1. The point that arises for consideration in this appeal is whether a radiologist who had installed X-ray unit in his clinic would be entitled to investment allowance under section 32A of the Income-tax Act, 1961 ('the Act').
2. The respondent-assessee is a consulting radiologist. He receives salary from some hospitals as a consultant radiologist. He also receives consultation charges from his own patients. He has set up X-ray unit in his clinic during this year costing Rs. 1,06, 478. From the X-ray unit he has received collections amounting to Rs. 67,476 apart from Rs. 9,600 received as consultation charges during this year.
He has a technician who operates the X-ray unit. The assessee claimed investment allowance on the X-ray plant installed by him during this year. The ITO rejected the claim on the ground that the assessee being a professional does not satisfy the conditions laid down in section 32A to qualify for the claim of investment allowance. The assessee appealed to the AAC. The AAC accepted the assessee's claim and directed the ITO to allow investment allowance under section 32A. He followed the decision of the Madras High Court in the case of CIT v. Dr. V.K.Ramachandran  128 ITR 727. Against the said order the revenue has preferred this appeal.
3. Shri P.O. George, learned senior departmental representative, strongly urged that for allowing investment allowance under section 32A, the machinery must be owned by the assessee and it should be wholly used for the purpose of business carried on by him. The assessee being a radiologist does not carry on any business. Further, the assessee does not manufacture or produce any article or thing. He further urged that the investment allowance is allowable only in the case of an industrial undertaking. The assessee does not satisfy that condition. Hence, the assessee is not entitled for investment allowance on the X-ray plant. He submitted that the decision in the case of Dr.
V.K. Ramachandran (supra) is a case of development rebate and as such it is not applicable to the assessee's case. He relied on a decision in the case of CIT v. Textile Machinery Corpn.  80 ITR 428 (Cal.) for the meaning of the words 'industrial undertaking'.
4. Shri Vittala Madmannaya, learned counsel for the assessee, strongly urged that the assessee satisfies all the conditions stipulated in section 32A for allowing investment allowance. He urged that the assessee receives salary from some hospitals and also consultation charges from his patients. During this year he had installed X-ray unit from which he gets collections. The X-ray unit installed in his clinic is a commercial activity and amounts to business. Thus, the assessee carries on the business and so he satisfies the first condition. The X-ray photo is different from the raw film. Hence, the assessee manufactures or produces an article or thing. Thus, he satisfies the second condition also. He then urged that the investment by the assessee was below Rs. 10 lakhs and the X-ray unit comes under the small-scale industrial undertaking. He urged that an undertaking means in commercial or business parlance, any activity engaged in with a view to earn profit. Industry means any business or trade, etc. He urged that even a profession can be treated as business in certain circumstances. He placed reliance on the cases of CIT v. M.R. Gopal  58 ITR 598 (Mad.), CITv. Ajay Printery (P.) Ltd.  58 ITR 811 (Guj.), CIT v. Tata Locomotive & Engg. Co. Ltd.  68 ITR 325 (Bom.), In re, Sree Yellamma Cotton, Woollen & Silk Mills Co. Ltd. AIR 1969 Mys. 280 and Bank of Maharashtra Ltd. v. Official Liquidator AIR 1969 Mys. 280.
5. We have considered the rival submissions. Section 32A deals with the investment allowance. Sub-sections (1) and (2) of section 32A which are relevant for our purpose read as under : (1) In respect of a ship or an aircraft or machinery or plant specified in sub-Section (2), which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed, or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty-five per cent of the actual cost of the ship, aircraft, machinery or plant to the assessee : Provided that no deduction shall be allowed under this section in respect of (a) any machinery or plant installed in any office premises or any residential accommodation, including any accommodation in the nature of a guest house ; (c) any ship, machinery or plant in respect of which the deduction by way of development rebate is allowable under section 33 ; and (d) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head 'Profits and gains of business or profession' of any one previous year.
(2) The ship or aircraft or machinery or plant referred to in sub-section (1) shall be the following, namely : (a) a new ship or new aircraft acquired after the 31st day of March, 1976, by an assessee engaged in the business of operation of ships or aircraft ; (b) any new machinery or plant installed after the 31st day of March, 1976, (i) for the purposes of business of generation or distribution of electricity or any other form of power ; or ii) in a small-scale industrial undertaking for the purposes of business of manufacture or production of any article or thing ; or (iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule.
