ACIT, CHENNAI V. Bharat Scans Pvt. Ltd., CHENNAI

ITA 3291/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4540 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 15-03-2017
• Assessment Year: misc
• Appeal Filed On: 05-12-2016
• Court: TRIBUNAL
• Department Lawyers: R DURAI PANDIAN JT
• Assessee Lawyers: G G PRABHAKARAN
• Keywords: Depreciation; Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO S . 3290 & 3291 /MDS/201 6 / ASSESSMENT YEAR S :201 2 - 13 & 2013 - 14 ASST. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE - 1(2), CHENNAI 600 034. VS. M/S. BHARAT SCANS PVT. LTD., 197, PETERS ROAD, ROYAPETTAH, CHENNAI 600 034. [PAN: AABCB 2272K] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI R. DURAI PANDIAN , JT. CIT / RESPONDENT BY : SHRI G.G. PRABHAKARAN, CA / DATE OF HEARING : 15 . 0 3 .201 7 / DATE OF P RONOUNCEMENT : 26 . 0 5 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER: BOTH THE APPEAL S FILED BY THE REVENUE ARE DIRECTED AGAINST SEPARATE O RDER S OF THE LD. COMMISSIONER OF INCOME T AX (A PPEALS) - 1, CHENNAI BOTH DATED 20 .0 9 .201 6 RELEVANT TO THE ASSESSMENT YEAR S 2012 - 1 3 & 2013 - 14 . THE REVENUE HAS RAISED TWO EFFECTIVE COMMON GROUNDS IN BOTH THE APPEALS, VIZ., (I) THE LD. CIT(A) ERRED IN ALLOWING 40% DEPRECIATION ON MEDICAL EQUIPMENT AND (II) THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE MADE UNDER SECTION 14A R.W R ULE 8D. SINCE COMMON GROUNDS IN BOTH THE APPEALS HAVE BEEN TAKEN BY THE REVENUE, WE SHALL DISCUSS THE FACTS PERTAINING TO THE ASSESSMENT YE AR 2012 - 13. I.T.A. NO S . 3290 & 3291 /M DS / 201 6 2 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SCAN CENTRE AND LABORATORY AND FILED ITS RETURN OF INCOME ON 29.12.2012 (REVISED) ADMITTING AN INCOME OF .1,34,64,610/ - . THE CASE WAS TAKEN UP FOR SCRUTINY AND NOTICE U NDER S ECTION 143(2) OF THE ACT WAS ISSUED ON 7.8.2013 . AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND DETAILS FILED BY THE ASSESSEE, THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 26.3.2015 BY ASSESSING TOTAL INCOME OF T HE ASSESSEE AT .5,80,76,560/ - BY MAKING ADDITIONS / DISALLOWANCES. 3 . WITH REGARD TO THE FIRST ISSUE OF DEPRECATION ON MEDICAL EQUIPMENT S, THE ASSESSEE CLAIMED 40% DEPRECIATION. SIMPLY BY FOLLOWING THE ASSESSMENT ORDERS OF ASSESSMENT YEARS 2010 - 11 & 2011 - 12 IN ASSESS EE S ONE CASE, THE ASSESSING OFFICER RESTRICTED THE DEPRECIATION AT 15% AND EXCESS DEPRECIATION WAS BROUGHT TO TAX. 4 . ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR ASS ESSMENT YEAR 2009 - 10, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO GRANT DEPRECIATION AT 40% ON THE ABOVE EQUIPMENTS. 5 . ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND THE LD. DR HAS CONTENDED THAT THE ACTUAL DEPRECIATION ALLOWE D ON THE MEDICAL EQUIPMENT IS 15% THE LD. CIT(A) HAS WRONGLY DIRECTED THE AO TO GRANT 40% OF DEPRECIATION. ON THE OTHER HAND, BY SUPPORTING THE ORDER I.T.A. NO S . 3290 & 3291 /M DS / 201 6 3 PASSED BY THE LD. CIT(A), THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10 AND THE SAME SHALL BE FOLLOWED THE ASSESSMENT YEAR UNDER CONSIDERATION . 6 . WE HAVE HEARD THE BOTH SIDES AND PERUSED THE MATERIALS AVAILABL E ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW . IN THIS CASE, THE ASSESSEE HAS CLAIMED 40% DEPRECIATION ON MEDICAL DIAGNOSTIC EQUIPMENTS. THE ASSESSING OFFICER HAS RESTRICTED THE ABOVE DEPRECIATION TO 15% BY FOLLOWING EARLIER ASSESSMENT. NOW , THE POINT AT ISSUE IS WHETHER THE ASSESSEE IS ELIGIBLE TO CLAIM DEPRECIATION ON MEDICAL DIAGNOSTIC EQUIPMENTS AT 40% OR 15%. IN SIMILAR FACTS AND CIRCUMSTANCES ON AN IDENTICAL ISSUE, THE C OORDINATE B ENCHES OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE A SSESSMENT YEAR 2009 - 10 IN ITA NO.1300/MDS/2013 DATED 13.02.2014 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL IS WHETHER THE MEDICAL DIAGNOSTIC IMAGING EQUIPMENT INSTALLED BY THE ASSESSEE COULD BE CONSIDERED IN THE NATURE OF SPECT GAMMA CAMERA AND IF SO, ENTITLED TO FOR DEPRECIATION AT 40%. 