Dr. Harinder Mittra, Phagwara V. The Assistant Commissioner of Income Tax, Phagwara

ITA 147/ASR/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0634 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-05-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 10-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMALENDU NATH MISHRA
• Assessee Lawyers: SH Y K SUD
• Keywords: Unexplained expenditure; Depreciation; Principle of natural justice; Rule of consistency; Application of stay; Difference of opinion; Change of opinion
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.147(ASR)/2016 ASSESSMENT YEAR:2012-13 PAN: AAZPM7153P DR. HARINDER MITTRA VS. ASSTT. COMMR. OF INCOME TA X, C/O MITTRA EYE HOSPITAL, CIRCLE PHAGWARA. NEW PATEL NAGAR. PHAGWARA. PHAGWARA. (APPELLANT) (RESPONDENT) S.A. NO.04(ASR)/2016 (ARISING OUT OF ITA NO.147(ASR)/2016) ASSESSMENT YEAR:2012-13 PAN: AAZPM7153P DR. HARINDER MITTRA VS. ASSTT. COMMR. OF INCOME TA X, C/O MITTRA EYE HOSPITAL, CIRCLE PHAGWARA. NEW PATEL NAGAR. PHAGWARA. PHAGWARA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.SH. Y.K. SUD, CA RESPONDENT BY: SH.AMALENDU NATH MISHRA, DR DATE OF HEARING: 12/05/2016 DATE OF PRONOUNCEMENT: 15/06/2016 ORDER PER A.D. JAIN, JM: THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2012-13, AGAINST THE ORDER DATED 23.02.2016, PASSED BY THE L D. CIT(A), JALANDHAR. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 2 1. THAT THE CIT(A) WAS NOT JUSTIFIED IN SUSTAININ G THE DISALLOWANCE OF RS. 67,52,250/- MADE BY THE AO OUT OF DEPRECIATION OF RS. 90,00,000/- CLAIMED BY THE ASSE SSEE ON SURGICAL LASER PURCHASED BY THE ASSESSEE. BOTH THE CIT(A) AND AO WHILE MAKING/SUSTAINING THIS DISALLOWANCE RE LIED UPON A VERY NARROW DEFINITION OF COMPUTERS AND THER EBY REDUCING THE RATE OF DEPRECIATION FROM 60 TO 15%. 2. THAT WITHOUT PREJUDICE TO THE GROUND NO. 1, BOTH THE AO AND THE CIT(A) FAILED TO APPRECIATION THAT AS PER PRESC RIBED RATES OF DEPRECIATION THE RATE PRESCRIBED IS 40% ON SURGI CAL LASERS AND NOT 15% ADOPTED BY AO ON GENERAL PLANT & MACHIN ERY. 3. THAT THE CIT(A) WHILE SUSTAINING THIS DISALLOWANCE NOT ONLY IGNORED THE WRITTEN SUBMISSIONS OF THE ASSESSEE BUT ALSO EXCEEDED HIS JURISDICTION BY SUSTAINING THE FINDING OF THE AO THAT SURGICAL LASER USED FOR EYE SURGERY IS NOT LIF E SAVING DEVICE, THEREFORE DEPRECIATION @ 40% IS NOT ALLOWAB LE. 4. THAT THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ACTION OF THE AO IN RELYING UPON THE STATEMENT OF ONE MR. SAN JAY BABBAR WITHOUT CONFRONTING THE SAME TO THE ASSESSEE . THIS ACTION OF THE CIT(A) AND AO IS AGAINST THE NATURAL JUSTICE. 5. THAT THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF RS. 20,50,539/- MADE BY THE AO OUT OF DEPRECIATION OF RS.32,80,862/- CLAIMED BY THE ASSES SEE ON TWO SURGICAL LASERS PURCHASE IN HIS EARLIER YEARS A ND DEPRECIATION ALLOWED @ 40% BY THE AO IN THOSE YEARS . THE CIT(A)WRONGLY UPHELD THE FINDING OF THE AO THAT DEP RECIATION SHOULD HAVE BEEN ALLOWED @ 15% AGAINST 40% CLAIMED BY THE ASSESSEE AND THEREBY UNSETTLED THE PREVIOUS HISTORY OF THE CASE. 6. THAT THE CIT(A) HAS WRONGLY SUSTAINED THE DISALL OWANCE OF RS. 41,16,236/- OUT OF DEPRECIATION OF RS. 5,54,981 /- CLAIMED BY THE ASSESSEE ON COMPUTERS PURCHASED IN E ARLIER YEARS. THE REDUCTION OF DEPRECIATION FROM 60% TO 15 % CLEARLY AMOUNTED TO CHANGE OF OPINION AND IS AGAINST THE FA CTS OF THE CASE AND LEGAL PROVISIONS. 