Explanation : For the purposes of this sub-section and sub-sections (2B), (2C) and (4), (1) 'new ship' or 'new aircraft' or 'new machinery or plant' shall have the same meanings as in the Explanation to clause (vi) of sub-section (1) of section 32 ; (2) an industrial undertaking shall be deemed to be a small-scale industrial undertaking, if the aggregate value of the machinery and plant (other than tools, jigs, dies and moulds) installed, as on the last day of the previous year, for the purposes of the business of the undertaking does not exceed, (i) in a case where the previous year ends before the 1st day of August, 1980, ten lakh rupees ; and (ii) in a case where the previous year ends after the 31st day of July, 1980, twenty lakh rupees ;and for this purpose the value of any machinery or plant shall be, (a) in the case of any machinery or plant owned by the assessee, the actual cost thereof to the assessee ; and (b) in the case of any machinery or plant hired by the assessee, the actual cost thereof as in the case of the owner of such machinery or plant.
6. In the instant case, the assessee owned the machinery or plant and it was installed in this accounting year and used in this year. The assessee is not hit by the proviso. The issues that arise for our consideration are : (ii) whether machinery or plant is installed in a small-scale industrial undertaking, and (iii) whether there is a manufacture or production of any article or thing 7. We will first deal with the first question. It is no doubt true that the assessee is a consultant radiologist He receives salary income from some hospitals and also some consultation charges. During this year he had installed X-ray plant in his clinic which is operated by a technician and has received collections. The patients who come to his clinic for taking X-ray photographs are his own patients as well as others. In our view, setting up of the X-ray plant in his clinic is a commercial activity independent from his professional activity. The activity carried on by the assessee is an admixture of both professional as well as commercial activity. So far as professional activity is concerned he gets his salary from some hospitals and consultation charges from his patients. The running of the X-ray unit is a commercial activity. Even though the commercial activity is carried on by a professional person, it being a commercial activity amounts to carrying on of business. If an unqualified person sets up X-ray plant it will be a business activity. Merely because a professional man has set up the X-ray unit it cannot be said that it is not a business activity. Further, X-ray photographs of persons who are not his patients are also taken in his clinic. Hence, it cannot be said that the X-ray plant was installed as an aid for diagnosis of his own patients. Thus, in our view, by setting up X-ray plant the assessee has been carrying on the business as a commercial activity.
8. In Dr. P. Vadamalayan v. CIT  74 ITR 94 (Mad.), the assessee was a doctor running a nursing home. He installed a combination stabilizer and an equipment called the major surgical luminaire. He claimed development rebate. The Madras High Court held as under : The problem confronting us is indeed a nice one, at once interesting and attractive. No doubt, the learned professions of medicine, law and theology enfold into their conclave only members who practise such professions as a vocation and not as a trade. But in these days of advanced science and ebullient developments commensurate with the need of the community, society and country, a centrifuged activity, though related to a profession as such, may not in a given case be interpreted as a wooden exercise thereof, if other compelling and surrounding circumstances need an expansive understanding of it in a commercial way. An expert professionalist, if he has the inclination, capacity and zeal to expand his activities may do so.
As a result thereof he might tread into the arena of business activity. Such a composite activity is conceivable and indeed is plausible in modern days. No doubt, no decisive test can be laid down but the multitude of incidents haloing the same might reflect on the true nature of the vocation. If, therefore, an expert equips himself, as in this case, with plant and machinery with which he, with the aid of his professional skill and in collaboration with qualified assistants, is able to turn out an activity which is not strictly a professional activity but savours of a commercial activity as well, is it to be understood still that he is mechanically exercising his profession. We think not. Any kind of commercial activity telescoped to professional activity ought to be understood as a business, as is properly understood. In such circumstances it may be that the business aspect of the activity springs from the professional activity of the person concerned and is irretrievably connected with it. Nevertheless, if it is said that if there is an organic and composite activity and if there is a merger of professional skill with trading or business, the poser to be answered is whether the combined endeavour results in emoluments which, though not strictly termable as profits, arc really gains in the shape of profits. If the answer is in the affirmative, it is a business as it is the outcome of combined efforts. . . .
