1995 (3) TMI 23 - HC - Income Tax

Court denies tax relief on medical scanner interest expense, clarifies eligibility criteria under Income-tax Act.

The court dismissed the petitioners' claim for tax relief under section 10(15)(iv)(c) of the Income-tax Act, 1961 for interest on a resonance scanner used ... Industrial Undertaking, Interest Payable Issues: Claim for tax relief under section 10(15)(iv)(c) of the Income-tax Act, 1961 for interest payable on the purchase price of a resonance scanner used for medical diagnosis.Analysis:The writ petitioners claimed tax relief under section 10(15)(iv)(c) of the Income-tax Act, 1961, for interest on the purchase of a resonance scanner used in medical diagnosis. They argued that they should be considered an industrial undertaking as they process unexposed films using the scanner. However, the Central Board of Direct Taxes rejected this contention, stating that the processed films are not sold but used for diagnosis. The judge upheld the Board's decision, deeming it reasonable and correct. He emphasized that a diagnostic center cannot be classified as an industrial undertaking merely by owning a machine for tax relief, as the relief is intended for manufacturing or processing goods, not professional services.The judge further pointed out that industrial processing typically involves similar products, whereas a scanner produces different photographs for each patient, making it unsuitable for classification as industrial processing. He concluded that the diagnostic center's activities do not meet the criteria for tax relief as an industrial undertaking. Despite the unconventional nature of the case, the judge found the petitioners' claim unacceptable and rejected their application without issuing a rule. The judgment was made without calling for affidavits, as the judge deemed the matter clear-cut and unworthy of further consideration. The application was dismissed, and no costs were awarded.