7. THAT THE CIT(A) HAS WRONGLY SUSTAINED THE ADDITION OF RS. 1,00,000/- MADE BY THE AO U/S 69C ON CLEAR PRESUMPT IONS AND ASSUMPTIONS. ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 3 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOCTOR BY PROFESSION, AN EYE SPECIALIST AND RUNNING HIS OWN H OSPITAL IN THE NAME OF MITRA EYE HOSPITAL AT PHAGWARA. THE AO, WHILE FI NALIZING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2012-13, UNDER S ECTION 143(3) OF THE INCOME TAX ACT, 1961 MADE ADDITIONS ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS.67,52,250/- ON THE NE W COMPUTERIZED LASER MACHINE PURCHASED AND INSTALLED BY THE ASSES SEE DURING THE YEAR. FURTHER, THE AO MADE AN ADDITION OF RS.20,50,539/- BY REDUCING THE RATE OF DEPRECIATION FROM 40%, AS CLAIMED BY THE AS SESSEE IN EARLIER YEARS, TO 15% AND ALSO A DISALLOWANCE OF RS.4,16,23 6/-, AGAIN OUT OF DEPRECIATION BY REDUCING THE RATE FROM 60% TO 15%, AS CLAIMED IN THE EARLIER YEARS. THE ADDITION OF RS.1 LAC WAS ALSO MA DE ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. 3. APROPOS GROUND NOS. 1 TO 4, THE FACTS ARE THAT T HE ASSESSEE PURCHASED A LASER, NAMELY, IL SE FS COMPUTER SYSTEM -2IEX CAP, 220V DURING THE YEAR FROM M/S. ABBOTT MEDICAL OPTIC S (P) LTD., VIDE INVOICE NO. P-18042011-1 DATED 18.04.2011 FOR RS.1. 50 CRORES. THE ASSESSEE CLAIMED DEPRECIATION @ 60% ON THIS MACHINE , ON THE BASIS THAT THIS ENTIRE MACHINE IS BASICALLY A COMPUTER SYSTEM WHICH IS USED TO CARRY OUT EYE SURGERY. 4. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT THE M ACHINE WAS IMMEDIATELY PUT TO USE AFTER ITS PURCHASE; THAT IT WAS A FULL-FLEDGED ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 4 COMPUTERIZED SYSTEM TO UNDERTAKE INITIAL PROCESSING BEFORE SURGERY; THAT IT WAS A COMPUTER SYSTEM USED IN ASSOCIATION WITH LASIK LASER MACHINE AND OTHER SURGERIES; THAT THIS COMPUTER SYSTEM HEL PS IN GETTING BETTER RESULTS OF LASER AND SURGERY; THAT IN FACT, IT IS A FULL-FLEDGED COMPUTERIZED SYSTEM TO UNDERTAKE PROCESSING BEFORE SURGERY; THAT THE PROCESS OF THIS COMPUTER SYSTEM CAN BE EXPLAINED BY TAKING THE EXAMPLE OF LASER SURGERY; THAT IN LASER, INITIALLY, THE FUL L MEASUREMENT OF THE EYE IS TO BE DIVIDED INTO PARTS; THAT IF THE TOP 20% PORTI ON IS TO BE KEPT INTACT, THEN, USING THE LASER MACHINE, THIS 20% PORTION IS PEELED OFF; THAT THIS IS CALLED MAKING OF FLAP; THAT THEN, LASER TREATMENT IS UNDERTAKEN ON THE BALANCE 80% PORTION OF THE EYE; THAT THE COMPUTER S YSTEM OF THE ASSESSEE IS USED TO MEASURE THE PRECISE 20% PORTION OF THE E YE; THAT IT UNDERTAKES ONLY THE MEASUREMENT PART AND REST EVERYTHING IS DO NE BY THE LASER MACHINE; THAT THE TERM COMPUTER IS NOT DEFINED IN THE ACT; THAT AS PER THE MERRIAM WEBSTER ONLINE