Apart from this, if an assessee, who is a professional and an expert, contemporaneously carries on a trade which is annexed to the exercise of such a profession and if, by doing so, he can take advantage of a provision in the fiscal Act by claiming an allowance or rebate, and if such a claim carries a lighter burden of tax, then he has the right to take advantage of the same.
It was held therein that any kind of commercial activity telescoped to professional activity ought to be understood as a business and the exercise of the profession by the assessee though for rendering service is yet of commercial nature. A concerted continued activity to render service also would be an industry analogous to trade or business. It was further observed that once it is found that in an individual's professional activity there is inherited in it a trading or business concept as well and is also owned as such by the person, then the conclusion is irresistible that the totality of the vocation has to gain the statutory allowance of development rebate. It was further observed that giving a wide connotation to the word 'business', if the activity though garbed as profession, is really commercial, or in any event, if the vocation of the assessee is an admixture of both, then the assessee would be entitled to relief for development rebate as claimed. This decision was followed by the same Court in the case of Dr. V.K. Ramachandran (supra). That was also a case of medical practitioner who claimed development rebate on X-ray machine. The Madras High Court held that even a professional activity could be tinged with a commercial character if the indicia of commerce are manifest in it. It is possible for a professional man to have business.
It was observed that the way in which the activity is carried on by a doctor is in no way different from an unqualified person carrying on a radiological institute. The mere fact that a professional person had, as an adjunct to his professional activities, such an institute did not disable him from running it as a commercial venture and earning income therefrom. It was held that the assessee has been carrying on the business as a commercial activity and was entitled to development rebate.In S. Mohan Lal v. R. Kondiah AIR 1979 SC 1132, the Supreme Court while considering the expression 'business' in section 10(3)(a)(iii) of the Andhra Pradesh Buildings (Lease, Rent & Eviction) Control Act (15 of 1960) held that the expression 'business' occurring therein is used in a wide sense so as to include the practice of profession of an advocate. In Barendra Prasad Ray v. ITO  129 ITR 295 the Supreme Court observed as under : The expression 'business' does not necessarily mean trade or manufacture only. It is being used as including within its scope professions, vocations and callings from a fairly long time. The Shorter Oxford English Dictionary defines 'business' as 'stated occupation, profession or trade' and 'a man of business' is defined as meaning 'an attorney' also. In view of the above dictionary meaning of the word 'business', it cannot be said that the definition of business given in section 45 of the Partnership Act, 1890 (53 & 54 Vict. c. 39), was an extended definition intended for the purpose of that Act only. Section 45 of that Act says : . . . The expression "business" includes every trade, occupation, or profession.' Section 2(b) of the Indian Partnership Act, 1932, also defines 'business' thus : The observation of Rowlatt, J. in Christopher Barker & Sons v. IRC  2 KB 222, 228 (KB). All professions are businesses, but 'all businesses are not professions . . .' also supports the view that professions are generally regarded as businesses. The same learned Judge in another case, IRC v. Marine Steam Turbine Co. Ltd.  1 KB 193, 203 (KB) held : The word 'business', however, is also used in another and a very different sense, as meaning an active occupation or profession continuously carried on and it is in this sense that the word is used in the Act with which we are here concerned.
The word 'business' is one of wide import and it means an activity carried on continuously and systematically by a person by the application of his labour or skill with a view to earning an income.
We are of the view that in the context in which the expression 'business connection' is used in section 9(1) of the Act, there is no warrant for giving a restricted meaning to it excluding 'professional connections' from its scope.
Thus, it was held therein that the professions are generally regarded as business.
9. The ratio laid down in the above cases squarely apply to the instant case. Though the assessee is a radiologist, setting up of the X-ray plant is a commercial activity and the combined activities of the assessee constituted 'business'. As held by the Supreme Court in the above decision, the word 'business' is one of wide import and professions are also regarded as business. Thus, in our view, the assessee satisfies the condition that he carries on the business by setting up the X-ray unit.
