[Down Town Hospital Ltd. v. CIT, (2009) 308 ITR 188
(SC)]
The appellant-assessee, a hospital, had made investment in
plant and machinery. It operated a nursing home in Guwahati. The assessee
claimed deduction u/s.80HH for the A.Y. 1994-95. The Assessing Officer (AO)
held that the assessee was not an industrial undertaking. It was, therefore,
not eligible for deduction and, consequently, the assessee’s claim for
deduction stood disallowed.
Aggrieved by the said order the matter was carried in
appeal to the Commissioner (Appeals). The Commissioner (Appeals) allowed the
relief following his earlier decision for A.Y. 1993-94, that the assessee was
an industrial undertaking. On appeal the Tribunal held that in view of two
decisions of two separate High Courts, namely, the Rajasthan High Court [CIT
v. Trinity Hospital, (1997) 225 ITR 178 (Raj.)] and the Kerala High Court
[CIT v. Upasana Hospital, (1997) 225 ITR 845 (Ker)] the assessee-hospital
was an industrial undertaking entitled to deduction u/s.80HH.
On an appeal by the Department, the Guwahati High Court
(251 ITR 683) held that in the absence of any materials to show that the
activities carried on in the Hospital or nursing home amounted to manufacture
or production of any article or thing, the assessee was not entitled to relief
u/s.80HH and u/s.80I.
On an appeal, the Supreme Court held that in order to
constitute an industrial undertaking, u/s.32A or u/s.80HH, the important
criteria to be applied by the Assessing Officer is to identify the item in
question, the process undertaken by it and the resultant output. For example,
if the item is a data processing machine/computer, the question as to whether
the printout from that computer is as a result of manufacture is one of the
tests to be applied in judging whether the undertaking which buys this article
is an industrial undertaking or not. Unfortunately, in the present case there
was no identification of the items installed in the hospital by the Tribunal
and, therefore, it was not possible for it to express any opinion as to
whether the assessee was entitled to deduction u/s.80HH of the Income-tax Act.
The impugned order of the Guwahati High Court was set aside
therefore, by the Supreme Court, and the matter was remitted to the Tribunal
for deciding the case de novo in accordance with law.