3. THE ASSESSEE HAS CLAIMED HIGHER AMOUNT OF DEPRECIATION ON PET/CT SCAN CLAIMING IT TO BE LIFESAVING MEDICAL EQUIPMENT. THIS ISSUE HA S BEEN CONSIDERED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN A VERY DETAILED MANNER IN THE LIGHT OF THE TECHNICAL AND MEDICAL DETAILS FURNISHED BEFORE HER. ON GOING THROUGH THE DETAILED DISCUSSION REGARDING THE NATURE AND USE OF PET/CT SCAN, WE DO NOT HAVE ANY DOUBT TO UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE PET/CT SCAN IS VERY MUCH USED IN THE TREATMENT OF CANCER. THE PET/CT SCAN GIVES BOTH ANATOMIC AND METABOLIC INFORMATION TO ASSESS THE PRESENT CONDITION OF CANCER GROWTH IN A PATIENT. THIS INSTRUMENT IS USEFUL NOT ONLY IN DETECTING CANCER BUT ALSO IN TREATING THE CANCER BY MAKING A PROPER ASSESSMENT OF THE CONDITION OF THE PATIENT. THE PET/CT SCAN IS ALSO VERY ESSENTIAL IN ASSESSING THE CONDITION OF PATIENTS SUFFERING FROM CA NCER I.T.A. NO S . 3290 & 3291 /M DS / 201 6 4 EVEN AT THE ADVANCED STAGE. THIS IMAGING TECHNOLOGY IS USED NOT ONLY IN THE TREATMENT OF CANCER BUT ALSO IN THE TREATMENT OF HEART DISEASES AND NEUROLOGICAL DISEASES, AS THE PET/CT SCAN DELIVERS THE CONDITION OF VASCULAR SYSTEM OF A PATIENT. 4. IN T HESE CIRCUMSTANCES, WE UPHOLD THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE PET/CT SCAN IS ENTITLED FOR HIGHER RATE OF DEPRECIATION AT 40%. 7 . THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE DECISION OF THE TRIBUNAL AND ALLOWED A DEPRECIATION AT 40% FOR BOTH THE ASSESSMENT YEAR S . THUS, WE FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE LD. CIT(A) ON THIS ISSUE AND THE GROUND RAISED BY THE REVENUE IS DISMISSED FOR BOTH THE ASSESSMENT YEARS . 8 . THE NEXT GROUND RAISED BY THE REVENUE IS WITH REGARD TO D ELETION OF DISALLOWANCE MADE BY UNDER SECTION 14A R/W RULE 8D. THE REVENUE OBSERVED THAT THE ASSESSEE HAS INVESTMENTS TO THE TUNE OF .4 , 03 , 45 , 393 / - AS ON 31.03.2011 AND .4 , 58 , 65 , 006 / - AS ON 31.03.2012. THE REVENUE WAS OF THE VIEW THAT THE ASSESSEE HAS T O INCUR INDIRECT EXPENDITURE TOWARDS MAINTAINING THOSE INVESTMENT S AND REJECTED THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURRED. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT( A) AND B Y FOLLOWI NG THE DECISION IN THE CASE OF AC IT V. M.BASKARAN IN ITA NO.1717/MDS /2013 DATED 31.07.2014, T HE LD. CIT(A) DELETED THE DISALLOWANCE MADE UNDER RULE 8D. ON BEING AGGRIEVED THE REVENUE IS IN APPEAL BEFORE TRIBUNAL. 9 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ASSESSING OFFICER HA S MECHANICALLY APPLIED THE PROVISIONS OF RULE 8D OF IT RULES AND DETERMINED I.T.A. NO S . 3290 & 3291 /M DS / 201 6 5 THE EXPENDITURE TOWARDS MAINTAINING THE INVESTMENTS MADE BY THE ASSESSEE. ADMITTEDLY, THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME OUT OF THE INVESTMENTS MADE BY IT . WITH REGARDS TO INVESTMENTS, NO DETAILS ARE AVAILABLE IN THE ASSESSMENT ORDER AS WELL AS IN THE APPELLATE ORDER. UNDER THESE FACTS AND CIRCUMSTANCES, WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO PASS A SPEAKING ORDER INCORPORATING THE FACTS AS TO WH ETHER THE ASSESSEE HAS MADE THE ABOVE INVESTMENTS FOR ACQUIRING SHARES, DEBENTURES, ETC. OR MADE ANY STRATEGIC INVESTMENTS IN ITS SUBSIDIARIES AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITIES OF BEARING HEARD TO TH E ASSESSEE. THUS, THE GROUND RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES FOR BOTH THE ASSESSMENT YEARS. 10 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 26 TH MAY , 2017 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 26 . 0 5 .201 7 V M/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.