10. We will now consider what is an industrial undertaking and whether the assessee has installed the machinery in the small-scale industrial undertaking. There is no definition of the industrial undertaking in section 32A. The Explanation thereto only states that an industrial undertaking shall be deemed to be a small-scale industrial undertaking if the aggregate value of the machinery and plant installed does not exceed Rs. 10 lakhs in a case where the previous year ends before 1-8-1980. The machinery owned by the assessee is less than Rs. 10 lakhs but what is an industrial undertaking is not defined. According to Webster's Dictionary 'undertaking' means any thing undertaken ; any business, work or project, which one engages in or attempts ; or an enterprise. Almost the same meaning is given in the Law Lexicon by T.P.Mukherjee (3rd edition). The above meaning given is wide enough to cover the assessee's case. In Sree Yellamma Cotton, Woollen & Silk Mills Co. Ltd.'s case (supra) the Mysore High Court considered the meaning of the word 'undertaking' and observed as under : ... It is not in its real meaning anything which may be described as a trangible piece of property like land, machinery or the equipment; it is in actual effect an activity of man which in commercial or business parlance means an activity engaged in with a view to earn profit. Property, movable or immovable, used in the course of or for the purpose of such business can more accurately be described as the tools of business or undertaking, i.e., things or articles which are necessarily to be used to keep the undertaking going or to assist the carrying on of the activities leading to the earning of profits.
Thus, it was observed that it is an activity of man which in commercial or business parlance means an activity engaged in with a view to earn profits. In the instant case, the activity of the assessee in setting up the X-ray plant is with a view to earn profit.
In M.R. Gopal's case (supra) rocks and boulders were cut into chips of various sizes with the aid of machinery. It was held by the Madras High Court that the process of making chips is obviously also an enterprise, an occupation, or a business, and, therefore, is an undertaking. In our view the above ratio squarely applies to this case. Thus, we hold that the setting up of X-ray plant is an enterprise or business and, therefore, an undertaking. There is no defin'tion of industry in the Act. Section 2(i) of the Industrial Disputes Act, 1947, defines industry as under : 'industry' means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen; The above definition is of very wide import which includes business, trade, manufacture, undertaking and calling of service. In Bangalore Water Supply & Sewerage Board v. A. Rajappa AIR 1978 SC 548 the Supreme Court held that even the restricted category of professions come under the definition of 'industry' in Section 2(i) of the Industrial Disputes Act. It was observed as under : All this adds up to the decanonisation of the noble professions.
Assuming that a professional in our egalitarian ethos, is like any other man of common clay plying a trade or business, we cannot assent to the cult of the elite in carving out islands of exception to 'industry'.
It was held that (i) professions, (ii') clubs, (iii) educational institutions, (iv) co-operatives, (v) research institutes, (vi) charitable projects, and (vii) other kindred adventures cannot be exempted from the scope of Section 2(j). It was also held in para 128 that if a business is run for production and/or supply of goods and services with an eye on profit it is plainly an industry.
In Shirodkar Clinic (P.) Ltd.  ICR 116 (Bom.) (sic) it was held as under: Though treating a patient, prescribing and determining the required treatment would be rendering professional service to the patient, looking after him during the time he is in the clinic so as to see that he does not exert himself and takes rest, is kept in a clean healthy surrounding and calm atmosphere and attending to his other needs, each of these are not of a professional character. Such an activity, therefore, is a combination of both professional skill and services as well as other ancillary skill and services which aid and/or follow the professional services rendered, and also facilitate rendering of proper professional service. If a distinction can be made between them, then the latter part of the activity would be an industry, while the former part which is essentially professional in character involving personal skill will not be an industry. The clinic was held as 'industry'.
(The above passage is extracted from page 267, Quinquennial Digest, Volume 4 published by AIR). In that case treating the patient, prescribing and determining the required treatment was held to be professional service to the patients, but looking after him during the time when he is in the clinic so as to see that he does not exert himself and takes rest and attending to his needs, etc., are not professional in character. The latter part of the activity would be an industry while the former is professional in character.
11. The assessee's case squarely comes within the meaning of industrial undertaking as discussed above and the machinery has been installed in small-scale industrial undertaking. Since the investment is below Rs. 10 lakhs, it is a small-scale industrial undertaking. The small-scale sector being a free sector, it need not obtain any sanction for setting up a unit as per the Industrial Policy of the Government. This is evident as per Chapter 1 of the Industrial Policy of the Government, a copy of which was placed before us. We are not admitting the provisional registration certificate dated 24-8-1983 filed before us as it was not available before the lower authorities. Thus, the assessee satisfies the second condition also.
12. The decision in Textile Machinery Corpn.'s case (supra), on which reliance was placed by the revenue does not improve the case of the revenue. In this case it was held as under : . . .Normally, anything undertaken to be done is an undertaking. An industrial undertaking, therefore, would normally be, in its ordinary acceptation, some industrial concern or enterprise or adventure which is undertaken to be done by the person concerned.
Whether the industrial undertaking means only the physical assets or the human assets involved in it or the principles of organisation which cover it are to a certain extent unrealistic because we are of the view that industrial undertakings cover a complex of ideas both physical and non-physical and we will not choose one at the cost of the other. It is a complex of ideas and methods of practical execution and, therefore, must necessarily involve both tangible and intangible considerations.
The words'industrial undertaking' in the Indian Income-tax Act, 1922, should, in our view, be interpreted to mean any venture or enterprise which a person undertakes to do and which has relation to some industry or has some industrial consequences. The notion of an undertaking basically means that it has got to be a concrete and tangible venture in the path of industry to make it an industrial undertaking.
Thus, it was observed that any enterprise undertaken by a person would be an industrial undertaking. It is no doubt true that it is observed that undertaking which has relation to some industry, but as pointed out earlier by us, industry includes any trade, business, manufacture or undertaking. Hence, the undertaking by the assessee in setting up the X-ray plant is an industrial undertaking. Thus, this decision does not in any way support the case of the revenue.
13. Thus, in our view, the machinery, i.e., the X-ray plant installed in the assessee's clinic is one installed in a small-scale industrial undertaking. Thus, the assessee satisfies this condition prescribed under sub-Section (2)(b)(ii) of section 32A.14. The last issue is whether there is a manufacture or production of any article or thing. In our view, when the X-ray film is exposed and processed, the resulting photograph is a production of a new article or thing. The X-ray photograph is something different from the original film and it does not retain the identity of the original film. The expression 'manufacture' or 'production' used in sub-Section (2)(b)(ii) of section 32A has not been defined.
15. The question as to what is manufacture or production has been considered in a number of cases. In North Bengal Stores Ltd. v. Member Board of Revenue  1 STC 157 the assessees are dealers in patent medicines and medical sundries. They are also dispensing chemists and as such they make up and dispense prescriptions written by medical practitioners for their patients. The questions arose whether the assessees while serving out prescriptions for individual cases can be said to be manufacturers. The Calcutta High Court held that a chemist who dispenses prescriptions of doctors produces goods for sale. It was observed as under: . . .The resultant mixtures, after dispensing prescriptions, are the goods sold by a dispensing chemist to his customers ; the process of dispensing is to produce those goods for sale, without which process sales of mixtures or compounds cannot be effected by a chemist. Even if that process is not the manufacture of goods, as articles of furniture, mechanical appliances and paints are made from raw materials, nevertheless, since it is the production of goods for the purpose of selling to customers, the chemist who dispenses prescriptions thereby produces goods for sale.
... To manufacture or produce goods for sale means to bring into being or to produce something in a form in which it will be capable of being sold or supplied in course of business. The essence of manufacturing, I apprehend, is that something is produced or brought into existence which is different from that out of which it is made, in the sense that j(the thing produced is by itself commercial commodity which is capable as such of being sold or supplied. It does not mean that the materials with which the thing is manufactured must necessarily lose their identity or become transformed in their basic or essential properties . . . .
When a dispensing chemist mixes different drugs according to , the prescription of a physician, the drugs may or may not be transformed into a different matter. The mixture may become a chemical compound in which the drugs used may have been transformed into a totally different thing in their character and properties, or it may result in what is called a mechanical or physical mixture, in which each drug retains its original properties. But in either case the resulting mixture is a distinct product brought into being in a particular form suitable for the particular use for which it is intended and capable of being sold or supplied for a price. When a man goes into a chemist's shop with a prescription he does not ask for this, that or the other drug mentioned in the prescription but he really wants the finished product in a form in which as a medicine it will be suitable for the use of the patient and when the chemist compounds the drugs according to the prescription he produces that medicine and sells, not so many different drugs of different quantities or measures, but the finished product. The selling of the finished product is his business and he brings it into being for sale in his business. This finished product is different from the ingredients with which it is made, just in the same sense as an ornament is different from the lump of gold or a pair of boots different from the leather or a suit of clothes is different from the cloth or a box is different from the wood, but it is the article which he brings into being for sale in course of his business.
