Calcutta High Court
J.M.D. Medicare Ltd. And Anr. vs Union Of India (Uoi) And Ors. on 29 March, 1995
Equivalent citations: [1996]218ITR184(CAL)
JUDGMENT Ajoy Nath Ray, J.
1. This matter is treated on day's list.
2. After the affidavit verifying the writ petition was affirmed the writ petitioners have received an order dated March 21, 1995, from the desk office of the Central Board of Direct Taxes. A copy of the said order has been handed up in court and the same is to be kept with the records of this writ petition.
3. The writ petitioners' claim is that they purchased from a Japanese concern a resonance scanner which is used for medical diagnosis by using the scanner so as to expose unexposed films.
4. It is their case that by virtue of certain provision of the Income-tax Act, 1961, mentioned hereinbelow, they are entitled to relief in regard to the interest payable on the purchase price of the scanner. They rely upon Section 10(15)(iv)(c) of the 1961 Act and upon the Explanation given at the bottom of Section 10(15)(iv) at the end of item (i). The Explanation mentioned above is set out below :
"Explanation.--For the purposes of this sub-clause, the expression 'industrial undertaking' means any undertaking which is engaged in-
(a) the manufacture or processing of goods ; or
(b) the business of generation or distribution of electricity or any other form of power ; or
(c) mining ; or
(d) the construction of ships ; or
(e) the operation of ships or aircrafts ;"
5. In a nutshell the writ petitioners' submission is that they process the goods, being the unexposed films by the use of the scanner and thus they are to be classed as an industrial undertaking.
6. In the order of the Board mentioned above such a contention has been repelled. It has been held therein that the allegedly processed goods being the exposed films are not sold as such. Those are processed as a tool for making diagnosis.
7. Even if I were to overlook the problem of most of the important respondents being situated outside the jurisdiction of the court, I would still have had no hesitation in coming straightaway to the conclusion that the above finding of the Central Board of Direct Taxes is eminently reasonable and correct and calls for no interference from this court.
8. Such a finding not only can be entered even on the first day the writ petition is moved but in my opinion should be entered in all cases where the court feels no hesitation about the matter as here. Such an adverse finding against the respondents on the very first day without calling for affidavits might be hasty or contrary to the usual procedure, but it is not at all so if it is the petitioners' case which is summarily rejected.
9. If a medical diagnostic centre were to be classed as an industrial undertaking processing goods being the films within the meaning of the above Explanation, it would become grouped with such other organisations as are concerned with mining, construction of ships, etc. This would appear to be an unnatural construction of the words "processing of goods".
10. Secondly, as emphasised by the Board, the films which are claimed to be the processed goods are not themselves sold to outsiders. It is indeed a weird case of processing of goods undertaken by an industrial undertaking when none of the processed goods is sold to anybody at all.
11. Thirdly, the purpose of the above relief is obviously to permit industrial undertakings to engage with relief in the activity of manufacture or processing of goods even when such activity requires purchase of foreign machinery. A diagnostic centre is, by no ordinary meaning of the words, an industrial undertaking merely by purchase of a machine and only for the purpose of tax relief to be claimed by it as owner of the said machine. The purpose of the relief nowhere appears to be the grant of any benefit for the rendering of any professional services.
12. Fourthly, an industrial processing of goods has a certain similarity in the case of each of the goods processed. The products arc largely similar or identical to one another. This is usual though not always the case. A scanner machine will, however, produce photographs which are totally different in the case of different patients and the value of the photographs derives from those differences rather than from their identity to one another.
13. In short, it is quite clear that the diagnostic centre is not processing goods as an industrial undertaking when it is exposing films by the use of the scanner obtained from Japan. Like most obvious things, it is easier to see and to understand than to explain. However, I have attempted to the best of my ability to explain why the writ petitioners' case, in my opinion, is so clearly unacceptable as not to merit even the issuance of a rule.
14. The application is, thus, rejected. There will be no order as to costs.