The Assistant Commissioner of Income tax, Jalandhar V. M/s. Patel Hospital Pvt. Ltd., Jalandhar

ITA 218/ASR/2013

• Counselvise Citation: 21820914 RSA 2013
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 09-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: Y K SUD
• Keywords: Depreciation; Additional evidence; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.217 & 218(ASR)/2013 ASSESSMENT YEARS:2008-09 & 2009-10 PAN :AAACP7865K ASSTT. COMMR. OF INCOME TAX VS. M/S. PATEL HOSPITAL P. LTD. CIRCLE-III, JALANDHAR. CIVIL LINES, JALANDHAR. (APPELLANT) (RESPONDENT) C.O. NO.22(ASR)/2013 (ARISING OUT OF I.T.A. NO. 218(ASR)/2013 ASSESSMENT YEAR:2009-10 PAN :AAACP7865K M/S. PATEL HOSPITAL P.LTD; VS. ASSTT. COMMR. OF IN COME TAX CIVIL LINES, JALANDHAR. CIRCLE-III, JALANDHAR. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH.TARSEM LAL, DR ASSESSEE BY: SH.Y.K.SUD, CA DATE OF HEARING: 04/02/2014 DATE OF PRONOUNCEMENT:24/02/2014 ORDER PER BENCH ; THESE TWO APPEALS OF THE REVENUE ARISE FROM TWO DI FFERENT ORDERS OF CIT(A), JALANDHAR, EACH DATED 01.02.2013 FOR THE A SSESSMENT YEARS 1008-09 & 2009-10. THE ASSESSEE HAS ALSO FILED CROSS OBJECT IONS FOR THE ASSESSMENT YEAR 2009-10. 2 2. IN ITA NO.217(ASR)/2013 A.Y.2008-09, THE REVENU E HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN : 1. DELETING ADDITION OF RS.7,65,534/- MADE ON ACCOUNT OF CATERING EXPENSES WITHOUT APPRECIATING THE FACTS OF PRESENT CASE AND WITHOUT CONSIDERING THE OBSERVATIONS MADE BY THE AO AND MAT ERIAL PLACED ON RECORDS. 2. DELETING THE ADDITION OF RS. 39015/- I.E. @ 25% OF THE EXPENSES CLAIMED ON HOTEL BILLS EXPENSES IGNORING THE FACT T HAT THE ASSESSEE FIELD TO FURNISH PROPER DETAILS OF SUCH EXPENSES. 3. IT IS PRAYED THAT THE ORDER OF THE CIT(A) BE SET AS IDE AND THAT THE AO RESTORED. 4. THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AMEND O R ALTER THE GROUND OF APPEAL BEFORE THE APPEAL IS HEARD AND DIS POSED OF. 3. IN ITA NO.218(ASR)/2013 A.Y.2009-10, THE REVEN UE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN : 1. DELETING ADDITION OF RS.8,72,976/- MADE ON ACCOUNT OF CATERING EXPENSES WITHOUT APPRECIATING THE FACTS OF PRESENT CASE AND WITHOUT CONSIDERING THE OBSERVATIONS MADE BY THE AO AND MAT ERIAL PLACED ON RECORDS. 2. DELETING THE ADDITION OF RS. 19, 75,000/- I.E. OUT OF TOTAL ADDITION OF RS.25,06,308/- MADE BY THE AO TREATING THESE EXPENS ES AS CAPITAL EXPENSES IGNORING THE DECISION OF HONBLE SUPREME C OURT IN THE CASE OF CIT VS. MANGAYARKARSI MILLS (SC) 315 ITR 11 4 WHICH HAS BEEN CONSIDERED BY THE LD. CIT(A), JLANDHAR, IN ANO THER CASE IN APPEAL NO.154 AND 147/09-10/CIT(A)//JAL. 3 3. IT IS PRAYED THAT THE ORDER OF THE CIT(A) BE SET AS IDE AND THAT THE AO RESTORED. 4. THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AMEND O R ALTER THE GROUND OF APPEAL BEFORE THE APPEAL IS HEARD AND DIS POSED OF. 4. IN C.O. NO.22(ASR)/2013 AY 2006-07, THE ASSESS EE HAS RAISED SOLE GROUND WHICH READS AS UNDER: 1. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAI NING THE ACTION OF THE AO OF CAPITALIZING RS.531308/- OUT OF MACHINERY REPAIRS AND MAINTENANCE. 2. THAT WHILE SUSTAINING THE ACTION OF THE AO, CIT( A) FAILED TO APPRECIATE THAT NO NEW ASSET HAD COME INTO EXISTENC E. 5. FIRST OF ALL, WE TAKE UP APPEAL OF THE REVENUE I N ITA NO.217(ASR)/2013 FOR THE ASSESSMENT YEAR 2008-09. A S REGARDS GROUNDS NO. 1 & 2 OF THE APPEAL OF THE REVENUE, THE BRIEF FACTS OF THE CASE ARE THAT THE AO NOTICED THAT AN EXPENDITURE OF RS.30,62,138/- IS DEBITED UNDER THE HEAD CATERING EXPENSES. THE PAYMENTS ARE MADE TO M/S. H OTEL CENTRE PAINT, ON THE BASIS OF BILLS RAISED BY THEM. THE AO ASKED FOR DETAILS OF CORRESPONDING BILLS RAISED ON PATIENTS. IN REPLY, IT WAS STATED M EANS PROVIDED TO PATIENTS ON 16.05.2007 AND THE ASSESSEES AND NO SEPARATE RECOR D WAS MAINTAINED. IT WAS ALSO EXPLAINED THAT MEANS WERE PROVIDED TO PATIENTS AS PER RECOMMENDATIONS OF THE DIETICIAN AND NO SEPARATE RECORD WAS MAINTAI NED. IT WAS ALSO FOUND THAT THIS CHARGE IS NOT SEPARATELY BILLED. WHEN THE AO FOUND THAT THESE CHARGES ARE NOT INCLUDED IN THE BILLS SHE FURTHER A SKED THE ASSESSEE AS TO HOW 4 THE BILLS RAISED BY THE HOTEL WERE VERIFIED WHEN TH ERE WAS NO SEPARATE RECORD? WHEN THERE IS A CANTEEN IN THE HOSPITAL PREMISES WH Y SOME BILLS OF M/S. HOTEL CENTREPOINT IS RELATED TO TEA-BILLS? THE JUST IFICATION FOR CLAIMING EXPENSES WHEN THESE ARE NOT RECOVERED FROM PATIENTS ? IT WAS EXPLAINED BY THE ASSESSEE THAT THESE CHARGES ARE INCLUDED IN THE ROOM RENTS HENCE NO EXTRA OR SEPARATE PAYMENT IS TAKEN. THE ASSESSEE ALSO PRO DUCED CERTAIN BILLS TO SHOW THAT TILL THE TIME ROOM RENT IS CHARGED NO SEP ARATE CHARGES FOR FOOD ARE MENTIONED AND THE MEAL IS ONLY CHARGED WHEN THE ROO M RENT IS NOT CHARGED I.E. THE LAST DAY OF ADMISSION. IT WAS ALSO EXPLAIN ED THAT THE CANTEEN WAS FOR OUTPATIENTS, ATTENDANTS AND STAFF AND THE TEA FOR P ATIENTS COME FROM THE HOTEL. THE AO AFTER ANALYZING THE REPLY OF THE ASSESSEE HE LD THAT THE EXPLANATION OFFERED WAS AN AFTER THOUGH IN DEPARTURE TO THE STA ND TAKEN EARLIER. MOREOVER, WHEN NO RECORD PATIENT WISE IS KEPT, IT WAS A PLOY FOR THE COMPANY TO REDUCE THE TAXABLE INCOME. IT WAS ALSO POINTED OUT BY THE AO THAT WHERE THE FOOD CHARGES ARE BILLED THEY ARE AT RS.80 OR AT RS.30, H OW THE ASSESSEE WAS PAYING TO THE HOTEL AT RS.146 AND RS.125 PER MEAL. IN THE RESULT, SHE DISALLOWED AN AMOUNT OF RS.7,65,534/- BEING 25% OF THE EXPENSES C LAIMED UNDER THIS HEAD. SHE ALSO DISALLOWED 25% OUT OF OTHER HOTEL BILLS CL AIMED UNDER CONFERENCE EXPENSES FOR THE REASONS MENTIONED IN THE ASSESSMEN T ORDER. 