DICTIONARY, COMPUTER M EANS ONE THAT COMPUTES; THAT AS PER WIKIPEDIA, A COMPUTER IS A GE NERAL PURPOSE DEVICE THAT CAN BE PROGRAMMED TO CARRY OUT A SET OF ARITHM ETIC OR LOGICAL OPERATIONS AUTOMATICALLY; THAT SINCE A SEQUENCE OF OPERATIONS CAN BE READILY CHANGED, THE COMPUTER CAN SOLVE MORE THAN O NE KIND OF PROBLEMS; THAT CONVENTIONALLY, A COMPUTER CONSISTS OF AT LEAST ONE PROCESSING ELEMENT, TYPICALLY A CENTRAL PROCESSING UNIT (CPU) AND SOME FORM OF MEMORY; THAT COMPUTERS CAN BE OF VARIOUS TY PES, LIKE WEATHER FORECASTING COMPUTERS, DEFENSE APPLICATION COMPUTE RS, ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 5 SPACE/ASTRONAUTS USABLE COMPUTERS, AS WELL AS MEDIC AL USE COMPUTERS ETC.; THAT ALL THESE FEATURES ARE THERE IN THE MAC HINE OF THE ASSESSEE; THAT THIS MACHINE MEASURES THE EXACT THICKNESS OF T HE FLAP, I.E., IT COMPUTES, OR IT PERFORMS ARITHMETIC OR LOGICAL OPER ATION; THAT IT HAS ITS OWN INTERNAL MEMORY AS WELL AS DVD DRIVE, FLOPPY DR IVE, ETC., FOR EXTERNAL MEMORY; THAT FURTHER, COMPUTATION IS THE I NTEGRAL PART OF THIS MACHINE; THAT USE OF THIS MACHINE IS IN CALCULATION OF EXACT THICKNESS IN TERMS OF PERCENTAGE OF THE TOTAL EYE; THAT THE FLAP IS LIFTED MANUALLY BY SOME OTHER MACHINERY; THAT THEN, SURGICAL OPERATION IS CONDUCTED USING LASER; THAT AS SUCH, IT IS A COMPUTER SYSTEM AND D EPRECIATION @ 60% HAD RIGHTLY BEEN CLAIMED THEREON. 5. HOWEVER, THE AFORESAID SUBMISSIONS OF THE ASSESS EE WERE REJECTED BY THE AO, OBSERVING, INTER-ALIA, IN PARA 5.1.18 OF THE ASSESSMENT ORDER, THAT THE BROCHURE / LITERATURE RELEVANT TO THE MACH INE OF THE ASSESSEE, AS PROVIDED BY THE SUPPLIER, I.E., M/S. ABBOTT MEDICA L OPTICS PVT. LTD., (AMO, FOR SHORT), CLEARLY ESTABLISHES CERTAIN C RUCIAL FACTS, I.E., THE INTRALASE FS AND IFS LASER SYSTEM OF OPHTHALMIC SUR GICAL LASERS INDICATED FOR USE IN PATIENTS UNDERGOING SURGERY O R TREATMENT REQUIRING THE INITIAL LAMELLAR RESECTION OF THE CORNEA; THAT THE U.S. FEDERAL LAW RESTRICTS THIS DEVICE TO SALE, DISTRIBUTION AND USE BY, OR ON THE ORDER OF, A PHYSICIAN OR OTHER LICENSED EYE-CARE PRACTITIONER; THAT THE SPECIAL FEATURES OF THE MACHINE ARE LIKE GREATER BIOMECHANI CAL STABILITY, SMOOTHER STROMAL BEDS, FASTER VISHAL RECOVERY, ENHA NCED SAFETY WITH ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 6 UNPARALLEL UNIFORMITY AND PRECISION; THAT THE ILA SIK SOLUTION, AVAILABLE EXCLUSIVELY FROM AMO, IS THE COMBINATION OF INTRALA SE AND ADVANCED CUSTOVUE TECHNOLOGIES; THAT THE LASER ASSISTED IN-S ITU KERATOMILEUSIS (LASIK) CAN ONLY BE PERFORMED BY A TRAINED OPHTHALM OLOGIST AND FOR SPECIFIED REDUCTION OR ELIMINATION OF MYOPIA, HYPER METROPIA, AND ASTIGMATISM, AS INDICATED WITHIN THE PRODUCT LABELI NG. 6. THE AO OBSERVED THAT THE ABOVE FACTS WERE CONTR ARY TO THE ASSESSEES CLAIM THAT HE HAD PURCHASED A COMPUTER S YSTEM; THAT THE COPY OF THE PURCHASE BILL OF THE MACHINE, AS PRODUC ED BY THE ASSESSEE, DESCRIBED THE MACHINE AS ILSE-COMPUTER SYSTEM2,IE K CAP, 220V; THAT THIS DESCRIPTION OF THE MACHINERY WAS CONTRARY TO THE ASSESSEES CLAIM; THAT SH. SANJAY BABBAR, SENIOR EXECUTIVE