32A that it is plant and machinery through which an article or thing could be produced. It was further observed that merely because a person happens to be a professionally qualified doctor, it cannot be said that such persons activity cannot be treated as an activity of carrying on of business. A professional activity can also be characterised as an activity of carrying on business if it is carried on like a commercial activity. In this case the meaning of 'industrial undertaking' was also considered by the Honble High Court and it was held that 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.</p><p style="text-align: justify;">(5) CIT v. Dr. V.K. Ramachandran : [1981]128ITR727(Guj) <p style="text-align: justify;">In this case, the assessee was a medical practitioner and purchased an X-ray machine. It was held 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 no way 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.</p><p style="text-align: justify;">(6) Dr. (P.) Vadamalayan v. CIT : [1969]74ITR94(Mad) <p style="text-align: justify;">In this case it was held that the carrying on of the nursing home by the assessee as part of his profession was of a commercial nature and the combined activities of the assessee constituted business and the assessee was entitled to development rebate. If an assessee who is a professional and an expert contemporaneously carries on a trade which is annexed to the exercise of such a profession and if by doing so he can take advantage of a provision in the fiscal Act by claiming an allowance or rebate and if such a claim carries a lighter burden of tax, then he has the right to take advantage of the same. The definition of 'business' being an inclusive definition and not being exhaustive is indicative of extension and expansion and not restriction.</p><p style="text-align: justify;">(7) Dr. Suresh Amin Family Trust v. CIT (1995) 125 CTR (Ahd) 421<p style="text-align: justify;">In this case it was held that Diagnostic Centre (pathological laboratory) is covered by the expression industrial undertaking and the words production or produce cover all or any activity which brings into existence no article or thing by a process which may or may not amount to manufacture. Similarly the expression article or thing is very wide and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests. Such reports would thus constitute an article or thing. Accordingly, the assessee was held to be entitled to investment allowance on items of plant and machinery.</p><p style="text-align: justify;">(8) CIT v. M.L. Agarwala <p style="text-align: justify;">In this case ultra-sound equipment with air conditioner and voltage stabiliser was held to be eligible for investment allowance. It was observed that the resulting print is an article which is manufactured. The court held that a special type of film or material is to be fed which is blank but after the processing it is obtained with the photographs/prints of the organs and the data related to such organs. It is not the same as fed into the machine as raw materials and, therefore, investment allowance was admissible under section 32A.</p><p style="text-align: justify;">(9) CIT v. R. Shroff Consultants (P) Ltd. : [1999]238ITR1018(Bom) <p style="text-align: justify;">In this case the assessee was engaged in business consultancy and a part thereof undertaking data processing through computers. In this case it was held that preparation of statements was not manufacture or production of an article or thing and the assessee is not entitled to investment allowance, on computer. The learned counsel for the assessee, Shri V.H. Patil, emphasised that this was an ex parte judgment and does not consider the decision of the Honble Rajasthan High Court in the case of Trinity Hospital (supra) and, therefore, it should not be followed as it has not complete binding effect.<p style="text-align: justify;">4. In regard to the proposition whether the assessees establishment comes within the purview of the term 'industrial undertaking', the learned counsel for the assessee argued that the section does not define industrial undertaking and so help has to be taken from other sections. He referred to Explanation to section 33B in which 'industrial undertaking has been defined, inter alia, as an undertaking engaged in the manufacture or processing of goods. He submitted that a whether commercially a different article or thing comes into existence is the basic test. He emphasised that the machine prepare the report and the opinion given by the doctor is an article. He submitted that a sample of blood is fed into the Analyser and blood report is obtained. What a doctor can do by human element is done by the Analyser. He further submitted that the balance sheet preparation by a computer has been held to be allowable for investment allowance, as balance sheet is a different article or thing. He, submitted that the Robotron Image Analyser is also a computer-aided machine, as is clear from the sanction obtained from Department of Electronics (CCI-Wing), Computer Development Division, New Delhi, in F. No. 4 (489)/Comp./88-01-04/01 dated 12-1-1988, a copy of which appears at page 16 of the paper book. In support of his contention, the learned counsel for the assessee also relied upon the decision of the Honble Karnataka High Court in the case of CIT v. Data Cons (P) Ltd. : [1985]155ITR66(KAR) . In this case, the meaning of the term 'processing of goods' was considered and it was held that conversion of data furnished by customers into balance sheet, stock account etc., amounts to processing of goods and the assessee is entitled to concessional rate of tax. It was held that in all these activities the assessee had to play an active role by coordinating the activities and collecting information on such activities amounted to processing of goods. The assessee was therefore an industrial company entitled to concessional rate of tax. Reliance was also placed by the learned counsel for the assessee on the following decisions :</p><p style="text-align: justify;">(a) CIT v. Peerless Consultancy Services (P.) Ltd. (1991) 186 ITR 609In this case, the term industrial company' has been described as a company engaged in the processing of goods. The word 'processing' has not been defined in the Act and so it has to be assigned its dictionary meaning, according to which it refers to the treatment to which a commodity is subjected in order to prepare it for the market. The nature and extent of processing may vary from case to case. In one case the processing may be slight and in another, it may be extensive. In the light of this discussion it was held that the assessee which carried on the business of providing technical and industrial consultancy on the basis of computers and of undertaking electronic data processing was an industrial undertaking.</p><p style="text-align: justify;">(b) CIT v. Shaw Wallace & Co. Ltd. : [1993]201ITR17(Cal) In this case it was held that computer is a complicated machine and not an office appliance. it was observed that the word 'production' has not been defined in the Act. The expression 'production of an article' means, among other things, that which is produced, a thing that results from any action, process or effort, a product, a product of human activity or effort. The word 'manufacture' has also not been defined in the Act. The expression 'manufacture' is generally understood to mean bringing into existence a new substance and does not mean merely to produce some change in a substance. Having regard to the nature and function of the computer and the data processing system, it cannot be said that they are office appliances. The purposes for which such machines which can be described as computers are used are well-known and in highly scientifically developed systems, they have their own roles to play and they cannot be equated with office appliances which would be of much simpler nature. The final end products, viz., printed materials and the statements are entirely different articles or things from the data which are fed into the computer and are transformed into instructions and computations through a series of programmes and processing and the same amounts to manufacture of an article or thing.</p><p style="text-align: justify;">(c) CIT v. Fort Gloster Industries Ltd. : [1996]219ITR223(Cal) In this case it was held that computer is used for processing raw materials, data, stray data and salary payments etc., and also for monitoring details of production entitled to investment allowance.</p><p style="text-align: justify;">(d) CIT v. Computerised Accounting & Management Service (P) Ltd. (1998) 99 Taxman 101 (Ker.)The assessee-company was doing business in computerised accounting and management services by using computers. Raw technical and commercial data were fed into computers as inputs as per requirements of various customers and the data were processed to get necessary informations, computations and statements as outputs. It was held to be an industrial undertaking and the computations and statements that a computer brings out are entirely different in contents from the inputs fed into the computer and, therefore, the assessee-company can be said to be engaged in the production of mechanically prepared information which is collected from the raw data being fed into the computer and hence entitled for investment allowance.</p><p style="text-align: justify;">(e) CIT v. Dr. L.C. Mitra (1998) 96 Taxman 568 (Pat.)In this case the main dispute was whether parts of X-ray machine could be considered as machinery or not and it was held that they could be considered as plant and as such the assessee, a doctor, was entitled to investment allowance in respect of certain parts added to the existing X-ray machine.</p><p style="text-align: justify;">(f) CIT v. Oswal Data Processors : [1997]223ITR735(MP) It was held that the work of data processing was an industrial activity and the assessee is entitled to investment allowance on computers installed by it.<p style="text-align: justify;">5. The learned counsel for the assessee also submitted that publishing amounts to manufacture and relied on the following decisions :</p><p style="text-align: justify;">(a) CIT v. Commercial Laws of India (P.) Ltd : [1977]107ITR822(Mad) In this case it was held that folding and stitching of the printed sheets constitute processing of goods and hence the assessee comes within the term 'industrial company'.</p><p style="text-align: justify;">(b) Orient Longman Ltd. v. CIT : [1981]130ITR477(Delhi) In this case also the assessee carried on the business of publication, purchase and sale of books. It was held that though the assessee as a publisher would not be doing more than getting the manuscript and preparing the same for printing and book binding, yet the fact that printing and book binding was done by someone else did not imply that the someone else was the manufacturer. It was the business of the assessee to get the books manufactured by getting the manuscript, designing the nature of the book, finishing the anticipated product and then selling the product after getting it made. Therefore, the assessee was an industrial company and entitled to concessional rate of tax in accordance with the provisions of the Act.</p><p style="text-align: justify;">(c) Addl. CIT v. A. Mukherjee & Co. (P.) Ltd. : [1978]113ITR718(Cal) The assessee in this case was a publisher of books. The assessees Job was to get the manuscript for publication, hit upon a suitable format for the book, get it printed as per its requirements under its supervision, get the book bound after suitable changes and then put out the publication for sale. In all these activities the assessee had to play an active role by co-ordinating its activities in a business-like manner. It was held that the assessee was engaged in the activity of manufacturing and also of processing of books, which are also goods.<p style="text-align: justify;">6. Relying thus on all the aforementioned case laws, the learned counsel for the assessee submitted that the firm managed by renowned professional doctors comes within the purview of the term 'industrial undertaking' as blood and semen samples are processed to get a report which is an article or thing as contemplated under section 32A(2)(b)(iii). The machine is computer-aided machine and apart from being utilised for generation of reports, it can be utilised for other purposes such as Metallurgy, Petrology, Biology/Medical and Space Science and since it is a software oriented system, it is possible to use the same for various other purposes in future, which may not be in the immediate consideration of the morphologist. The learned counsel for the assessee vehemently argued that on the same analogy on which X-ray machines, ECG machine, ICCU are entitled to investment allowance, Robotron Image Analyser, which is practically performing the same functions, should be held to be entitled for investment allowance. He emphasised that the assessee is not using it only for consultancy purposes butt for other purposes also, as is evident from the income and expenditure statement. The assessee has derived income from testing fees, investigation charges, consultancy charges and miscellaneous income. He further submitted that as the name of the assessee itself suggests that it is a laboratory, the basic activity of which implies processing, there is no reason why this machinery should not be allowed investment allowance.<p style="text-align: justify;">7. The learned Departmental Representative submitted that the assessee is a firm of two doctors. Doctors are professionals and for imparting consultancy services, they are basically using this instrument. He submitted that, first of all, the firm does not come within the term 'industrial undertaking' as it is not manufacturing any article or thing. It was submitted that hospital is altogether different where many activities are carried on. In this case, the assessees activities are very limited and what the machine has done has, in substance, reduced the time taken for final diagnosis. The learned Departmental Representative submitted that the machine serves only the purpose as is served by a blood pressure instrument. He wondered if blood pressure instrument could be said to produce any article or thing when it simply measures the blood pressure. He relied upon the decision of the Honble Bombay High Court in the case of CIT v. Sterling Foods (Goa) (1995) 213 ITR 811 in which it was held that processing is a much wider term than manufacture. He submitted that processing is not covered under section 32A while in the present case, at best, it can be said that the basic activity is that of processing. He referred to the decision of the Honble Supreme Court in the case of N.C Budharaja & Co. (supra) and submitted that, as observed by the learned Commissioner (Appeals), the Honble Supreme Court held that the word 'article' employed in section 32A must be understood in the sense in which it is understood in the commercial world. The word 'article' cannot comprehend or take within its ambit a dam, a bridge, a building, a road, a canal and so on. He submitted that the learned Commissioner (Appeals) has rightly relied on the principles laid down in the case of A.C. Budharaja & Co. (supra). He further submitted that the learned Commissioner (Appeals) observed that the machinery in question is utilised for obtaining the relevant data in relation to the health of a patient and this activity cannot be said to be manufacture or production of an article in the sense in which it is understood in the commercial world. He submitted that the computer-aided machine cannot be equated with computer as it is not producing anything. The learned Departmental Representative submitted that in the assessees case these facts have to be kept in mind while deciding the issue. He emphasised that the assessee is basically a consultant and providing consultancy. He referred to section 32A and submitted that the installation of plant and machinery should be 'for the purpose of manufacture.........' He submitted that in Explanation to section 33B, the words used are 'manufacture or processing' whereas the word 'processing' is conspicuously missing in section 32A. He further submitted that the word 'processing' is much wider than the word 'manufacture' and unless something different from the original that is fed into the plant comes out, an activity cannot come within the term 'manufacture'. He referred to the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra) and that of the Honble Bombay High Court in the case of CIT v. Boots Co. (I) Ltd. : [1995]214ITR175(Bom) and submitted that no liberal construction should be adopted if the language of the section is clear. It is only when the language of the provision is ambiguous that the construction beneficial to the assessee may be adopted. He referred to the decision of the Honble Supreme Court in Deputy CST v. Pio Food Packers (1980) 46 STC 63 in which, he submitted, it was held that the original commodity must change its character for an activity to come within the purview of 'manufacture'. He also relied on the decision of the Honble Bombay High Court in the case of Sterling Foods (Goa) (supra) wherein it was observed that the expressions 'processing', 'manufacture' and 'production' used in various taxing statutes are not interchangeable expressions. Though used in juxtaposition, they convey different concepts and refer to different activities. The term 'processing' is much wider. The nature and extent of processing may vary from case to case. Every process does not tantamount to manufacture. It is only when the process results in the emergence of a new and different article having a distinctive name, character or use that manufacture can be said to have taken place.</p><p style="text-align: justify;">Similarly, production is wider than manufacture. As a result, every production need not amount to manufacture, though every manufacture can be characterised as production. Accordingly, he submitted, it was held by the Honble Bombay High Court in the above case that processing of prawns does not amount to manufacture or production of an article and the assessee is not entitled to special deduction under section 80HH. The learned Departmental Representative emphasised that in the present case, blood is put into the machine and analysed. No processing or no manufacturing activity is done. Sample remains what it was earlier. He also relied upon the decision of the Honble Bombay High Court in the case of R. Shroff Consultants P. Ltd. (supra) and submitted that the said judgment, through an ex parte judgment, is, nonetheless a judgment of the jurisdictional High Court and binding on the Tribunal. The learned Departmental Representative submitted that no liberal construction of the taxing statute has to be adopted when the language is clear.