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Issues involved: Determination of commercial activity for claiming development rebate on X-ray equipment and jurisdiction of the Tribunal regarding the application of section 154.
Issue 1 - Commercial Activity for Development Rebate: The assessee, a medical practitioner, claimed development rebate on X-Ray machines for the assessment year 1972-73. The machinery was purchased, installed, and used in the same year. Initially, the ITO allowed the rebate but later sought to rectify the assessment order under section 154, which was objected to by the assessee. The AAC allowed the appeal, considering the total receipts and expenses related to the X-Ray activity, concluding that it amounted to a commercial activity. The Tribunal upheld this view, stating that the X-Ray activities constituted a business, following a previous court decision. The High Court, after considering subsequent Supreme Court judgments, affirmed that even professional activities can have a commercial character if commerce elements are evident. It was established that the assessee's X-Ray institute was run as a commercial venture, entitling him to the development rebate. Issue 2 - Jurisdiction under Section 154: The second issue pertained to whether there was a mistake apparent from the record to warrant the application of section 154 by the ITO. The Commissioner's counsel argued this point extensively, indicating its debatable nature. The High Court concluded that the debatability of the issue signified it was not a mistake apparent from the record. Therefore, the Tribunal's decision to not apply section 154 was upheld in favor of the assessee. In summary, the High Court determined that the X-Ray activities conducted by the medical practitioner qualified as a commercial venture, justifying the development rebate claim. Additionally, the Tribunal's decision to not apply section 154 was deemed appropriate due to the debatable nature of the issue, ultimately ruling in favor of the assessee.
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