O F ABBOTT MEDICAL OPTICS PVT. LTD. INFORMED THAT THE ABBOTT GROUP I S NOT IN THE MANUFACTURING OF COMPUTERS; THAT FOR DETERMINING CL ASSIFICATION AS WELL AS THE RATE OF DEPRECIATION ALLOWABLE, THE TEST IS THE FUNCTIONAL TEST; THAT THESE DAYS, DEVICES ARE INVARIABLY CONTROLLED BY IN TEGRATED CIRCUITS (IC)/MICROPROCESSORS; THAT THE MERE FACT THAT THES E ARE PRESENT IN VARIOUS DEVICES WILL NOT CONVERT THE DEVICE INTO A COMPUTER; THAT FOR INSTANCE, A CAR ENGINE IS CONTROLLED BY MICRO- PROC ESSORS BUT A CAR CANNOT BE TREATED AS COMPUTER; THAT A VEHICLE WILL RETAIN ITS CHARACTER AS A VEHICLE BECAUSE OF THE FUNCTIONAL TEST, I.E., TH E FUNCTION IT PERFORMS; THAT A MACHINE WHICH HAS MICROPROCESSORS IN IT AND IS USED BY DOCTORS TO ASSIST IN SURGERY, WILL RETAIN ITS CHARACTER AS A MEDICAL MACHINE AND IT ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 7 CANNOT BE DESCRIBED AS A COMPUTER; THAT THE DEPREC IATION CHART CONTAINED IN APPENDIX-1 ALSO SUPPORTS THESE OBSERV ATIONS; THAT UNDER THE HEAD LIFE SAVINGS MEDICAL EQUIPMENTS, THE RAT E OF DEPRECIATION OF VARIOUS MEDICAL EQUIPMENTS IS PROVIDED; THAT THE LI ST ALSO INCLUDES MRI SYSTEM WHICH, AGAIN, IS A MACHINE WHERE THE MAGNET IC RESONANCE IS CONVERTED INTO VISIBLE IMAGES IN 3D, USING MICROPRO CESSORS IN THE MACHINE; THAT IF THESE ITEMS WERE TO BE TREATED AS A COMPUTER, A SEPARATE RATE WOULD NOT HAVE BEEN PROVIDED IN THE D EPRECIATION SCHEDULE; THAT BY APPLYING THE FUNCTIONAL TEST TO THE MACHIN E OF THE ASSESSEE, IT WAS HELD TO BE A MEDICAL MACHINE AND NOT A COMPUTE R SYSTEM, AS CLAIMED BY THE ASSESSEE; AND THAT AS EVIDENT FROM T HE LITERATURE OF THE MACHINERY, THE MACHINE IS AN OPHTHALMIC SURGICAL LA SER, INDICATED FOR USE IN PATIENTS UNDERGOING SURGERY OR TREATMENT RE QUIRING THE INITIAL LAMELLAR RESECTION OF THE CORNEA. 7. IT WAS IN THIS MANNER THAT THE CLAIM OF THE ASSE SSEE FOR DEPRECIATION @ 60% WAS NEGATED BY THE AO. 8. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) AFFIRMED THE AFORESAID ACTION OF THE ASSESSING OFFICER. IT WAS O BSERVED IN PARAS 5.4 & 5.5 OF THE ORDER, THAT THE LD. CIT(A) WAS ALSO OF T HE OPINION, LIKE THE AO, THAT THE PLANT AND MACHINERY ON WHICH DEPRECIATION HAD BEEN CLAIMED BY THE ASSESSEE @ 60%, COULD NEITHER BE TREATED AS A C OMPUTER, NOR AS A LIFE SAVING MACHINE; THAT THE MACHINE OF THE ASSESSEE CO ULD NOT CURE ANY LIFE ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 8 THREAT TO ANY PATIENT AND IT CAN ONLY BE TERMED AS A MEDICAL EQUIPMENT FOR TREATMENT OF SOME EYE DISEASES; THAT THE AO HAD BROUGHT SUFFICIENT MATERIAL ON RECORD TO SUPPORT HIS POINT OF VIEW; TH AT THIS MATERIAL HAD BEEN COLLECTED FROM THE COMPANY FROM WHICH THE PLAN T AND MACHINERY HAD BEEN PURCHASED BY THE ASSESSEE, IN ORDER TO KN OW THE VARIOUS FUNCTIONS PERFORMED BY THE MACHINE, AS THE ASSESSE E HAD NOT SUPPLIED THIS INFORMATION AS AND WHEN ASKED FOR DURING THE C OURSE OF ASSESSMENT PROCEEDINGS; THAT THE AO HAD DULY CONFRONTED THE M ATERIAL IN HIS POSSESSION TO THE ASSESSEE BEFORE COMING TO HIS CON CLUSION; THAT THE ASSESSEE HAD NEVER ASKED FOR CROSS-EXAMINATION OF T HE OFFICIAL OF THE COMPANY FROM WHICH THE MACHINE HAD BEEN PURCHASED; THAT THE PLEA NOW BEING TAKEN, I.E., BEFORE THE LD. CIT(A), WAS J UST AN AFTERTHOUGHT; THAT MOREOVER, IT WOULD NOT SOLVE ANY PROBLEM AS IT HAD BEEN PROVED ON RECORD THAT THE PLANT AND MACHINERY PURCHASED BY TH E ASSESSEE IS NEITHER A COMPUTER SYSTEM, NOR A LIFE SAVING EQUIPM ENT, BUT ONLY A MEDICAL EQUIPMENT FOR TREATMENT OF EYE PATIENTS; T HAT IF THE DEFINITION PROVIDED BY THE ASSESSEE WERE ACCEPTED, THEN EVERY MEDICAL EQUIPMENT/MACHINE, SUCH AS MRI MACHINES, C.T. SCAN, ULTRASOUND OR OTHERWISE, ARE TO BE TREATED AS A COMPUTER SYSTEM O R LIFE SAVING EQUIPMENT; THAT THUS, THE DEFINITION BEING PROVIDE D BY THE ASSESSEE TO COMPUTER SYSTEM, OR LIFE SAVING EQUIPMENT IS VA GUE AND CANNOT BE ACCEPTED; THAT THE ARGUMENTS PUT FORTH BY THE ASSES SEE DURING THE APPELLATE PROCEEDINGS WERE, MORE OR LESS, THE SAME AS THOSE ADVANCED ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 9 DURING THE ASSESSMENT PROCEEDINGS; THAT EACH AND EV ERY ARGUMENT TAKEN BY THE ASSESSEE WAS STATED TO HAVE BEEN REBUTTED DU RING THE ASSESSMENT PROCEEDINGS; THAT THE JUDICIAL PRONOUNCEMENTS RELI ED ON BY THE ASSESSEE HAD ALTOGETHER DIFFERENT FACTS AND WERE NOT APPLICA BLE; AND THAT AS SUCH, NO INTERFERENCE WAS CALLED FOR WITH THE ACTION OF THE AO IN DISALLOWING EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE. 9. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED THE STAND TAKEN BEFORE THE TAXING AUTHORITIES, WHEREAS THE LD . DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 10. IN THIS REGARD, IT IS SEEN THAT IT IS THE SELF- ADMITTED CASE OF THE ASSESSEE THAT IN THE EARLIER ASSESSMENT YEARS, I.E. , A.YS. 2005-06 TO 2009-10, THE DEPRECIATION WAS ALLOWED TO THE ASSES SEE @ 40% UNDER SUB CLAUSE (J) OF CLAUSE (EA) OF ITEM NO.3 OF HEAD III, I.E., MACHINERY AND PLANT, AS CONTAINED IN THE TABLE OF RATES AT WHICH DEPREC IATION IS ADMISSIBLE UNDER RULE 5 OF THE I.T. RULES, SUCH TABLE BEING C ONTAINED IN APPENDIX-I TO THE I.T. RULES. THIS IS ALSO WHAT HAS BEEN STATE D BY THE ASSESSEE IN HIS WRITTEN SUBMISSIONS FILED BEFORE THE LD. CIT(A), I. E., WRITTEN SUBMISSIONS DATED 24.08.2015 (APB 1 TO 8), WRITTEN SUBMISSIONS DATED 7.9.2015 (APB 9) AND REJOINDER TO THE COMMENTS OF THE AO ON THE W RITTEN SUBMISSION OF THE ASSESSEE, WHICH WERE FORWARDED BY THE LD. CIT(A ) TO THE AP (APB 17- 19). 11. THE FACTS FOR THE YEAR UNDER CONSIDERATION HAVE NOT BEEN SHOWN TO HAVE UNDERGONE ANY CHANGE FROM THOSE PRESENT IN THE EARLIER YEAR, I.E., ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 10 ASSESSMENT YEARS, 2005-06 TO 2007-08 AND THE SUBSEQ UENT YEARS, I.E., ASSESSMENT YEAR 2009-10. 12. THEREFORE, FOR THE YEAR UNDER CONSIDERATION ALS O, DEPRECIATION @ 40% ON THE SURGICAL LASER IS ALLOWED TO THE ASSESSE E. 13. THIS TAKES CARE OF GROUND NOS. 1 TO 4. 14. SO FAR AS REGARDS GROUND NO.5, THE AO MADE A DI SALLOWANCE OF RS.20,50,539/- OUT OF DEPRECIATION OF RS.32,80,862/ - CLAIMED BY THE ASSESSEE ON TWO SURGICAL LASERS PURCHASED BY THE AS SESSEE IN THE EARLIER YEARS. HERE ALSO, DEPRECIATION WAS ALLOWED @ 15%, A S AGAINST THAT OF 40% ALLOWED IN THE EARLIER YEARS. 15. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER. 16. OUR ABOVE FINDINGS WITH REGARD TO GROUND NOS. 1 TO 4 ARE SQUARELY APPLICABLE TO THIS ISSUE ALSO AND IN ACCORDANCE THE REWITH, ON THESE TWO SURGICAL LASERS ALSO, DEPRECIATION @ 40% IS ALLOWED TO THE ASSESSEE. 17. GROUND NO. 5 IS, THUS, ACCEPTED. 18. COMING TO GROUND NO.6, THE AO MADE DISALLOWANCE OF RS.4,16,236/- OUT OF DEPRECIATION OF RS.5,54,981/- CLAIMED BY THE ASSESSEE ON COMPUTERS PURCHASED IN EARLIER YEARS. THE AO APPLIED A RATE OF 15%. 19. THE LD. CIT(A) UPHELD THE ACTION OF THE AO APPL YING A RATE OF 15%. 20. THE ASSESSEE HAD CLAIMED DEPRECIATION AMOUNTING TO RS.5,54,981/- @ 60% ON THE WRITTEN DOWN VALUE (BROU GHT FORWARD ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 11 BALANCE) AS ON 01.04.2011, RS. 9,24,969/- ON ACCOU NT OF RT-VUE-100- 3D. ON QUERY BY THE AO, THE ASSESSEE SUBMITTED T HAT THE MACHINE RT VUE-100 3D WAS IMPORTED IN F.Y. 2010-11 FOR RS.23, 12,423/- AND WAS PUT TO USE AROUND THE SECOND WEEK OF AUGUST, 2010; THAT THIS IS A COMPUTER, AS MENTIONED IN THE PURCHASE BILL OF THE MACHINE; THAT IT CONSISTS OF HARDWARE AND SOFTWARE; THAT THE HARDWAR E INCLUDES COMPUTER UNIT AND MONITOR AND THE SOFTWARE INCLUDES WINDOWS AND PROPRIETARY SOFTWARES; THAT THE RATE OF DEPRECIATION SPECIFIED THEREON IS 60%; AND THAT THE MACHINE IS A COMPUTER SYSTEM WITH MONITOR, KEY BOARD, CPU, MOUSE, ETC.; THAT IT IS A SPECIFIC MEDICAL USE COMP UTER WITH SPECIFIC SOFTWARE INSTALLED IN IT; THAT IT IS AN INDEPENDENT SYSTEM USED TO MEASURE THE THICKNESS OF THE CORNEA AND OTHER PARTS OF THE EYE; THAT IT MEASURES THE FILTRATION ANGLE IN GLAUCOMA; AND THAT IT MEASU RES THE RATINAL NERVE FIBRE THICKNESS IN GLAUCOMA. 21. THE AO REJECTED THE ASSESSEES AFORESAID STAND, OBSERVING, INTER- ALIA, THAT A MACHINE WHICH HAS A MICRO PROCESSOR IN IT AND IS USED BY A DOCTOR TO ASSIST IN LASIK LASER AND SURGERY, WILL R ETAIN ITS CHARACTER AS A MEDICAL MACHINE AND IT CANNOT BE DESCRIBED AS A COM PUTER. 22. THE ASSESSEE MAINTAINS THAT IN THE EARLIER YEAR S,S DEPRECIATION @ 60% HAS BEEN ALLOWED ON THIS PARTICULAR BLOCK OF AS SETS, AS A COMPUTER. THIS IS ALSO WHAT HAS BEEN STATED BY THE ASSESSEE I N HIS WRITTEN ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 12 SUBMISSIONS DATED 24.08.2015 (SUPRA) BEFORE THE LD. CIT(A) (APB-4, GROUND NO. 6): GROUND NO.6: THE WRITTEN SUBMISSIONS STATED ABOVE IN GROUND NO.5 MAY ALSO BE CONSIDERED FOR GROUND NO.6 BECAUSE IN THIS PARTICULAR BLOCK OF ASSETS DEPRECIATION @ 60% HAD BEEN ALLOWED IN THE EARLIER YEARS, THEREFORE, THE DEPRECIATION ON THIS BLOCK OF ASSETS COULD NOT HAVE BEEN REDUCED FROM 60% TO 15%. 23. THIS HAS NOT BEEN DISPUTED BEFORE US. ACCORDING LY, THIS CONTENTIOIN IS ACCEPTED AND DEPRECIATION @ 60% IS ALLOWED TO T HE ASSESSEE ON THE PRINCIPLE OF CONSISTENCY, SUBJECT TO VERIFICATION B Y THE AO WITH REGARD TO THE ASSESSEES CLAIM OF HAVING BEEN GRANTED DEPRECI ATION @ 60% ON THIS BLOCK OF ASSETS IN THE EARLIER YEARS. 24. SO FAR AS REGARDS GROUND NO.7, THE ASSESSEE, DU RING THE ASSESSMENT PROCEEDINGS, STATED THAT IN THE FINANCIA L YEAR 2011-12, RELEVANT TO THE YEAR UNDER CONSIDERATION, HIS ELDER SON, AKSHAY MITTRA HAD BEEN A STUDENT OF M.B.B.S. AT ADESH INSTITUTE O F MEDICAL SCIENCES, BATHINDA; THAT A TOTAL ANNUAL FEE OF RS.3,00,000/- WAS REMITTED ON 07.04.2011, THROUGH HIS SAVINGS BANK ACCOUNT; THAT SINCE HE WAS STAYING AT THE HOUSE OF A FAMILY FRIEND, NAMELY, DR. RAJ K UMAR GARGA AT BATHINDA, NO ADDITIONAL EXPENSES TOWARDS EDUCATION OF AKSHAY MITTRA WERE INCURRED BY THE ASSESSEE. A CONFIRMATORY LETTE R IN THIS REGARD FROM DR. RAJ KUMAR GARGA WAS FILED. 25. THE AO, HOWEVER, MADE THE ADDITION OF RS.1,00, 000/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE, OBSERVING AS FOLLOWS I N PARA 5.3.2 OF THE ASSESSMENT ORDER: ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 13 5.3.2. CONTENTIONS PUTFORTH BY THE ASSESSEE HAVE B EEN CONSIDERED. WITHOUT DOUBTING THE AUTHENTICITY OF ASSESSEES ABO VE CLAIMS, ELEMENT OF EXPENDITURE ON (A) BOOKS/STUDY MATERIAL, (B) POCKET EXPENSES, (C) CLOTHINGS AND (D) MISCELLANEOUS EXPEN SES OF A M.B.B.S. STUDENT IS NOT RULED OUT AND SAME IS ESTIMATED AT RS.1,00,000/- FOR WHICH ASSESSEE COULD NOT PROVE TH E SOURCE. ADDITION OF RS.1,00,000/-, ON ACCOUNT OF ASSESSEES UNEXPLAINED EXPENDITURE VIS--VIS MBBS STUDY OF HIS ELDER SON, U/S 69C. 26. THE LD. CIT(A), CONFIRMING THE ADDITION, HELD A S FOLLOWS: 9.4. I HAVE CONSIDERED THE OBSERVATIONS OF THE ASS ESSING OFFICER AS MADE BY HIM IN THE ASSESSMENT ORDER AS WELL AS REM AND REPORT. I HAVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE VIDE LETTER DATED 24.08.2015 AS WELL AS HIS COUNTER COMMENTS ON THE REPORT OF THE A.O. ON THE ISSUE UNDER REFERENCE. I HAVE FURTHER CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE AS WELL AS THE A.O. I HAVE AGAIN CONSIDERE D OTHER MATERIAL BROUGHT BY THE ASSESSEE ON RECORD. ON CAREFUL CONTE NTIONS, I AM ALSO OF THE OPINION THAT APART FROM BOARDING AND LODGING EXPENSES OF THE SON OF THE ASSESSEE WHO WAS PURSUING MBBS IN A PRIV ATE COLLEGE THERE MUST BE SOME OTHER EXPENSES ON CLOTHES, BOOKS , TRANSPORTATION AND OTHER DAY TO DAY NEEDS. IT IS NOT THE CASE OF T HE ASSESSEE THAT THESE EXPENSES HAVE ALSO BEEN INCURRED BY THE FR IEND OF THE ASSESSEE WITH WHOM HIS SON WAS STAYING. IT IS ALSO NOT THE CASE OF THE ASSESSEE THAT HIS SON HAS NOT INCURRED ANY EXPE NSES ON TRANSPORTATION, CLOTHS, BOOKS AND OTHER DAY TO DAY NEEDS. UNDER SUCH CIRCUMSTANCES, THE ACTION OF THE A.O. IN MAKI NG ADDITION ON ACCOUNT OF UNEXPLAINED EXPENSES OF THE SON OF THE A SSESSEE BY INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT C ANNOT BE SAID TO BE UNJUSTIFIED. I AM ALSO OF THE OPINION THAT THE JUDI CIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE HAVE DISTINGUISHABLE FA CTS FROM THE FACTS OF THE CASE OF THE ASSESSEE AND HAVE NO APPL ICATION IN THE CASE OF THE ASSESSEE. 9.5. IN VIEW OF THE ABOVE STATED FACTS AND IN THE C IRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE AO IS FULLY JUSTIFIED IN MAKING ADDITION ON ACCOUNT OF UNEXPLAINED EXPENSES OF THE SON OF THE ASSESSEE BY INVOKING PROVISIONS OF SECTION 69C OF T HE ACT. THE ADDITION OF RS.1,00,000/- MADE BY THE AO IN THIS CA SE ON ACCOUNT OF UNEXPLAINED EXPENSES OF THE SON OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT IS UPHELD. IN THE RESULT, THE GROUND NO.8 OF APPEAL TAKEN BY THE ASSESSEE IS DISM ISSED. ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 14 27. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT SECTION 69C OF THE ACT PROVIDES THAT WHERE IN ANY FINANCIAL YEAR A N ASSESSEE HAD INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANAT ION ABOUT THE SOURCE OF SUCH EXPENDITURE, OR THE EXPLANATION, IF ANY, OF FERED BY HIM IS NOT, IN THE OPINION OF THE AO, SATISFACTORY, THE AMOUNT CO VERED BY SUCH EXPENDITURE SHALL BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. IT HAS BEEN SUBMITTED THAT THE CAS E OF THE ASSESSEE HAS BEEN THAT NO SUCH EXPENDITURE, AS FOUND BY THE AUTH ORITIES BELOW, HAS BEEN INCURRED BY THE ASSESSEE. IT HAS FURTHER BEEN SUBMITTED THAT MOREOVER, THE SON OF THE ASSESSEE IS A MAJOR AND AS SUCH, NO ADDITION IS CALLED FOR IN THE HANDS OF THE ASSESSEE. RELIANCE HAS BEEN PLACED ON J.J. ENTERPRISES VS. CIT, 254 ITR 216 (SC) AND UMACHAR AN SHAW & BROS. VS. CIT, 37 ITR 271 (SC). 28. AS OPPOSED TO THIS, THE LD. DR, AGAIN, HAS REL IED ON THE IMPUGNED ORDER. 29. THE VERY CASE OF THE ASSESSEE HIMSELF IS THAT T HE SON OF THE ASSESSEE WAS AN MBBS STUDENT AT BATHINDA. IN HIS RE PLY BEFORE THE AO, THE ASSESSEE SUBMITTED THAT HIS SON WAS STAYING AT THE HOUSE OF A FAMILY FRIEND AND THAT AS SUCH, NO ADDITIONAL EXPEN SES TOWARDS HIS EDUCATION WERE INCURRED BY THE ASSESSEE. THE TOTAL ANNUAL FEE OF RS.3,00,000/- WAS STATED TO HAVE BEEN REMITTED. HO WEVER, THIS DOES NOT EXPLAIN AWAY THE OBSERVATIONS MADE BY THE LD. CIT( A). IT HAS NOT BEEN THE CASE OF THE ASSESSEE THAT THE ANNUAL FEE REMITT ED INCLUDED THE ITA NO.147(ASR)/2016 SA NO.04(ASR)/2016 A.Y. 2012-13 15 EXPENSES OF BOOKS, CLOTHES, TRANSPORTATION AND OTHE R DAY TO DAY REQUIREMENTS. THE AO HAD SPECIFICALLY ASKED THE AS SESSEE TO EXPLAIN THE BOARDING AND LODGING EXPENSES AND OTHER RELATED EX PENSES AND THE SOURCE THEREOF. THE EXPLANATION OFFERED BY THE ASSE SSEE WAS ONLY WITH REGARD TO BOARDING AND LODGING. HOWEVER, NO BASIS HAS BEEN GIVEN BY EITHER OF THE AUTHORITIES BELOW TO ARRIVE AT AN EST IMATE OF RS.1,00,000/- IN THIS REGARD. THIS ESTIMATE APPEARS TO BE FAR-FE TCHED, PARTICULARLY IN VIEW OF THE FACT THAT THE EDUCATION OF THE ASSESSEE WAS AT BATHINDA IN PUNJAB. AS SUCH, WE DEEM IT APPROPRIATE TO RESTRICT THIS ADDITION TO RS.50,000/-. 30. GROUND NO.7 IS, ACCORDINGLY, PARTLY ACCEPTED. 31. AS REGARDS THE STAY APPLICATION FILED BY THE AS SESSEE, THE SAME IS DISMISSED AS INFRUCTUOUS SINCE WE HAVE DISPOSED OF THE APPEAL ITSELF, AS ABOVE. 31. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/06/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 15/06/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:DR. HARINDER MITTRA, PHAGWARA 2. THE ACIT, PHAGWARA. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER