Law:

Section:

Section 32A of the Income-tax Act, 1961 - Investment allowance - Assessment year 1989-90 - Whether a hospital is an industrial undertaking engaged in manufacture or production of any article or thing and is entitled to investment allowance under section 32A in respect of equipments such as x-ray machines, ultrasound scanner, angiography, gamma camera, stress analysis equipment, etc. - Held, yes FACTS The assessee-company was engaged in the business of running hospital. It claimed investment allowance in respect of the equipments such as x-ray machines, ultrasound scanner, angiography, gamma camera, stress analysis equipments, etc. The Assessing Officer disallowed the assessee's claim on the ground that the hospital was not engaged in manufacture or production of any article or thing, which is a pre-requisite for grant of investment allowance. On appeal, the Commissioner (Appeals) allowed the investment allowance in respect of the plant and machinery, i.e., x-ray machines, ultrasound scanner, angiography, gamma camera, stress analysis equipment, etc., by following the assessee's own case relating to the assessment year 1986-87. The Tribunal upheld the order of the Commissioner (Appeals). On the revenue's appeal : HELD In order to claim investment allowance, the assessee has to satisfy the following conditions : (a)the assessee should own the plant and machinery; (b)the same should be used wholly for the purpose of the business carried on by the assessee; and (c)the plant and machinery should come under any of the categories specified in sub-section (2) of section 32A. Section 32A specifically states that the new plant and machinery should be installed after 31-3-1976 in any industrial undertaking for the purpose of business of manufacture or production of any article or thing, not being an article or thing specified in the List in the Eleventh Schedule. In the instant case, there was no dispute regarding the above first two conditions since the assessee satisfied the same. The dispute involved was regarding the third condition, i.e., whether the hospital can be considered as an industrial undertaking and also engaged in manufacture or production of article or…

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