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Section 32A of the Income-tax Act, 1961 - Investment allowance - Assessment year 1990-91 - Whether reports of patients coming out of CT scan machine amount to production or manufacture of articles - Held, no - Whether investment allowance is admissible on C.T. scan machine installed in a diagnostic centre - Held, no FACTS The assessee, running a diagnostic centre, claimed deduction of investment allowance in respect of the CT scan machine purchased during the relevant assessment year. The Assessing Officer disallowed the claim. On appeal, the Commissioner (Appeals) directed the Assessing Officer to allow the investment allowance to the assessee. The Tribunal, however, allowed the revenue's appeal holding that the assessee was not an industrial undertaking engaged in manufacture of any article or thing. On reference : HELD Under section 32A, the machinery or plant should be installed in an industrial undertaking for the purpose of business of manufacture or production of articles/things. Since CT scan machine was installed in a diagnostic centre, one of the pre-conditions to attract section 32A was not satisfied. Hence, the assessee was not entitled to deduction of investment allowance on CT scan machine installed and used by the assessee during the year under consideration. Investment allowance is available only in respect of machinery which is used for the purpose of manufacture of articles or things and it is not available in respect of machinery installed for the purpose of business of the assessee which does not fall within the specification contained in section 32A(2). In the instant case, the reports of patients coming out of CT scan machine did not amount to production or manufacture of articles. Therefore, the Tribunal was justified in law in holding that the appellant was not entitled to deduction of investment allowance on the CT scan machine installed and used by the appellant during the year under consideration. The diagnostic centre run by the appellant was not an industrial undertaking. Generating reports from CT scan machine did not amount to manufacture or production of article or thing. [Para 4] CASES REFERRED TO CIT v. Shaan Finance (P.) Ltd.…

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