5 6. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH E WRITTEN EXPLANATION AND ADDITIONAL EVIDENCE WHICH WAS FORWARDED TO THE AO, WHO SUBMITTED THE REPORT WHICH WAS RECEIVED BY THE LD. CIT(A) ON 16.1 1.2012. 7. THE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCE AND AFTER CONSIDERING THE SAME DELETED THE DISALLOWANCES. 8. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER AND ARGUED THAT THE ASSESSEE COULD NOT CO-RELATE THE CATERING EXPENSES VIZ-A-VIZ EACH PATIENT. MOREOVER, BILLING HAS BEEN DONE AT A HIGHE R SIDE WHICH IS OVER AND ABOVE THE MARKET RATE. AS REGARDS THE EXPENSES ON C ONFERENCE AND MEDICAL CAMP, NO DETAIL IN BILLS IS THERE AND THEREFORE, TH E LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION AND ACCORDINGLY REQUESTED TO REVERSE THE ORDER OF THE LD. CIT(A). 9. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE, MR. Y.K. SUD, CA ARGUED THAT THE ADDITIONAL EVIDENCE IN THE FORM OF INDOOR PATIENTS REGISTER AND ATTENDANCE RECORDS OF DOCTORS AT CONFERENCE WAS PRODUCED., WHICH WAS VERIFIED BY THE A.O. AND THE LD. CIT(A) AND THERE I S A PACKAGE GIVEN TO THE PATIENTS WHICH INCLUDES FREE FOOD, WHICH WAS VERIFI ABLE FROM THE INDOORS PATIENT REGISTER AND WHICH HAS BEEN VERIFIED. AS RE GARDS THE CONFERENCE EXPENSES, THE PACKAGE IS GIVEN TO THE HOTEL WHICH H AD BILLED THE SAME ACCORDINGLY AND THE PAYMENT HAS BEEN MADE. NO DEFEC T IN THE SAME HAS BEEN 6 POINTED OUT AND THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE PRAYED TO CONFIRM THE ORDER OF THE LD. CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE ARE CONVINCED WITH THE ARG UMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ADDITIONAL EVIDEN CES IN THE FORM OF INDOOR PATIENTS REGISTER AND ATTENDANCE RECORD OF DOCTORS AT CONFERENCE AND OTHER RELEVANT REGISTERS WERE PRODUCED. THE REGISTER FOR INDOOR PATIENTS, WHICH IS A VITAL RECORD, HAS TO BE MAINTAINED BY THE HOSPITAL AND THE LD. CIT(A) HAS RIGHTLY ADMITTED THE ADDITIONAL EVIDENCES. THESE EX PENSES CLAIMED BY THE ASSESSEE HAVE BEEN INCURRED FOR THE FIRST TIME FOR STARTING CANCER UNIT DURING THE IMPUGNED YEAR AND EARLIER THE PATIENTS WERE MAK ING THEIR OWN ARRANGEMENTS FOR MEALS. THE SYSTEM ADOPTED BY THE A SSESSEE THAT DURING THE PERIOD OF ADMISSION NO SEPARATE CHARGES FOR FOOD WE RE BILLED AND THE SAME WERE INCLUSIVE IN THE PACKAGE/ROOM RENT. ONE HALF M EAL OR TEA IS TAKEN AT RS.80 AND RS.30 ON THE DAY OF DISCHARGE. THE LD. CI T(A) HAS RIGHTLY SCRUTINIZED THE BILLS WHICH WERE ALSO BEFORE THE AO AND HAS RIGHTLY COME TO THE CONCLUSION THAT NO ADDITION CAN BE MADE BY THE AO AND ACCORDINGLY, WE FIND NO INFIRMITY IN DELETING SUCH ADDITION MADE ON AD-HOC BASIS FOR THE REASONS THAT THE AO AT LEAST ACCEPTS THAT ACTUALLY SUCH EXPENSES HAVE BEEN INCURRED AND NO SPECIFIC DEFECT HAS BEEN POINTED OU T. 7 10.1. ALSO WITH REGARD TO THE MEDICAL CAMP AND CONF ERENCE EXPENSES, WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THE HO TEL WHILE ISSUING THE BILLS IS HARDLY CONCERNED, IF THERE WAS A CONFERENCE OR S IMPLE GATHERING AND SUCH BILLS ARE ON RECORD. AS AN ADDITIONAL EVIDENCE, THE DETAILS OF DOCTORS WHO ATTENDED, THEIR ADDRESS OR MOBILE PHONE NOS. OR ATT ENDANCE SHEETS SIGNED BY THEM HAVE BEEN PLACED ON RECORD, WHICH HAVE RIGHTLY BEEN ADMITTED BY THE LD. CIT(A). IN THE ABSENCE OF ANY SPECIFIC DEFECT W HEN THE AO ACCEPTS SUCH EXPENDITURE HAS BEEN INCURRED, NO ADDITION IS WARRA NTED ON ESTIMATION BASIS. THUS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). HENCE, GROUNDS NO. 1 & 2 OF REVENUE ARE DISMISSED. 11. GROUNDS NO. 3 & 4 ARE GENERAL IN NATURE, THEREF ORE, DO NOT REQUIRE ANY ADJUDICATION. 12. NOW WE TAKE UP APPEAL OF THE REVENUE IN ITA NO .218(ASR)/2013 FOR THE ASSESSMENT YEAR 2009-10. AS REGARDS GROUND NO.1 , THE AO HAS DISALLOWED RS.8,72,976/- ON ACCOUNT OF CATERING EXP ENSES, WHICH HAVE BEEN DELETED BY THE LD. CIT(A). 13. SINCE THE FACTS AND CIRCUMSTANCES OF THE PRESEN T CASE ARE IDENTICAL TO THE FACTS OF THE CASE IN ITA NO.217(ASR)/2013 FOR T HE ASSESSMENT YEAR 2008- 09 DECIDED BY US IN ASSESSEES OWN CASE HEREINABOVE AND FOLLOWING OUR SAID ORDER IN ITA NO.217(ASR)/2013 FOR THE A.Y.2008-09, WE FIND NO INFIRMITY IN 8 THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE , WHO HAS RIGHTLY DELETED THE ADDITION. ACCORDINGLY, GROUND NO.1 OF THE REVEN UE IS DISMISSED. 14. AS REGARDS GROUND NO.2, THE BRIEF FACTS AS ARIS ING FROM THE ORDER OF THE AO ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UN DER: DURING THE EXAMINATION OF BOOKS OF ACCOUNT, THE ASS ESSEE HAS FILED SOME BILLS WHICH PERTAIN TO REPAIR AND MAINTENANCE OF GENERAL EQUIPMENT ETC. THE DETAILS OF THESE BILLS ARE AS UN DER: I. DURA 352-X-RAY TUBE FOR CT SCANNER RS.19,75,000 /- (AGAINST EXCHANGE OF OLD DEFECTIVE TUNE) II) UST-5209 RS. 2,00,000/- III) PGS 3KVA ONLINE UPS RS. 43,118/- IV) WATER FLOW PCB RS. 92,126/- V) PCB INJ LV CONTROL RS. 1,96,064 4.1. THE ASSESSEE WAS ASKED TO EXPLAIN WHY NOT THES E BILLS BE TREATED AS CAPITAL IN NATURE. IN THIS REGARD THE ASSESSEE H AS FILED REPLY DATED 25.08.2011 STATING THAT ALL THESE EXPENSE ARE REPAI R AND REPLACEMENT OF SPARES FOR THE EQUIPMENTS ALREADY PURCHASED AND CAPITALIZED INITIALLY AND CHARGED ACCORDINGLY TO REPAIR AND MAI NTENANCE ACCOUNT DETAILS IN THIS REGARD ARE AS UNDER: A UPS FOR RS.43,118/- PURCHASED VIDE BILL NO.6248 F ROM POWER GUARD SYSTEMS CHANDIGARH AND REPLACED IN DIALYSES M ACHINE/ WATER FLOW PCB FOR RS.92126/- HAVE BEEN REPLACED TO A CANCER EQUIPMENT NAMED LINEAR ACCELERATOR VIDE BILL M/S. S IEMENS LTD. NEW DELHI. PCB ASSAY CONTROL BOARD HAVE BEEN REPLACED TO A CAN CER EQUIPMENT NAMED LINEAR ACCELARATOR VIDE BILL M/S. S IEMENS LTD. NEW DELHI. DURA X-RAY TUBE OF RS.19,75,000/- PURCHASED FROM SI EMENS LTD. NEW DELHI VIDE B. NO.596728100596801 DATED 05.06.20 10 ON 9 ACCOUNT OF REPAIR & REPLACEMENT OF DURA X-RAY TUBE FOR CT SCANNER. THE LIFE OF THIS IS 200000 SECONDS AND AFT ER THAT IT HAS TO BE REPLACED, SO ACCORDINGLY WE HAVE CHARGED TO R EPAIR & MAINTENANCE ACCOUNT. CARDIAC PROBE CW BOARD FOR RS.2 LAC PURCHASED FROM M/S. TRIVITION MED. CHENNAI VIDE B. NO.409 DATED 29.9.2 008 FROM FOR REPAIR COLOUR DUPPLER SCANNER. THIS IS REPLACEA BLE ITEMS AND HAVE GOT VERY SHORT PERIOD LIFE SO ACCORDINGLY WE HAVE CHARGED IT TO MAINTENANCE A/C. IT WAS FURTHER STATED BY THE ASSESSEE REGARDING DU RA X-RAY TUBE AND CARDIAC PROBE CW VIDE REPLY DATED 18.11.2011 AS UND ER: 1) DURA X-RAY TUBE PURCHASED FROM M/S. SIEMENS LTD . NEW DELHI VIDE B.NO. 596728100596801 DATED 05.06.2010 F OR RS.19,75,000/- REPLACED FOR CT SCANNER. THE LIFE OF THIS IS 20000 SECONDS AND AFTER THAT IT HAS TO BE REPLACED. SO AC CORDINGLY WE HAVE CHARGED THE EXPENSES TO REPAIR & MAINTENANCE ACCOUN T. COPY OF SERVICE REPORT OF SUPPLIERS M/S. SIEMENS L TD. AND OUR PURCHASE ORDER IS ENCLOSED. 2) CARDIAC PROBE CW BOARD PURCHASED FROM M/S. TRIV ITION MEDICAL, CHENNAI VIDE B.NO.409 DATED 29.09.2008 FOR RS.200000/- FOR REPAIR COLOR DUPPLER SCANNER. THIS IS REPLACEABLE I TEMS AND HAVE GOT VERY SHORT LIFE PERIOD LIFE SO ACCORDINGLY WE HAVE CHARGED IT TO MAINTENANCE A/C. COPY OF INSTALLATION OF THE SUPPLIER M/S. TRIVITRO N MEDICAL IS ENCLOSED. 4.3. I HAVE CONSIDERED THE REPLY OF THE ASSESSEE AN D THE FACTS OF THE CASE, I FIND THAT: I) DURA 352-X-RAY TUBE FOR CT SCANNER OF RS.19,75,000/- HAS A LONG LIFE OF 2 LACS SECONDS AND AFTER THAT IT IS REPLACED. FURTHER THE ASSESSE COULD NOT FURNISHING ANY EVIDENCE THAT IT WAS 10 REPLACED ANY TIME EARLIER AFTER PURCHASE OF CT SCANNER OF 11.4.04. THEREFORE, EVEN IF IT IS TREATE D AS REPLACEMENT OF PART OF MACHINE , IT IS OF EXTENSIVE NATURE HAVING DURABILITY OF 4 OR 5 YEARS. II) PGS 3 KVA ONLINE UPS IS A SEPARATE MACHINE HAVING LONG LIFE AND THEREFORE, ITS REPLACEMENT CANNOT BE TREATED AS REVENUE IN NATURE. III) WATER FLOW PCS IS ALSO A SEPARATE MACHINE HAVING LONG LIFE AND THEREFORE, ITS REPLACEMENT CANNOT BE TREATED AS REVENUE IN NATURE. IV) PCB INJ LV CONTROL IS A SEPARATE MACHINE AND THEREFORE, ITS REPLACEMENT CANNOT BE TREATED AS REVENUE IN NATURE. V) UST-5209 HAS A LONG LIFE AND AFTER THAT IT IS REPLACED. THEREFORE, EVEN IF IT IS TREATED AS REPLACEMENT OF PART OF MACHINE, IT IS OF EXTENSIVE NATURE HAVING DURABILITY OF 4 OR 5 YEARS. 4.5. IT IS PERTINENT TO MENTION HERE THAT THE LD. C IT(A) HAS IN SIMILAR CIRCUMSTANCES CONFIRMED THE ADDITION FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. MANGAY ARKARSI MILLS (SC) 315 ITR 114. THE RELEVANT PARA OF THE ORDER OF CIT(A) IN APPEAL NO.154 AND 147/09-10/CIT(A)/JAL IS REPRODUCED BELOW : 37.7. IN THE CASE OF CIT VS. MANGAYARKARSI MILLS ( SUPRA), THE HONBLE APEX COURT ALSO RELIED ON THEIR EARLIER JUD GMENT IN THE CASE OF BALLIMAL NAVAL KISHORE VS. CIT 224 ITR 414 (SC). IN THE CASE OF BILLIMAL NAVAL KISHORE VS. CIT, THE ISSUE UNDER CON SIDERATION WAS WHETHER THE EXPENDITURE FOE EXPENSIVE REPAIRS OF AN EXHIBITION THEATRE BY THE ASSESSEE CONSTITUTED CURRENT AFFAIRS. THE ASSESSEE HAD EXTENSIVELY REPAIRED THE THEATRE BY SPENDING ON MAC HINERY, NEW FURNITURE, SANITARY FITTINGS AND REPLACEMENT OF ELE CTRICAL WIRING. IN ADDITION, THE ASSESSEE HAD INCURRED EXPENDITURE ON EXTENSIVE REPAIRS TO THE WALLS TO THE HALL, TO THE FLOORING AND ROOFI NG, TO DOORS AND WINDOWS AND TO THE STAGE SITES. ETC. THE ITO HELD T HE EXPENDITURE ON REPAIRS TO WALLS ETC. AMOUNTING TO RS.62,977/- AS C APITAL IN NATURE. THE AAC AFFIRMED THE VIEW TAKEN BY THE ITO BUT THE HONBLE TRIBUNAL UPHELD THE ASSESSEES CASE. THE HONBLE HI GH COURT ANSWERED THE REFERENCE MADE BY THE REVENUE IN FAVOU R OF THE REVENUE AND AGAINST THE ASSESSEE. ON FURTHER APPEAL BY THE ASSESSEE, THE 11 HONBLE APEX COURT HELD THAT THE EXPRESSION CURREN T REPAIRS WAS NOT MERE REPAIRS. THEY REFERRED TO THEIR JUDGMENT IN THE CASE OF NEW SHERROCK SPINNING AND MFG. CO. LTD. VS. CIT 130 ITR 338 (BOM.) IN WHICH IT WAS HELD THAT THE EXPRESSION CURRENT REPA IRS MEANT EXPENDITURE ON BUILDING MACHINERY ETC; WHICH WAS NO T FOR THE PURPOSE OF RENEWING OR RESTORATION BUT WHICH WAS ONLY FOR T HE PURPOSES OF PRESERVING OR MAINTAINING ALREADY EXISTING ASSET AN D WHICH DID NOT BRING A NEW ASSET INTO EXISTENCE OR DID NOT GIVE A NEW AND A DIFFERENT ADVANTAGE. THE HONBLE APEX COURT APPROVED THE TEST LAID DOWN IN THE CASE OF NEW SHERROCK SPINNING AND MFG. CO. LTD. VS. CIT (SUPRA) AND HELD THAT THE REPAIR EXPENDITURE OF RS.62,977/- ON EXISTING REPAIR OF THE STRUCTURE OF THE BUILDING COULD NOT QUALIFY AS CURRENT REPAIRS AND IT WAS HELD THAT THIS WAS A CASE OF TOTAL RENOVATIO N AND HAD RIGHTLY BEEN HELD BY THE HIGH COURT TO BE CAPITAL IN NATURE AND THE ASSESSEES APPEAL WAS DISMISSED. HENCE, THE SUM AND SUBSTANCE OF THE AFORESAID JUDGMENTS IS THAT THE REPAIR OF A PART OF A COMPLET E MACHINE MAY BE CONSIDERED AS CURRENT REPAIRS, BUT THE REPLACEMENT OF THE MACHINES CANNOT BE TERMED AS CURRENT REPAIRS. FURTHER EXTENSIVE RENOVATION IS NOT OF THE NATURE OF CURRENT REPAIRS AND ALSO CA NNOT BE CONSIDERED FOR DEDUCTION AS A REVENUE EXPENDITURE. 4.5. IN VIEW OF ABOVE DISCUSSION, THE EXPENDITURE O F RS.25,06,308/- ON PURCHASE OF MACHINE/MACHINERY PARTS AS DISCUSSED ABOVE IS NOT ALLOWABLE AS REVENUE EXPENDITURE AS THESE ARE CAPIT AL IN NATURE. HOWEVER, DEPRECIATION ON IT OF RS.3,75,946/- @ OF 1 5% IS ALLOWABLE AND THEREFORE AN ADDITION OF RS.21,03,362/- SHALL B E MADE TO THE TOTAL INCOME OF THE ASSESSEE. 15. THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE A SSESSEE WITH REGARD TO THE DURA 352-X-RAY TUBE FOR CT SCANNER AMOUNTING TO RS.19,75,000/- AND DELETED THE DISALLOWANCE AND CONFIRMED THE REST OF THE DISALLOWANCE FOR THE REASONS MENTIONED IN HIS ORDER. 16. THE LD. DR, RELIED ON THE ORDER OF THE ASSESSIN G OFFICER. 17. THE LD. COUNSEL FOR THE ASSESSEE, MR. Y.K. SUD, CA INVITED OUR ATTENTION TO THE EXPLANATION GIVEN BEFORE THE LD. C IT(A). HE STATED THAT IT 12 WAS EXPLAINED TO THE AO WITH REGARD TO THE ADDITIO N OF RS.19,75,000/- THAT THIS IS A PARTICULAR TUBE WHICH IS A PART OF THE CT SCANNER AND IS NOT A MACHINERY BY ITSELF. THE CT SCANNER WAS GOT FROM SI EMENS MEDICAL SOLUTIONS, USA FOR USD 293600/- EQUIVALENT TO RS.13 035840/-. COPY OF THE SAID MACHINERY ALONGWITH ITS ACCESSORIES WAS CAPITA LIZED AS MACHINERY IN THE YEAR 2004. THE ASSESSEE HAS BEEN INCURRING EXPENSES ON ITS GENERAL MAINTENANCE. THEREFORE, THIS IS ESSENTIAL REPAIR W HICH DOES NOT BRING INTO EXISTENCE ANY ASSET WHICH CAN NOT BE CAPITALIZED BE CAUSE THE ASSET IS CT SCANNER AND TUBE IS JUST A PART OF THE SCANNER AND REPLACEMENT OF WORN OUT PART OF AN ASSET. 17.1 SIMILARLY, UST 5209 FOR AN AMOUNT OF RS.2,00,0 00/- WAS PURCHASED FROM M/S. TRIVITRON MED. SYSTEMS, CHENNAI, WHICH IS A PART OF A MAJOR EQUIPMENT COLOR DOPPLER ULTRASOUND SCANNER PURCHAS ED FROM M/S. ADVANCED TECHNOLOGIES LABS US FOR USD 53500/- EQUIV ALENT TO RS.2594000/- AND WAS CAPITALIZED AS MACHINERY IN TH E YEAR 2001. COPY OF WHICH HAS BEEN PLACED ON RECORD BEFORE THE AUTHORIT IES BELOW. ESSENTIALLY THIS IS ALSO A REPAIR WHICH CANNOT BE CAPITALIZED. 17.2 AS REGARDS ADDITION OF RS.43118/- FOR PGS 3 KV A ONLINE UPS, THE SAME WAS PURCHASED FROM M/S/ POWER GUARD SYSTEM CHA NDIGARH, WHICH IS A PART OF A DIALYSIS MACHINE AND IS NOT AN INDEPENDEN T MACHINE BY ITSELF. THE 13 DIALYSIS MACHINE WAS PURCHASED FOR RS.11,00,000/- F ROM M/S. R.R. SURGICO NEW DELHI, A COPY OF THE SAME HAS BEEN PLACED ON RE CORD. 17.3. AS REGARDS THE ADDITION OF RS.92,126/- WITH R EGARD TO WATER FLOW PCB PURCHASED FROM M/S. SIEMENS LTD; NEW DELHI, WH ICH IS A PART OF A MAJOR CANCER EQUIPMENT LINEAR ACCELERATOR PURCHASED FOR USD 442241.79 EQUIVALENT TO RS.20595200/- , WHICH HAS BEEN CAPITA LIZED AS MACHINERY IN THE YEAR 2004 AND THEREFORE, WATER FLOW CONTROL B EING PART REPLACED IN LIEU OF THE EXISTING DAMAGE PART IS FOR REPAIR AND CANN OT BE CAPITALIZED. 17.3. SIMILARLY, WITH REGARD TO THE ADDITION OF RS. 196064/- FOR PCB ASSY INJ LV CONTROL, WHICH WAS PURCHASED FROM M/S. SIEME NS LTD; NEW DELHI. IT IS A PART OF A MAJOR CANCER EQUIPMENT LINEAR AC CELERATOR PURCHASED FOR USD 442241.79 WHICH IS EQUIVALENT TO RS.20595200/- FROM M/S. SIEMENS MEDICAL SOLUTIONS USA WAS CAPITALIZED AS MACHINERY IN THE YEAR 2004. THEREFORE, ACCORDINGLY THE REPAIR EXPENSES CANNOT B E CAPITALIZED AND THE LD. CIT(A) ARE NOT JUSTIFIED IN CONFIRMING THE ADDITION S OF RS.43118/-, RS.92126/- AND RS.1960664/- . THE LD. CIT(A) IS JU STIFIED IN DELETING THE ADDITION OF RS. 19,75,000/-. 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) WITH REG ARD TO DELETION OF ADDITION OF RS.19,75,000/- WHICH WAS A PART OF THE C.T. SCANNER AND IS NOT A 14 MACHINERY BY ITSELF. BUT AT THE SAME TIME, THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF UST-5299, PGS ONLINE UP S, WATER FLOW PCB AND PCB INJ LV CONTROL FOR RS.2,00,000/-, RS.43,11 8/-, RS.92,126/- AND RS.1,96,064/-. IN FACT, THESE ARE THE PARTS OF THE MAIN MACHINERY WHICH HAVE BEEN REPLACED AS ESSENTIALLY TO BE TREATED AS FOR REPAIRS AND MAINTENANCE OF MACHINERY. WE FIND NO INFIRMITY IN THE ORDER OF TH E LD. CIT(A), WHO HAS RIGHTLY DELETED THE ADDITION OF RS.19,75,000/-. TH E ORDER OF THE LD. CIT(A) IS REVERSED WITH REGARD TO THE ADDITIONS OF RS.2,00,00 0/-, 43,118/- RS.92,126/- AND RS.196064/- ON ACCOUNT OF UST-5299, PGS ONLINE UPS, WATER FLOW PCB AND PCB INJ LV CONTROL. THE AO IS DIRECTED TO D ELETE THE ADDITIONS SO MADE. THUS, IN THE FACTS AND CIRCUMSTANCES, GROUND NO.2 OF THE REVENUE IS DISMISSED. 19. GROUNDS NO. 3 & 4 OF THE REVENUE ARE GENERAL IN NATURE, THEREFORE, DO NOT REQUIRE ANY ADJUDICATION. 20. AS REGARDS GROUNDS NO. 1 & 2 OF C.O. NO.22/A SR/2013, THE ASSESSEE HAS STATED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.531308/- ON ACCOUNT OF MACHINERY REPAIRS AND MAI NTENANCE. SINCE WE HAVE REVERSED THE ORDER OF THE LD. CIT(A) ON THE IS SUE HEREINABOVE, IN PARA 18 OF OUR ORDER, THEREFORE, THE GROUNDS NO. 1 & 2 RAISED BY THE ASSESSEE IN C.O. ARE ALLOWED. 15 23. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE IN ITA NOS. 217 & 218(ASR)/2013 ARE DISMISSED AND C.O. NO.22(ASR)/201 3 OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH FEBRUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24TH FEBRUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. PATEL HOSPITAL (P) LTD. JALANDHAR . 2. THE ACIT CIRCLE-III, JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR