M/S SWARAN NURSING HOME , AMRITSAR V. DCIT, CIRCLE-V, AMRITSAR

ITA 217/ASR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5744 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-01-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 25-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 217(ASR)/2017 AS SESSMENT YEAR: 2012-13 [PAN: AAPFS 3760E] M/S. SWARAN NURSING HOME 57, JOSHI COLONY, AMRITSAR. VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-V, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SATISH BANSAL (C.A.) RESPONDENT BY: SMT. BALWINDER KAUR (D.R.) DATE OF HEARING: 31.01.2018 DATE OF PRONOUNCEMENT: 16.02.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR ('CIT(A)', FOR SHORT) DATED 28.02.2017, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) DATED 23.03.2 015 FOR ASSESSMENT YEAR (AY) 2012-13. 2. THE APPEAL RAISES A SINGLE ISSUE, I.E., THE VALI DITY OF THE DISALLOWANCE IN THE SUM OF RS. 2,45,200, EFFECTED BY THE ASSESSING OFFI CER (AO) IN ASSESSMENT, SINCE CONFIRMED BY THE LD. CIT(A). ITA NO.217 (ASR)/2017(AY 2012-13) SWARAN NURSING HOME V. CIT 2 3. THE ASSESSEES, A PARTNERSHIP FIRM RUNNING A EYE HOSPITAL BY THE NAME DALJIT SINGH EYE HOSPITAL CLAIM FOR MACHINERY REPAIR WAS FOUND DURING THE ASSESSMENT PROCEEDINGS TO INCLUDE THE FOLLOWING, WHICH WERE, I N VIEW OF THE A.O., FOR PURCHASE OF GOODS WHICH WERE INDEPENDENT MACHINES, OR PARTS OF AN INDEPENDENT MACHINE - MADE TO ENHANCE THE WORKING CAPACITY OF T HE PARENT MACHINE: 1. HAND PIECE 2 X RS. 60,000 1,20,000/- APPLE IPAD 64GB 44,666/- SMART COVER FOR IPAD 1,955/- ADAPTER AND SCREEN GUARD 2,310/- TAXES ON IPAD 2,766/- TOTAL AMOUNT OF IPAD 51,700/- 2. HARD DISK 146 GB 15,000/- 3. AC KIT 22,000/- 4. 2 HARD DISKS 36,500/- TOTAL AMOUNT 2,45,200/- THE ASSESSEE FURNISHING NO SATISFACTORY ANSWER AS T O WHY THE SAME WAS NOT TO BE CAPITALIZED, THE STATED EXPENDITURE WAS DISALLOWED FOR BEING NOT REVENUE IN NATURE, A POSTULATE OF SECTION 37(1). THE SAME WAS CONFIRME D IN APPEAL; THE ASSESSEE FAILING TO IMPROVE ITS CASE BEFORE HIM IN ANY MANN ER, EVEN AS HE, ACCEPTING THE ASSESSEES ARGUMENT IN ITS RESPECT, DIRECTED FOR AL LOWANCE OF DEPRECIATION ON THE IMPUGNED SUM, FORMING, BY THE REVENUES OWN STAND, A PART OF PLANT & MACHINERY. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE ASSESSEE BEFORE US DID NOT CONTEST THE DISALLOW ANCE QUA IPAD COSTING (INCLUDING ACCESSORIES) RS. 51,700. THOUGH WE ARE C ONSCIOUS THAT THE SAME COULD BE FOR PERSONAL PURPOSES, NO SUCH DOUBT HAS BEEN EX PRESSED BY THE REVENUE AT ANY ITA NO.217 (ASR)/2017(AY 2012-13) SWARAN NURSING HOME V. CIT 3 STAGE, ALSO ALLOWING DEPRECIATION THEREON. THE DISA LLOWANCE IN ITS RESPECT IS, ACCORDINGLY, CONFIRMED. WITH REGARD TO THE HAND PIECES, THE SAME, AS BEFOR E THE REVENUE AUTHORITIES, IS EXPLAINED TO BE A PART OF THE PHACO EMULSIFICATI ON MACHINE USED FOR SURGERY OF CATARACT. IT - CONNECTED AT THE BASE OF THE SAID MA CHINE, IS INTRODUCED INSIDE THE EYE FOR SURGERY TO WASH OUT THE CATARACT. IT, THUS, ENT ERING THE BODY OF THE PATIENT DURING SURGERY, IS STERILIZED BEFORE REUSE/PERIODICALLY. F URTHER, BEING AN ELECTRONIC PART, THE SAME GETS DAMAGED OVER TIME, REQUIRING ITS REPAIR/R EPLACEMENT. THE ASSESSEE HAS PURCHASED TWO SUCH HAND SETS DURING YEAR, AT RS. 60 ,000 APIECE; IN FACT, ALSO DEDUCTING TAX AT SOURCE THEREON (AT THE RATE OF 10% ). SIMILAR CLAIM IS CONTENDED TO OBTAIN IN ALL THE YEARS. HOW, WE WONDER, DOES THIS INCREASE THE WORKING CAPACITY OF THE EMULSIFICATION MACHINE, OF WHICH IT IS A PART, OR BE CONSTRUED AS AN INDEPENDENT MACHINE? WE FIND NO MERIT IN THE REVENU ES CASE IN THIS REGARD, SO THAT THE DISALLOWANCE QUA THE SAME IS DIRECTED FOR DELETION. NEEDLESS TO ADD , DEPRECIATION WITH REFERENCE TO SAME WOULD STAND WIT HDRAWN. THE NEXT ITEM IS HARD DISK, THREE IN NUMBER, AT TO TAL COST OF RS. 51,500. THE HARD DISK IS USED TO STORE DATA OF THE PATIENTS, WH ICH IS MAINTAINED FROM THE REGISTRATION STAGE ONWARDS, I.E., UP TO THE FINAL D IAGNOSIS AND OPERATION. IT IS THEREFORE CLEAR THAT THE FIRM, FINDING ITS EXISTING STORAGE CAPACITY AS DEFICIENT, HAS ENHANCED THE SAME. IT WAS ARGUED BEFORE US THAT THE SAME BEING NOT CONNECTED TO A PARENT MACHINE, CANNOT BE REGARDED AS AN INDEPENDEN T MACHINE. WE ARE UNABLE TO AGREE. FIRSTLY, RETRIEVAL OR ACCESSIBILITY OF DATA STORED ON A HARD DISK, I.E., WHICH IS A STORAGE DEVICE, WOULD REQUIRE IT TO BE CONNECTED TO A COMPUTER SYSTEM. THAT APART, IT SERVES AN INDEPENDENT FUNCTION OF STORAGE OF BUS INESS DATA, I.E., THE RECORD OF THE PATIENTS, OR ANY OTHER FOR THAT MATTER, FOR FUTURE REFERENCE, USE, MANIPULATION, ETC., FOR BUSINESS PURPOSES. HOW IS IT, ONE MAY ASK, DIFF ERENT FROM (SAY) AN OIL STORAGE TANK, WHICH MAY BE PERMANENTLY OR TEMPORARILY CONNE CTED WITH THE MAIN PLANT FOR ITA NO.217 (ASR)/2017(AY 2012-13) SWARAN NURSING HOME V. CIT 4 TRANSFER OF THE STORED MATERIAL. WE FIND NO SUBSTAN CE IN THE ASSESSEES CASE AND, ACCORDINGLY, CONFIRM THE DISALLOWANCE. THE LAST ITEM OF REPAIR EXPENDITURE IS IN RESPEC T OF A AC KIT, STATED TO BE A REPLACEMENT OF OLD ONE WHICH, BEING INSTALLED IN A CAR (VERNA SX), HAD GOT BURNT OUT, REQUIRING REPLACEMENT. THE REGISTRATION NUMBER OF THE VEHICLE APPEARS ON THE PURCHASE BILL ITSELF. THE REVENUE HAS NOT DOUBTED T HE GENUINENESS OF EXPENDITURE. WE, THEREFORE, FIND NO BASIS IN THE REVENUES CASE. THE DISALLOWANCE, AT NET OF DEPRECIATION, IS DIRECTED FOR DELETION. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 16, 2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 16.02.2018. /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: SWARAN NURSING HOME (2) THE RESPONDENT: DEPUTY. COMMISSIONER OF INC OME TAX, CIRCLE-V AMRITSAR. (3) THE CIT(A)-2, AMRITSAR. (4) THE PR. CIT,-II, AMRITSAR. (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER