2002 (7) TMI 60 - HC - Income Tax

Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in allowing investment allowance on ultrasound medical diagnostic electrical equipment, air-conditioner and servo voltage stabilizer? - we answer the question in the affirmative, i.e., in favour of the assessee.

Summary

Issues:
Whether investment allowance can be claimed on ultrasound medical diagnostic electrical equipment, air-conditioner, and servo voltage stabilizer under section 32A of the Income-tax Act, 1961.

Analysis:
The judgment dealt with the issue of claiming investment allowance under section 32A of the Income-tax Act, 1961, for specific equipment. The assessee, a radiologist, claimed deduction for ultrasound medical diagnostic electrical equipment, air-conditioner, and servo voltage stabilizer. The Assessing Officer initially rejected the claim, stating that the assessee did not manufacture or produce any article as required by the Act. However, the Deputy Commissioner of Income-tax (Appeals) and the Tribunal overturned this decision, allowing the investment allowance.

The court analyzed the definition of "manufacture or production of any article or thing" under section 32A(2)(b)(ii) of the Act. Referring to a similar case before the Rajasthan High Court, it was held that the images produced by the ultrasound machine constituted a "thing" within the meaning of the Act. The court cited precedents where activities like x-ray diagnosis and computer data processing were considered as production of a "thing" for claiming investment allowance.

The Revenue attempted to challenge the Tribunal's decision by citing a different case related to deduction under other sections of the Act. However, the court distinguished the cases and emphasized that the claim in this instance was specific to the mentioned equipment and not the entire establishment. The court reiterated the relevance of previous judgments in similar cases to support the assessee's claim for investment allowance.

The judgment also referenced decisions from various High Courts supporting the permissibility of investment allowance for different equipment and activities under section 32A. The court highlighted cases involving aerial photography, x-ray machines, cameras, and computer documentation services to establish a consistent interpretation of the law across jurisdictions. Ultimately, the court concluded that the assessee was entitled to investment allowance under section 32A(2)(b)(ii) based on the preponderance of judicial opinion and the need for uniformity in such matters.

In conclusion, the court answered the question in the affirmative, ruling in favor of the assessee and allowing the investment allowance on the ultrasound medical diagnostic electrical equipment, air-conditioner, and servo voltage stabilizer under section 32A of the Income-tax Act, 1961.