Investment allowance denied for clinical diagnostic equipment because testing and reporting do not amount to manufacture or production.

Laboratory equipment used by a clinical bio-chemist for testing blood and urine samples, preparing slides and issuing diagnostic reports was not treated as plant and machinery used for the manufacture or production of an article or thing. The activity amounted only to examination and reporting, not to the creation of any new and distinct product. Authorities concerning X-ray units and nursing homes were distinguished on their facts because they involved situations where a new article emerged. Investment allowance under section 32A was therefore unavailable, and the disallowance was upheld.

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Issues: Whether laboratory equipment used by a clinical bio-chemist in examining blood and urine samples and preparing slides and reports amounted to plant and machinery used for the manufacture or production of an article or thing so as to qualify for investment allowance under section 32A of the Income-tax Act, 1961.

Analysis: The assessee used the equipment to test samples, prepare slides, examine blood and urine, and furnish diagnostic reports. This activity did not amount to manufacture or production of any new article or thing. The authorities relied upon by the assessee concerned X-ray units or nursing homes and involved distinguishable factual situations where a new and distinct article emerged, which was not the case here.

Conclusion: The assessee was not entitled to investment allowance under section 32A, and the disallowance was justified.

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