In Hiralal Jitmal v. CST  8 STC 325 (MP), the assessee was a printer and dyer of textile cloth purchased by him and carried on the business of selling the printed and dyed textiles. The question arose whether the assessee is a manufacturer or not. The Madhya Pradesh High Court held that a person who has engaged in the work of printing and dyeing textiles purchased by him and in the business of selling or supplying the printed and dyed material is a manufacturer. While considering the meaning of the word 'manufacture', it was observed as under : ... In my opinion, to constitute 'manufacture' for the purposes of the Act, it is not necessary that there must be a transformation in the materials and that the transformation must have progressed so far that the manufactured article becomes commercially known as another and different article from the raw materials. All that is necessary is that the material should have been changed or modified by man's art or industry so as to make it capable of being sold in an acceptable form to satisfy some want, or desire, or fancy or taste of man . ...
In Ajay Printery (P.) Ltd.'s case (supra) the assessee-company carried on the business of printing balance sheets, profit and loss accounts, etc. The assessee contended that it was a manufacturing or processing concern. On those facts, the Gujarat High Court held that the business of printing balance sheet, profit and loss accounts, etc., is a business which consists wholly of 'manufacture of goods' as they are quite different from the raw materials, paper and ink from which it is made, the use of which would be different from the use of the raw materials used in producing it. It was observed as under : ... No one would say when he sells a book or supplies to his customers pamphlets or balance sheets that the order which the customer had placed with him was an order for ink and paper, or that the printer, when he accepted that order, accepted the order for supplying paper and ink. The order was for the supply and sale of the pamphlet or the balance sheet or share certificates, a commodity or an article quite different from the raw materials from which it is made and the use of which would be different from the use of the raw materials used in producing it. Even if the limited construction of the word 'manufacture' were to be adopted, i.e., transformation and conversion of the materials into a different commodity the rawmaterials losing their identity, the article produced would still be a totally different article from the materials, namely, paper and ink, which are consumed in making it. The paper and ink which are used in the process of making pamphlets, balance sheets or the book, by themselves would be of no value and cannot have apart from the contents a realisable value if sold as such materials. When they are used the only commodity which would have any commercial value would be the finished product, namely, the balance sheet or the profit and loss account, the share certificate, the pamphlet, etc.
In M.R. Gopal's case (supra), the Madras High Court while considering the meaning of the word 'manufacture' held that the process employed in converting boulders into small chips of stones with the aid of labour and machinery is a manufacturing process and the industry is an 'industrial undertaking'.
In Tata Locomotive & Engg. Co. Ltd.'s case (supra) the assessee was carrying on the business in the manufacture of locomotives and other engineering products. Question arose whether assembling of imported parts into a finished chassis amounted to the manufacture or production of an article within the meaning of Section I5C of the Indian Income-tax Act, 1922. The Bombay High Court held that it amounted to manufacture or production of an article. It was observed as under : Thus looked at from any point of view and whether one takes into account the wider or narrower meaning of the word 'manufacture', it is clear that assembling of automotive bus/truck chassis from imported parts in a knocked down condition would give rise to an article which is totally different from the parts. This so even though the component parts from which the automotive chassis is made, retain their individual identity in the whole article which is thus manufactured or produced. . . .
. . .Beyond doubt, therefore, it must be held that the assembling of those parts into the finished product which is an automobile, amounts to the manufacture or production of the automobile.
In CIT v. Pressure Piling Co. (India) (P.) Ltd.  126 ITR 333 (Bom.) the assessee is a private limited company doing the business of laying foundations of buildings by a specialised patented method known as 'pressure piling'. The question arose whether the product which results from the pessure piling can be classified as an article and whether this article can be said to have been manufactured or produced by the assessee-company. The Bombay High Court held that the assessee was engaged in the 'manufacture or production' of articles within the meaning of section 84(2)(iii}. It was observed as under : . . .The essence of the manufacturing process is the conversion of raw material into an entirely new commodity or a new thing. There can be no doubt in the instant case that by subjecting the concrete mixture which may consist of several articles to certain process along with iron bars, something new is brought into being. . .
It is difficult, therefore, to see how the product which ultimately results from the piling process cannot be said to be an independent article. It is also not necessary that all articles must necessarily have the quality on the possibility of being sold and purchased across the counter or it must necessarily be transportable to another site before it can be classified as an article. A particular manufacturer specialising in the production of a particular product may, by way of a special facility to certain customers, undertake to produce and supply it at the site itself, and, therefore, the site where the manufacturing process is carried on would be immaterial or irrelevant for the purpose of determining whether the product of the manufacturing process can be described as an article.
In our view, since the end-product of the piling process is something which has an independent existence and is an independent entity and is normally described as a pile, it is an article for the purpose of Section 84(2)(iii) of the Act. It is brought into being by a special process of production. ...
In that case, it was also observed that it is not necessary that all articles must necessarily have the quality or possibility of being sold and purchased across the counter.
16. The ratio laid down in the above cases squarely apply to the instant case. When the chemist dispenses prescriptions and sells the mixtures to his customers, he produces a separate article which was different, though that article was composed of several drugs in North Bengal Stores Ltd.'s case (supra). When a piece of cloth is manufactured, it will become a distinct article having distinct use as distinguished from cotton, yarn or silk substances in Hiralal Jitmas case (supra). When a printer prints books or journals or pamphlets or balance sheets, the raw materials are paper and ink with which he either by hand or with the aid of machinery produces a distinct article. The article produced would be totally a different article from the materials, viz., paper and ink which are consumed in making it in Ajay Printery (P.) Ltd.'s case (supra). In similar manner when a raw film is exposed and processed, the resulting photograph is a production of a new article or thing. It is quite different from the original raw film. This X-ray photograph produced cannot be used again as a raw film. It is useful only for the patients and the radiologist to diagnose the case of his patients. By producing X-ray photograph, the assessee satisfied the condition that there is production of any article or thing. In Board's Circular No. 24 [F. No, 6/22/1968 IT AI)], dated 23-7-1969, the Board has clarified that a cinema film suitable for exhibition is entirely different from the raw unexposed film. In our view, the above should be equally applicable to X-ray photograph even as it is entirely different from the raw film.
17. The learned departmental representative relied on the decision of the Supreme Court in the case of Union of India v. Delhi Cloth & General Mills Co. Ltd. AIR 1963 SC 791. The Supreme Court observed as under : . . . The word 'manufacture' used as a verb is generally understood to mean as 'bringing into existence a new substance,' and does not mean merely 'to produce some change in a substance' however miner in consequence the change may be. This distinction is well brought about in a passage thus quoted in Permanent Edition of Words and Phrases, Vol. 26, from an American Judgment. The passage runs thus : "Manufacture" implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation ; a new and different article must emerge having a distinctive name, character or use.'South Bihar Sugar Mills Ltd. v. Union of India AIR 1968 SC 922. We do not think that the above passage is in any way against the assessee. It was pointed out there that there must be transformation and a new and different article must emerge having a distinctive name, character or use. In the instant case, when the raw film is exposed and X-ray photograph is produced, it is a different and distinctive article from the raw film. There is transformation and the new article produced has a separate character or use as it is useful only to the person whose X-ray photograph is taken and to the radiologist to diagnose his patients' case. This X-ray photograph produced is entirely different from the raw film and a new and different article has been produced.
Further, in the above decision, the meaning of the word 'production' did not come up for consideration. This is a case of production of new article, i.e., X-ray photograph by exposing raw film and the X-ray photograph is a different article from raw film.
18. On a consideration of the entire facts of the case, we hold that the assessee carried on the business in setting up the X-ray unit as it is a commercial activity different from the professional activity. The machinery or plant has been installed in a small-scale industrial undertaking. When a raw film is exposed, the resulting X-ray photograph is produced which is a new article or thing different from the raw film. Thus, the assessee satisfied all the conditions laid down in section 32A. The assessee is entitled for the investment allowance. We agree with the order dated 18-3-1982 of the Nagpur Bench of the Tribunal in Fourth JTO v. Dr. E.U. Mane  1 ITD 648. In our view, the AAC was justified in directing the ITO to allow investment allowance claimed by the assessee under section 32A.