<p style="text-align: justify;">8. In the rejoinder, the learned counsel for the assessee submitted that there is no dispute that there is difference between 'manufacture' and 'processing'. He submitted that in the case of the assessee, receipts are of four/five types and consultancy is only incidental.<p style="text-align: justify;">9. We have considered the rival submissions of the learned parties. The basic ingredients of section 32A are the following :</p><p style="text-align: justify;">(1) There should be a ship or aircraft or machinery or plant, in short, equipment, which is owned by the assessee and is wholly used for the purpose of the business carried on by him.</p><p style="text-align: justify;">(2) The equipment should be installed in an industrial undertaking.</p><p style="text-align: justify;">(3) There should be manufacture or production of an article or thing, not being an article or thing specified in the list in Eleventh Schedule.</p><p style="text-align: justify;">As far as the first ingredient is concerned, there is no dispute that the Robotron Image Analyser comes within the term 'machinery'. As regards the term 'industrial undertaking', the same has not been defined in the section, and, therefore, guidance has to be taken from the meaning given in the different sections of the Income Tax Act and the meaning of 'industrial undertaking' as understood in common parlance has to be considered. As per Explanation to section 33B, 'industrial undertaking' means any undertaking which, inter alia, is engaged in the manufacture or processing of goods. As has been seen in different judicial pronouncements discussed above, nursing home, hospitals, pathology labs, computer divisions etc., are all entitled for investment allowance and hence they come within the term 'industrial undertaking'. In the present case, the processing is done in the laboratory of the assessee for proper analysis of blood in the Robotron Image Analyser for obtaining relevant data in relation to the state of health of a patient and the medical reports are prepared. Thus we hold that the assessees laboratory comes within the term 'industrial undertaking' for the purposes of section 32A. In Halsburys Laws of England, 'manufacture' has been defined as follows :</p><p style="text-align: justify;">'It has been said that a manufacture must have some reference to trade or commerce and that it must be for, or have as its product, something of a material nature. These conditions, however, if necessary, are certainly not sufficient. One test for manufacture is whether a vendible product is produced, improved, restored or preserved, and whilst this test is somewhat narrow, absence of a vendible product ordinarily negates patentability. Not all vendible products, however, are produced by manufacture, which is concerned only with the useful as distinct from the fine arts, and with industry as distinct from agriculture and other such applications of natural processes. Manufacture has been defined as a manner of adapting natural materials by the hands of man or by man-made devices or machinery, and as the making of an article or material by physical labour or applied power; but the practice is to accept as manufacture a wider range of industrial activities than such a definition would suggest. It includes articles made in sit us as well as articles made in factory.'</p><p style="text-align: justify;">Das J. observed in North Bengal Stores Ltd. v. Board of Revenue 1 STC 157 (Cal) that '. . . the essence of manufacturing is that something is produced or brought into existence which is different from that out of which it is made, in the sense that the thing produced is by itself commercial commodity which is capable as such of being sold or supplied. It does not mean that the materials with which the thing is manufactured must necessarily lose their identity or be transformed in their basic or essential properties'. The following activities are held as 'manufacture' or 'processing of goods' :</p><p style="text-align: justify;">(1) Book publishing (Circular No. 347 dated 7-7-1982)</p><p style="text-align: justify;">(2) Mixing different types of tea to arrive at a desired blend G.A. Randevian Ltd. v. CIT (1983) 12 Taxman 160 (Cal).<p style="text-align: justify;">(3) Production of cinematographic films (Circular No. 24 dated 23-7-1969)</p><p style="text-align: justify;">(4) Tailoring clothes Nu-Look P. Ltd v. CIT (1985) 23 Taxman 39 (Delhi).<p style="text-align: justify;">(5) Conversion of computer cash vouchers, invoices etc., into balance sheet, stock account etc.<p style="text-align: justify;">Data Cons case (supra)</p><p style="text-align: justify;">It has been held in the case of Dr. Y.K. Ramachandran by the Honble Madras High Court (supra) that professional activity carried on by an assessee will not deprive him of investment allowance. In the present case, the assessee is having income from different sources along with income from consultancy services, and on this ground alone it cannot be denied investment allowance, as held in the aforementioned case. Thus we have to examine whether any new commodity coming within the purview of the term 'article or thing' is produced by the assessee or not. The assessees activities consist of obtaining blood sample, putting it into the Analyser and getting the relevant data in the form of medical report for forming an opinion by the doctor. The Ahmedabad Bench of the Tribunal in the case of Dr. Suresh Amin Family Trust (supra) has clearly laid down that the expression article or thing is capable of very wide meaning and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests in the pathological laboratory. These reports are all no doubt useful for the concerned patient and are not freely marketable but as held in various judicial pronouncements, X-ray plants are entitled for investment allowance though X-ray films are only used for the concerned patient. This report was definitely not in existence before the blood was put into the Analyser and it has subsequently come out after proper analysis of the blood in the form of definite report on the basis of which the doctor will form an opinion about the state of health of the patient. It is similar to the ECG machines in which also a graph of the working of the heart is obtained with the help of machinery and the judicial approach is to allow investment allowance in respect of ECG machine also, as held by the Honble Kerala High Court in the case Upasana Hospital (supra), though the word 'processing' has not been used in section 32A but the generation of report by the image analyser will definitely come within the purview of 'manufacture or production of any article or thing' as contemplated under section 32A. The article or thing as contemplated under section 32A means a new thing which can be perceived by a person. It need not necessarily be marketable. Here Report generated by Robotron Image Analyser is a new thing generated by the use of machine. This interpretation is also in consonance with the series of judicial pronouncements discussed above. The case of R. Shroff Consultants (P.) Ltd. (supra) decided by the Honble Bombay High Court, relied upon by the learned Departmental Representative, is a case of business consultancy firm undertaking data processing through computers and is not a case of nursing home or diagnostic centre, and, therefore, not applicable to the facts of the case before us. As is seen from the income and expenditure account, the assessee is not any imparting consultancy services, as was the case in the above cited case. Thus the ratio laid down in the said case cannot squarely be applied to the facts of the present case. If ECG machines, X-ray machines and other instruments used in diagnostic centres, the basic function of which is to analyse the data fed into them, to give desired reports which are useful for the person for whom it is generated are entitled for investment allowance, we do not see any reason why Robotron Image Analyser, which also is a machine generating useful reports, should not be entitled for investment allowance. We are therefore of the considered opinion that the assessee is entitled to grant of investment allowance on the Robotron Image Analyser.<p style="text-align: justify;">10. The following two grounds taken by the assessee were not pressed at the time of hearing :</p><p style="text-align: justify;">'2. The learned Commissioner of Income Tax is wrong in disallowing alternate claim under section 32AB although Audit Report under section 32AB has submitted before him. The learned Commissioner of Income Tax should have considered facts which were submitted before him.</p><p style="text-align: justify;">3. The learned Commissioner of Income Tax Appeal erred in confirming addition on account of disallowable Rs. 10,000 without any reasonable basis. Same may be allowed.'</p><p style="text-align: justify;">These grounds are therefore dismissed as not pressed.<p style="text-align: justify;">11. In the result, the appeal is partly allowed.<p style="text-align: justify;"></p><p style="text-align: justify;">', 'observations' => null, 'overruledby' => null, 'prhistory' => '', 'pubs' => '[2001]79ITD14(Mum)', 'ratiodecidendi' => '', 'respondent' => 'ito', 'sub' => 'Direct Taxation', 'link' => null, 'circuit' => null ) ), 'args' => array( (int) 0 => '369304' ) ) $title_for_layout = 'Medical Genetic Clinic and Laboratory Vs. Ito Semantic Analysis' $shops = array( 'LAW' => array( (int) 0 => 'the Income Tax Act', (int) 1 => 'the Income Tax Act', (int) 2 => 'the Income Tax Act', (int) 3 => 'the Income Tax Act', (int) 4 => 'the Income Tax Act', (int) 5 => 'The Ahmedabad Bench' ), 'PERSON' => array( (int) 0 => 'ORDERS.V Mehrotra', (int) 1 => 'Hema Purandare', (int) 2 => 'Amit Chakravarty', (int) 3 => 'Robotron Image Analyser', (int) 4 => 'Robotron Image Analyser', (int) 5 => 'a. Metallurgyb', (int) 6 => 'Ambalal Dave v.', (int) 7 => 'Photographs', (int) 8 => 'V.K. 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Shroff Consultants', (int) 108 => 'the Honble Bombay High Court', (int) 109 => 'Departmental Representative', (int) 110 => 'ECG', (int) 111 => 'Income Tax', (int) 112 => 'Audit Report', (int) 113 => 'Income Tax', (int) 114 => 'Income Tax Appeal' ), 'MONEY' => array( (int) 0 => '15 per cent' ), 'PRODUCT' => array( (int) 0 => '845' ), 'NORP' => array( (int) 0 => 'Vadamalayan' ), 'FAC' => array( (int) 0 => 'Diagnostic Centre' ), 'EVENT' => array( (int) 0 => 'CCI-Wing' ), 'ORDINAL' => array( (int) 0 => 'first', (int) 1 => 'first' ) ) $desc = array( 'Judgement' => array( 'id' => '369304', 'acts' => '', 'appealno' => 'IT Appeal No. 249 (Mum) of 1996 21 June 2000 A.Y. 1989-90', 'appellant' => 'Medical Genetic Clinic and Laboratory', 'authreffered' => '', 'casename' => 'Medical Genetic Clinic and Laboratory Vs. Ito', 'casenote' => ' - BOMBAY STAMP ACT, 1958. Schedule 1, Article 36: [Y.R. Meena, CJ & D.A. Mehta & A.S. Dave, JJ] Deed of Mortgage Liability to pay stamp duty Held, Any instruments in respect of transactions, relating to loans and advances, loans and mortgages, cash credit or overdraft bonds, agreements of pawn or pledge and letters of hypothecation executed by farmers for agricultural and land development purposes in favour of all Commercial Bank etc. are entitled to remission of entire duty chargeable under the Stamp Act with effect on and from 1.4.1979 under Government Notification dated 23.3.1979. Thus, where loan was granted by Bank of India under Agricultural Finance Scheme towards purchase of Air Compressors, Drilling Rods and other Accessories. Use of the Air compressors, Drilling Rods and other Accessories in case of applicant who is a farmer can only be for purpose of drilling a bore-well for purpose of irrigation in process of carrying on agricultural activities. Thus, it is apparent that loan was availed of by applicant-farmer for agricultural and land development purposes because a bore-well would go to increase the utility of agricultural land by ensuring round the year irrigation. The instrument in question would therefore fall within scope of complete remission granted to instrument of mortgage under Government Notification dated 23.3.1979 and hence not liable to stamp duty under Article 36 of Schedule I of the Act. - A professional activity can also be characterised as an activity of carrying on business if it is carried on like a commercial activity. The purposes for which such machines which can be described as computers are used are well-known and in highly scientifically developed systems, they have their own roles to play and they cannot be equated with office appliances which would be of much simpler nature. In all these activities the assessee had to play an active role by co-ordinating its activities in a business-like manner. He submitted that processing is not covered under section 32A while in the present case, at best, it can be said that the basic activity is that of processing. It includes articles made in sit us as well as articles made in factory. Suresh Amin Family Trust (supra) has clearly laid down that the expression article or thing is capable of very wide meaning and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests in the pathological laboratory.', 'caseanalysis' => null, 'casesref' => '', 'citingcases' => '', 'counselplain' => ' V.H. Patil and Vipul Joshi, <i>for the Assessee </i>Naveen Chandra, <i>for the Revenue</i>', 'counseldef' => '', 'court' => 'Mumbai', 'court_type' => 'HC', 'decidedon' => '2000-06-21', 'deposition' => '', 'favorof' => null, 'findings' => null, 'judge' => '', 'judgement' => 'ORDER<p style="text-align: justify;">S.V Mehrotra, A.M.</p><p style="text-align: justify;">This appeal by the assessee is directed against the order of the Commissioner (Appeals)-XVII, Bombay, dated 19-10-1995 for the assessment year 1989-90.<p style="text-align: justify;">2. The assessee is a firm consisting of two partners, Dr. Hema Purandare and Dr. Amit Chakravarty. During the year the firm purchased one computer machine called 'Robotron Computer Aided Image Analyser'. The assessing officer noted that the assessee was not engaged in business nor is it engaged in the activity of construction, manufacture or production of any one or more of the articles or things other than those specified in the list in the Eleventh Schedule to the Income Tax Act so as to be entitled for investment allowance on this machinery. She noted that the assessee is engaged in professional activity and are consultant medical geneticist and is offering services mainly for prenatal diagnosis of hereditary diseases/defects. The instrument to be purchased being an advance model of machinery would reduce the required manual labour to 15 per cent. She also noted that the machinery will help to give report faster, accurate and it is a life-saving machine. The analysis of investigation done by this machinery will help the professional to decide the treatment required for their patients. She also observed that the analysis of the investigation is not a commercial commodity and it is not saleable to be traded. Accordingly, she disallowed the investment allowance of Rs. 2,11,361. She also noted that since the machinery is stated to be image analyser and is placed in the consultant room, it will come within the wider meaning given to items 10 and 22 of the Eleventh Schedule. The learned Commissioner (Appeals) applied the decision of the Honble Supreme Court in the case of CIT v. N.C. Budharaja & Co. : [1993]204ITR412(SC) and observed that the machinery in question is utilised for obtaining relevant data in relation to the stated the health of a patient and this activity cannot be said to be manufacture or production of an article in the sense in which it is understood in the commercial world. He also agreed with the contention of the assessing officer that the assessee was engaged in a professional activity and could not be said to be carrying out a business. The medical reports prepared by the assessee were of value only to the patients. These reports are not to be freely traded for money in the market. The learned Commissioner (Appeals) observed that at any rate the assessee cannot be construed to be an industrial undertaking, as is required for the purposes of deduction of investment allowance. Accordingly, he confirmed the order of the assessing officer.<p style="text-align: justify;">3. The learned counsel for the assessee adverted to page 23 of the paper book which contains the submissions made before the Commissioner (Appeals) in this regard. In the said submissions it has been pointed out that the assessing officer had disallowed the investment allowance on the ground that image analyser machine is not being used for commercial activity. However, it was submitted that this machine could be used for metallurgy, medical petrology and space science purposes. It translates visual image into quantitative information in report form. The assessee is running a clinical laboratory where this machine is used to get translated in report form visual image of blood, semen etc. This is being given to customers on every report fixed charges basis. It has been mentioned in the said submissions that the activity carried on by the assessee though grabbed as profession is really commercial or in any event, if the vocation of the assessee is an admixture of both, then the assessee will be entitled to relief for development rebate. The learned counsel for the assessee also adverted to page 21 of the paper book where a brochure in respect of this machinery is contained. In this brochure, as regards the utility of the machinery, it has been mentioned as under :</p><p style="text-align: justify;">'For simple observation of micro-structure analyst can see directly through the eyepiece of the microscope and draw the inference but for translation of a visual image into quantitative information Robotron Image Analyser has no substitute.</p><p style="text-align: justify;">Robotron Image Analyser is a computer aided and software oriented instrument suitable for wide field of application viz,</p><p style="text-align: justify;">a. Metallurgy</p><p style="text-align: justify;">b. Petrology</p><p style="text-align: justify;">c. Biology/Medical</p><p style="text-align: justify;">d. Space Science</p><p style="text-align: justify;">Being software oriented systems it is possible to use the same for various other purposes in future, which may not be in the immediate consideration of the morphologist.'</p><p style="text-align: justify;">The learned Commissioner (Appeals), it was submitted by the learned counsel for the assessee, wrongly relied on the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra). He emphasised that in this case, construction of dams and canals was held to be not construction of a thing or things. He further emphasised that article or thing should be seen in general law. He referred to various decisions which are discussed hereinbelow.</p><p style="text-align: justify;">(1) CIT v. Pressure Piling Co. (India) (P.) Ltd. : [1980]126ITR333(Bom) <p style="text-align: justify;">In this case, the meaning of manufacture or produce was considered. The assessee was carrying on business of laying pressure piling foundations for buildings by a specialised patented method. Concrete mixture was subjected to certain processes under pressure along- with iron bars in bores in site. It was held that Piles a new and independent product was brought into existence and it is an article. Thus it was held that the assessee is engaged in manufacture or production of an article.</p><p style="text-align: justify;">(2) CIT v. Trinity Hospital (1996) 225 ITR 178 <p style="text-align: justify;">In this case, the assessee-firm was running a hospital/nursing home for rendering efficient medical services to the patients. The assessee installed in its hospital various machines including (i) X-ray machine, (ii) an ultrasound scanner/ultra monographic machine, (iii) a fetal monitor, and (iv) air conditioning equipment, to ensure the proper working of these machines. It was held as under :</p><p style="text-align: justify;">'(i) that the photographs of various parts of the body obtained by these machines are the resultant product of work or activity. They are the result of efforts and activities and give a result in black and white regarding the internal position of the parts of the body and are helpful for 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 things under section 32A of the Act. The installation of these machines in the hospital by the assessee was for the purpose of the business of production of things. The Tribunal was, therefore, right in allowing investment allowance to the assessee;'</p><p style="text-align: justify;">The learned counsel for the assessee emphasised that this case has considered the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra).</p><p style="text-align: justify;">(3) CIT v. Upasana Hospital (1996) 225 ITR 845 <p style="text-align: justify;">In this case the firm was running a hospital and it was held that the firm carried on business and expenditure incurred by the firm on purchase of X-ray plant, ICCU and ECG equipment were entitled to investment allowance. In this case it was held that when a medical practitioner, without confining himself to his conventional function of examining patients and prescribing medicines, establishes an X-ray plant and machinery for augmenting his professional work, it cannot be said that he has no profit motive in such adventure. That means he is carrying on a business activity which attracts the investment allowance under section 32A of the Income Tax Act. Any venture or enterprise which a person individually or collectively undertakes to do and which has some industrial consequences would be an industrial undertaking. It must also be the result of organised activity resulting in manufacture or production of any article or thing. When raw X-ray film is exposed and processed, the resulting X-ray photograph is a production of a new article or thing. The article produced is a distinct and different article from raw film. The court held that the firm was entitled to investment allowance in respect of the X-ray plant and other accessories, the ICCU and ECG equipment and that the assessees unit of X-ray machine and accessories was a small scale industrial undertaking for the production of X-ray photographs coming within the ambit of section 32A(2)(b)(ii) of the Act.</p><p style="text-align: justify;">(4) Natvarlal Ambalal Dave v. CIT (1996) 225 ITR 936 <p style="text-align: justify;">In this case it was observed that photographs of various parts of the human body obtained by an X-ray machine are the end result of effort and activity carried on with the machine by human endeavour which is helpful for the proper and efficient diagnosis of the patient. Photographs or graphs obtained cannot but be a thing produced by the use of X-ray machine. It was further held that it is not the requirement of section 32A of the Income Tax Act, 1961, 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 an article or thing, that such article or thing must be saleable in the open market as a common marketable commodity only. A thing may be produced for being sold to a particular person or for the use of a particular person. Therefore an X-ray machine satisfies the condition in section 32A that it is plant and machinery through which an article or thing could be produced. It was further observed that merely because a person happens to be a professionally qualified doctor, it cannot be said that such persons activity cannot be treated as an activity of carrying on of business. A professional activity can also be characterised as an activity of carrying on business if it is carried on like a commercial activity. In this case the meaning of 'industrial undertaking' was also considered by the Honble High Court and it was held that 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.</p><p style="text-align: justify;">(5) CIT v. Dr. V.K. Ramachandran : [1981]128ITR727(Guj) <p style="text-align: justify;">In this case, the assessee was a medical practitioner and purchased an X-ray machine. It was held 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 no way 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.</p><p style="text-align: justify;">(6) Dr. (P.) Vadamalayan v. CIT : [1969]74ITR94(Mad) <p style="text-align: justify;">In this case it was held that the carrying on of the nursing home by the assessee as part of his profession was of a commercial nature and the combined activities of the assessee constituted business and the assessee was entitled to development rebate. If an assessee who is a professional and an expert contemporaneously carries on a trade which is annexed to the exercise of such a profession and if by doing so he can take advantage of a provision in the fiscal Act by claiming an allowance or rebate and if such a claim carries a lighter burden of tax, then he has the right to take advantage of the same. The definition of 'business' being an inclusive definition and not being exhaustive is indicative of extension and expansion and not restriction.</p><p style="text-align: justify;">(7) Dr. Suresh Amin Family Trust v. CIT (1995) 125 CTR (Ahd) 421<p style="text-align: justify;">In this case it was held that Diagnostic Centre (pathological laboratory) is covered by the expression industrial undertaking and the words production or produce cover all or any activity which brings into existence no article or thing by a process which may or may not amount to manufacture. Similarly the expression article or thing is very wide and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests. Such reports would thus constitute an article or thing. Accordingly, the assessee was held to be entitled to investment allowance on items of plant and machinery.</p><p style="text-align: justify;">(8) CIT v. M.L. Agarwala <p style="text-align: justify;">In this case ultra-sound equipment with air conditioner and voltage stabiliser was held to be eligible for investment allowance. It was observed that the resulting print is an article which is manufactured. The court held that a special type of film or material is to be fed which is blank but after the processing it is obtained with the photographs/prints of the organs and the data related to such organs. It is not the same as fed into the machine as raw materials and, therefore, investment allowance was admissible under section 32A.</p><p style="text-align: justify;">(9) CIT v. R. Shroff Consultants (P) Ltd. : [1999]238ITR1018(Bom) <p style="text-align: justify;">In this case the assessee was engaged in business consultancy and a part thereof undertaking data processing through computers. In this case it was held that preparation of statements was not manufacture or production of an article or thing and the assessee is not entitled to investment allowance, on computer. The learned counsel for the assessee, Shri V.H. Patil, emphasised that this was an ex parte judgment and does not consider the decision of the Honble Rajasthan High Court in the case of Trinity Hospital (supra) and, therefore, it should not be followed as it has not complete binding effect.<p style="text-align: justify;">4. In regard to the proposition whether the assessees establishment comes within the purview of the term 'industrial undertaking', the learned counsel for the assessee argued that the section does not define industrial undertaking and so help has to be taken from other sections. He referred to Explanation to section 33B in which 'industrial undertaking has been defined, inter alia, as an undertaking engaged in the manufacture or processing of goods. He submitted that a whether commercially a different article or thing comes into existence is the basic test. He emphasised that the machine prepare the report and the opinion given by the doctor is an article. He submitted that a sample of blood is fed into the Analyser and blood report is obtained. What a doctor can do by human element is done by the Analyser. He further submitted that the balance sheet preparation by a computer has been held to be allowable for investment allowance, as balance sheet is a different article or thing. He, submitted that the Robotron Image Analyser is also a computer-aided machine, as is clear from the sanction obtained from Department of Electronics (CCI-Wing), Computer Development Division, New Delhi, in F. No. 4 (489)/Comp./88-01-04/01 dated 12-1-1988, a copy of which appears at page 16 of the paper book. In support of his contention, the learned counsel for the assessee also relied upon the decision of the Honble Karnataka High Court in the case of CIT v. Data Cons (P) Ltd. : [1985]155ITR66(KAR) . In this case, the meaning of the term 'processing of goods' was considered and it was held that conversion of data furnished by customers into balance sheet, stock account etc., amounts to processing of goods and the assessee is entitled to concessional rate of tax. It was held that in all these activities the assessee had to play an active role by coordinating the activities and collecting information on such activities amounted to processing of goods. The assessee was therefore an industrial company entitled to concessional rate of tax. Reliance was also placed by the learned counsel for the assessee on the following decisions :</p><p style="text-align: justify;">(a) CIT v. Peerless Consultancy Services (P.) Ltd. (1991) 186 ITR 609In this case, the term industrial company' has been described as a company engaged in the processing of goods. The word 'processing' has not been defined in the Act and so it has to be assigned its dictionary meaning, according to which it refers to the treatment to which a commodity is subjected in order to prepare it for the market. The nature and extent of processing may vary from case to case. In one case the processing may be slight and in another, it may be extensive. In the light of this discussion it was held that the assessee which carried on the business of providing technical and industrial consultancy on the basis of computers and of undertaking electronic data processing was an industrial undertaking.</p><p style="text-align: justify;">(b) CIT v. Shaw Wallace & Co. Ltd. : [1993]201ITR17(Cal) In this case it was held that computer is a complicated machine and not an office appliance. it was observed that the word 'production' has not been defined in the Act. The expression 'production of an article' means, among other things, that which is produced, a thing that results from any action, process or effort, a product, a product of human activity or effort. The word 'manufacture' has also not been defined in the Act. The expression 'manufacture' is generally understood to mean bringing into existence a new substance and does not mean merely to produce some change in a substance. Having regard to the nature and function of the computer and the data processing system, it cannot be said that they are office appliances. The purposes for which such machines which can be described as computers are used are well-known and in highly scientifically developed systems, they have their own roles to play and they cannot be equated with office appliances which would be of much simpler nature. The final end products, viz., printed materials and the statements are entirely different articles or things from the data which are fed into the computer and are transformed into instructions and computations through a series of programmes and processing and the same amounts to manufacture of an article or thing.</p><p style="text-align: justify;">(c) CIT v. Fort Gloster Industries Ltd. : [1996]219ITR223(Cal) In this case it was held that computer is used for processing raw materials, data, stray data and salary payments etc., and also for monitoring details of production entitled to investment allowance.</p><p style="text-align: justify;">(d) CIT v. Computerised Accounting & Management Service (P) Ltd. (1998) 99 Taxman 101 (Ker.)The assessee-company was doing business in computerised accounting and management services by using computers. Raw technical and commercial data were fed into computers as inputs as per requirements of various customers and the data were processed to get necessary informations, computations and statements as outputs. It was held to be an industrial undertaking and the computations and statements that a computer brings out are entirely different in contents from the inputs fed into the computer and, therefore, the assessee-company can be said to be engaged in the production of mechanically prepared information which is collected from the raw data being fed into the computer and hence entitled for investment allowance.</p><p style="text-align: justify;">(e) CIT v. Dr. L.C. Mitra (1998) 96 Taxman 568 (Pat.)In this case the main dispute was whether parts of X-ray machine could be considered as machinery or not and it was held that they could be considered as plant and as such the assessee, a doctor, was entitled to investment allowance in respect of certain parts added to the existing X-ray machine.</p><p style="text-align: justify;">(f) CIT v. Oswal Data Processors : [1997]223ITR735(MP) It was held that the work of data processing was an industrial activity and the assessee is entitled to investment allowance on computers installed by it.<p style="text-align: justify;">5. The learned counsel for the assessee also submitted that publishing amounts to manufacture and relied on the following decisions :</p><p style="text-align: justify;">(a) CIT v. Commercial Laws of India (P.) Ltd : [1977]107ITR822(Mad) In this case it was held that folding and stitching of the printed sheets constitute processing of goods and hence the assessee comes within the term 'industrial company'.</p><p style="text-align: justify;">(b) Orient Longman Ltd. v. CIT : [1981]130ITR477(Delhi) In this case also the assessee carried on the business of publication, purchase and sale of books. It was held that though the assessee as a publisher would not be doing more than getting the manuscript and preparing the same for printing and book binding, yet the fact that printing and book binding was done by someone else did not imply that the someone else was the manufacturer. It was the business of the assessee to get the books manufactured by getting the manuscript, designing the nature of the book, finishing the anticipated product and then selling the product after getting it made. Therefore, the assessee was an industrial company and entitled to concessional rate of tax in accordance with the provisions of the Act.</p><p style="text-align: justify;">(c) Addl. CIT v. A. Mukherjee & Co. (P.) Ltd. : [1978]113ITR718(Cal) The assessee in this case was a publisher of books. The assessees Job was to get the manuscript for publication, hit upon a suitable format for the book, get it printed as per its requirements under its supervision, get the book bound after suitable changes and then put out the publication for sale. In all these activities the assessee had to play an active role by co-ordinating its activities in a business-like manner. It was held that the assessee was engaged in the activity of manufacturing and also of processing of books, which are also goods.<p style="text-align: justify;">6. Relying thus on all the aforementioned case laws, the learned counsel for the assessee submitted that the firm managed by renowned professional doctors comes within the purview of the term 'industrial undertaking' as blood and semen samples are processed to get a report which is an article or thing as contemplated under section 32A(2)(b)(iii). The machine is computer-aided machine and apart from being utilised for generation of reports, it can be utilised for other purposes such as Metallurgy, Petrology, Biology/Medical and Space Science and since it is a software oriented system, it is possible to use the same for various other purposes in future, which may not be in the immediate consideration of the morphologist. The learned counsel for the assessee vehemently argued that on the same analogy on which X-ray machines, ECG machine, ICCU are entitled to investment allowance, Robotron Image Analyser, which is practically performing the same functions, should be held to be entitled for investment allowance. He emphasised that the assessee is not using it only for consultancy purposes butt for other purposes also, as is evident from the income and expenditure statement. The assessee has derived income from testing fees, investigation charges, consultancy charges and miscellaneous income. He further submitted that as the name of the assessee itself suggests that it is a laboratory, the basic activity of which implies processing, there is no reason why this machinery should not be allowed investment allowance.<p style="text-align: justify;">7. The learned Departmental Representative submitted that the assessee is a firm of two doctors. Doctors are professionals and for imparting consultancy services, they are basically using this instrument. He submitted that, first of all, the firm does not come within the term 'industrial undertaking' as it is not manufacturing any article or thing. It was submitted that hospital is altogether different where many activities are carried on. In this case, the assessees activities are very limited and what the machine has done has, in substance, reduced the time taken for final diagnosis. The learned Departmental Representative submitted that the machine serves only the purpose as is served by a blood pressure instrument. He wondered if blood pressure instrument could be said to produce any article or thing when it simply measures the blood pressure. He relied upon the decision of the Honble Bombay High Court in the case of CIT v. Sterling Foods (Goa) (1995) 213 ITR 811 in which it was held that processing is a much wider term than manufacture. He submitted that processing is not covered under section 32A while in the present case, at best, it can be said that the basic activity is that of processing. He referred to the decision of the Honble Supreme Court in the case of N.C Budharaja & Co. (supra) and submitted that, as observed by the learned Commissioner (Appeals), the Honble Supreme Court held that the word 'article' employed in section 32A must be understood in the sense in which it is understood in the commercial world. The word 'article' cannot comprehend or take within its ambit a dam, a bridge, a building, a road, a canal and so on. He submitted that the learned Commissioner (Appeals) has rightly relied on the principles laid down in the case of A.C. Budharaja & Co. (supra). He further submitted that the learned Commissioner (Appeals) observed that the machinery in question is utilised for obtaining the relevant data in relation to the health of a patient and this activity cannot be said to be manufacture or production of an article in the sense in which it is understood in the commercial world. He submitted that the computer-aided machine cannot be equated with computer as it is not producing anything. The learned Departmental Representative submitted that in the assessees case these facts have to be kept in mind while deciding the issue. He emphasised that the assessee is basically a consultant and providing consultancy. He referred to section 32A and submitted that the installation of plant and machinery should be 'for the purpose of manufacture.........' He submitted that in Explanation to section 33B, the words used are 'manufacture or processing' whereas the word 'processing' is conspicuously missing in section 32A. He further submitted that the word 'processing' is much wider than the word 'manufacture' and unless something different from the original that is fed into the plant comes out, an activity cannot come within the term 'manufacture'. He referred to the decision of the Honble Supreme Court in the case of N.C. Budharaja & Co. (supra) and that of the Honble Bombay High Court in the case of CIT v. Boots Co. (I) Ltd. : [1995]214ITR175(Bom) and submitted that no liberal construction should be adopted if the language of the section is clear. It is only when the language of the provision is ambiguous that the construction beneficial to the assessee may be adopted. He referred to the decision of the Honble Supreme Court in Deputy CST v. Pio Food Packers (1980) 46 STC 63 in which, he submitted, it was held that the original commodity must change its character for an activity to come within the purview of 'manufacture'. He also relied on the decision of the Honble Bombay High Court in the case of Sterling Foods (Goa) (supra) wherein it was observed that the expressions 'processing', 'manufacture' and 'production' used in various taxing statutes are not interchangeable expressions. Though used in juxtaposition, they convey different concepts and refer to different activities. The term 'processing' is much wider. The nature and extent of processing may vary from case to case. Every process does not tantamount to manufacture. It is only when the process results in the emergence of a new and different article having a distinctive name, character or use that manufacture can be said to have taken place.</p><p style="text-align: justify;">Similarly, production is wider than manufacture. As a result, every production need not amount to manufacture, though every manufacture can be characterised as production. Accordingly, he submitted, it was held by the Honble Bombay High Court in the above case that processing of prawns does not amount to manufacture or production of an article and the assessee is not entitled to special deduction under section 80HH. The learned Departmental Representative emphasised that in the present case, blood is put into the machine and analysed. No processing or no manufacturing activity is done. Sample remains what it was earlier. He also relied upon the decision of the Honble Bombay High Court in the case of R. Shroff Consultants P. Ltd. (supra) and submitted that the said judgment, through an ex parte judgment, is, nonetheless a judgment of the jurisdictional High Court and binding on the Tribunal. The learned Departmental Representative submitted that no liberal construction of the taxing statute has to be adopted when the language is clear.<p style="text-align: justify;">8. In the rejoinder, the learned counsel for the assessee submitted that there is no dispute that there is difference between 'manufacture' and 'processing'. He submitted that in the case of the assessee, receipts are of four/five types and consultancy is only incidental.<p style="text-align: justify;">9. We have considered the rival submissions of the learned parties. The basic ingredients of section 32A are the following :</p><p style="text-align: justify;">(1) There should be a ship or aircraft or machinery or plant, in short, equipment, which is owned by the assessee and is wholly used for the purpose of the business carried on by him.</p><p style="text-align: justify;">(2) The equipment should be installed in an industrial undertaking.</p><p style="text-align: justify;">(3) There should be manufacture or production of an article or thing, not being an article or thing specified in the list in Eleventh Schedule.</p><p style="text-align: justify;">As far as the first ingredient is concerned, there is no dispute that the Robotron Image Analyser comes within the term 'machinery'. As regards the term 'industrial undertaking', the same has not been defined in the section, and, therefore, guidance has to be taken from the meaning given in the different sections of the Income Tax Act and the meaning of 'industrial undertaking' as understood in common parlance has to be considered. As per Explanation to section 33B, 'industrial undertaking' means any undertaking which, inter alia, is engaged in the manufacture or processing of goods. As has been seen in different judicial pronouncements discussed above, nursing home, hospitals, pathology labs, computer divisions etc., are all entitled for investment allowance and hence they come within the term 'industrial undertaking'. In the present case, the processing is done in the laboratory of the assessee for proper analysis of blood in the Robotron Image Analyser for obtaining relevant data in relation to the state of health of a patient and the medical reports are prepared. Thus we hold that the assessees laboratory comes within the term 'industrial undertaking' for the purposes of section 32A. In Halsburys Laws of England, 'manufacture' has been defined as follows :</p><p style="text-align: justify;">'It has been said that a manufacture must have some reference to trade or commerce and that it must be for, or have as its product, something of a material nature. These conditions, however, if necessary, are certainly not sufficient. One test for manufacture is whether a vendible product is produced, improved, restored or preserved, and whilst this test is somewhat narrow, absence of a vendible product ordinarily negates patentability. Not all vendible products, however, are produced by manufacture, which is concerned only with the useful as distinct from the fine arts, and with industry as distinct from agriculture and other such applications of natural processes. Manufacture has been defined as a manner of adapting natural materials by the hands of man or by man-made devices or machinery, and as the making of an article or material by physical labour or applied power; but the practice is to accept as manufacture a wider range of industrial activities than such a definition would suggest. It includes articles made in sit us as well as articles made in factory.'</p><p style="text-align: justify;">Das J. observed in North Bengal Stores Ltd. v. Board of Revenue 1 STC 157 (Cal) that '. . . the essence of manufacturing is that something is produced or brought into existence which is different from that out of which it is made, in the sense that the thing produced is by itself commercial commodity which is capable as such of being sold or supplied. It does not mean that the materials with which the thing is manufactured must necessarily lose their identity or be transformed in their basic or essential properties'. The following activities are held as 'manufacture' or 'processing of goods' :</p><p style="text-align: justify;">(1) Book publishing (Circular No. 347 dated 7-7-1982)</p><p style="text-align: justify;">(2) Mixing different types of tea to arrive at a desired blend G.A. Randevian Ltd. v. CIT (1983) 12 Taxman 160 (Cal).<p style="text-align: justify;">(3) Production of cinematographic films (Circular No. 24 dated 23-7-1969)</p><p style="text-align: justify;">(4) Tailoring clothes Nu-Look P. Ltd v. CIT (1985) 23 Taxman 39 (Delhi).<p style="text-align: justify;">(5) Conversion of computer cash vouchers, invoices etc., into balance sheet, stock account etc.<p style="text-align: justify;">Data Cons case (supra)</p><p style="text-align: justify;">It has been held in the case of Dr. Y.K. Ramachandran by the Honble Madras High Court (supra) that professional activity carried on by an assessee will not deprive him of investment allowance. In the present case, the assessee is having income from different sources along with income from consultancy services, and on this ground alone it cannot be denied investment allowance, as held in the aforementioned case. Thus we have to examine whether any new commodity coming within the purview of the term 'article or thing' is produced by the assessee or not. The assessees activities consist of obtaining blood sample, putting it into the Analyser and getting the relevant data in the form of medical report for forming an opinion by the doctor. The Ahmedabad Bench of the Tribunal in the case of Dr. Suresh Amin Family Trust (supra) has clearly laid down that the expression article or thing is capable of very wide meaning and would surely include reports prepared by diagnostic centre with the help of various plants and equipments by carrying out various tests in the pathological laboratory. These reports are all no doubt useful for the concerned patient and are not freely marketable but as held in various judicial pronouncements, X-ray plants are entitled for investment allowance though X-ray films are only used for the concerned patient. This report was definitely not in existence before the blood was put into the Analyser and it has subsequently come out after proper analysis of the blood in the form of definite report on the basis of which the doctor will form an opinion about the state of health of the patient. It is similar to the ECG machines in which also a graph of the working of the heart is obtained with the help of machinery and the judicial approach is to allow investment allowance in respect of ECG machine also, as held by the Honble Kerala High Court in the case Upasana Hospital (supra), though the word 'processing' has not been used in section 32A but the generation of report by the image analyser will definitely come within the purview of 'manufacture or production of any article or thing' as contemplated under section 32A. The article or thing as contemplated under section 32A means a new thing which can be perceived by a person. It need not necessarily be marketable. Here Report generated by Robotron Image Analyser is a new thing generated by the use of machine. This interpretation is also in consonance with the series of judicial pronouncements discussed above. The case of R. Shroff Consultants (P.) Ltd. (supra) decided by the Honble Bombay High Court, relied upon by the learned Departmental Representative, is a case of business consultancy firm undertaking data processing through computers and is not a case of nursing home or diagnostic centre, and, therefore, not applicable to the facts of the case before us. As is seen from the income and expenditure account, the assessee is not any imparting consultancy services, as was the case in the above cited case. Thus the ratio laid down in the said case cannot squarely be applied to the facts of the present case. If ECG machines, X-ray machines and other instruments used in diagnostic centres, the basic function of which is to analyse the data fed into them, to give desired reports which are useful for the person for whom it is generated are entitled for investment allowance, we do not see any reason why Robotron Image Analyser, which also is a machine generating useful reports, should not be entitled for investment allowance. We are therefore of the considered opinion that the assessee is entitled to grant of investment allowance on the Robotron Image Analyser.<p style="text-align: justify;">10. The following two grounds taken by the assessee were not pressed at the time of hearing :</p><p style="text-align: justify;">'2. The learned Commissioner of Income Tax is wrong in disallowing alternate claim under section 32AB although Audit Report under section 32AB has submitted before him. The learned Commissioner of Income Tax should have considered facts which were submitted before him.</p><p style="text-align: justify;">3. The learned Commissioner of Income Tax Appeal erred in confirming addition on account of disallowable Rs. 10,000 without any reasonable basis. Same may be allowed.'</p><p style="text-align: justify;">These grounds are therefore dismissed as not pressed.<p style="text-align: justify;">11. 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LAW: the Income Tax Act, the Income Tax Act, the Income Tax Act, the Income Tax Act, the Income Tax Act, The Ahmedabad Bench
PERSON: ORDERS.V Mehrotra, Hema Purandare, Amit Chakravarty, Robotron Image Analyser, Robotron Image Analyser, a. Metallurgyb, Ambalal Dave v., Photographs, V.K. Ramachandran, Suresh Amin Family Trust, M.L. Agarwala, Shri V.H. Patil, Analyser, Analyser, L.C. Mitra, Addl, Job, Robotron Image Analyser, J., Delhi).(5, Y.K. Ramachandran, Analyser, Suresh Amin Family Trust, Analyser, Robotron Image Analyser, Robotron Image Analyser
GPE: Bombay, Petrologyc, India, New Delhi, Eleventh Schedule
CARDINAL: 19-10-1995, two, one, 2,11,361, 10 and 22, 1993]204ITR412(SC, 23, 21, 1980]126ITR333(Bom, 225, 178, 225, 225, 936, 1981]128ITR727(Guj, 125, 1999]238ITR1018(Bom, 4, 12, 16, 186, one, 1993]201ITR17(Cal, 1996]219ITR223(Cal, 99, 96, 1977]107ITR822(Mad, 1981]130ITR477(Delhi, 1978]113ITR718(Cal, two, 213, 811, 1995]214ITR175(Bom, 46, four/five, 1, One, 1, 347, 7, 12, 160, 24, 23, 23, two, 2, 10,000
DATE: the assessment year 1989-90.2, the year, 1996, 1996, 1996, 1961, 1969]74ITR94(Mad, 1995, 489)/Comp./88-01, 1991, 1998, 1998, 1997]223ITR735(MP, 1995, 1980, 1983, 1985
ORG: Robotron Computer Aided Image Analyser', the Eleventh Schedule, the Honble Supreme Court, CIT, N.C. Budharaja & Co., the Commissioner (Appeals, Biology/Medicald, Commissioner (Appeals, the Honble Supreme Court, N.C. Budharaja & Co., CIT, Pressure Piling Co., CIT, Trinity Hospital, ITR, Tribunal, the Honble Supreme Court, N.C. Budharaja & Co., CIT, Upasana Hospital, ITR, ICCU, ECG, ICCU, ECG, Act.(4, CIT, ITR, the Honble High Court, CIT, CIT, CIT, CTR, CIT, fed, CIT, R. Shroff Consultants, Trinity Hospital, inter alia, the Robotron Image Analyser, Department of Electronics, Computer Development Division, CIT v. Data Cons, Reliance, CIT, Peerless Consultancy Services, ITR, CIT, Shaw Wallace & Co. Ltd., fed, CIT, Fort Gloster Industries Ltd., CIT, Computerised Accounting & Management Service, fed, fed, fed, CIT, CIT, Oswal Data Processors, it.5, CIT, Orient Longman Ltd., CIT, CIT, A. Mukherjee & Co., Metallurgy, Petrology, Biology/Medical and Space Science, ECG, ICCU, Departmental Representative, Departmental Representative, the Honble Bombay High Court, CIT v. Sterling Foods (Goa, the Honble Supreme Court, N.C Budharaja & Co., the Honble Supreme Court, A.C. Budharaja & Co., Departmental Representative, the Honble Supreme Court, N.C. Budharaja & Co., CIT v. Boots Co., the Honble Supreme Court, CST, Pio Food Packers, the Honble Bombay High Court, Sterling Foods (Goa, the Honble Bombay High Court, Departmental Representative, the Honble Bombay High Court, R. Shroff Consultants P. Ltd., High Court, Tribunal, Departmental Representative, the Robotron Image Analyser, inter alia, the Robotron Image Analyser, North Bengal Stores Ltd., Board of Revenue 1, G.A. Randevian Ltd., CIT, CIT, Data Cons, ECG, ECG, the Honble Kerala High Court, Upasana Hospital, R. Shroff Consultants, the Honble Bombay High Court, Departmental Representative, ECG, Income Tax, Audit Report, Income Tax, Income Tax Appeal
MONEY: 15 per cent
PRODUCT: 845
NORP: Vadamalayan
FAC: Diagnostic Centre
EVENT: CCI-Wing
ORDINAL: first, first