METROPOLIS HEALTHCARE LTD., Mumbai V. DCIT, CIRCLE- 16(2), NEW DELHI

ITA 6484/DEL/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8168 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 08-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Additional depreciation; Assessment record; TDS
• Section: 37; 143(3); 32(1)(iia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘E’ : NEW DELHI) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER and SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA No.6484/Del./2018 (ASSESSMENT YEAR : 2013-14) M/s. Metropolis Healthcare Ltd., vs. DCIT, Circle 16(2), 250-D, Udyog Bhawan, New Delhi. Hindi Cycle Marg, Worli, Mumbai – 400 030 (Maharashtra). (PAN : AACCP1414E) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Mayank Patwari, CA REVENUE BY : Shri Manu Chaurasiya, Senior DR Date of Hearing : 02.11.2021 Date of Order : 18.11.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, M/s. Metropolis Healthcare Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the impugned order dated 27.08.2018 passed by the Commissioner of Income-tax (Appeals)-6, New Delhi qua the assessment year 2013-14 on the grounds inter alia that :- “1. That the Appellant filed return of income declaring total income of Rs.49,38,32,980/ -. The Ld A.O, passed the ITA No.6484/Del./2018 2 order under section 143(3) dated 30/03/2016 determining the Total Income at Rs.50,24,54,863/- by making disallowance of additional depreciation of Rs.71,64,846/- . 2. The facts of the case are that appellant is in the business of pathological testing and diagnostic laboratories and claimed additional depreciation of Rs.71,64,846/- u/s 32(1)(iia) of IT Act on plant and machinery purchased during the year. The Ld. A.o. did not allow the additional depreciation of Rs.71,64,846/- claimed by the appellant on the ground that work done in pathological laboratory cannot be put at par to an industrial undertaking, as there is no end product in the pathological examination of material supplied. 3. During the previous year relevant to the assessment year 2013-14 the appellant company has made addition to plant and machinery of Rs.4,75,67,900/ -. On these additions the appellant has claimed normal depreciation of Rs.1,60,60,189/-. In addition to normal depreciation, the appellant has also claimed additional depreciation of Rs.71,64,846/- at 20% on the additions made during the year. 4. Aggrieved by the order of the Ld A.O. disallowing additional depreciation of Rs.71,64,846/-, the appellant company filed an appeal before the Ld. CIT(A)-6, New Delhi. It was submitted before the Ld. CIT(A) by the appellant that the question whether, Diagnostic/Pathological Laboratory is engaged in the business of manufacture or production of any article or thing came up for the adjudication before the Hon'ble High Court of Gujarat, in the case of CIT vs Suresh Amin Family Trust-(2007) 158 taxman 105(Guj)/ (2007) 288 ITR 101 (Guj). The Hon'ble High Court after following the Hon'ble Supreme Court Decision in the case of CIT vs Peerless Consultancy and Services Private Limited (2001) 248 ITR 178 held that Suresh Amin Family Trust was running a pathological laboratories and such business activity could be taken to an industrial undertaking and such plant and machinery could be entitled to investment allowance on the expenditure incurred on pathological equipments. Section 32(1)(iia) used the same language as adopted in Section 32A(2) of I.T. Act, and accordingly it was submitted to Ld. CIT(A) that the claim of appellant was covered by ruling of Hon'ble Gujarat High Court which is in respect of ITA No.6484/Del./2018 3 an assessee who is the business of pathological testing and diagnostic laboratories, identical to the case of appellant. Similar other H.C. decisions were relied on by appellant in appeal before the Ld. CIT(A). 5. The Ld CIT (A) - 6, New Delhi vide his order dated 27/08/2018 in Appeal No 10140/2016-17 held that additional depreciation is not allowable as the appellant is in the business of providing diagnostic services. 6. The Ld. CIT(A) disallowed additional depreciation on the premise that the appellant is engaged in providing diagnostic services. However, the appellant company is in the business of diagnostic and pathological laboratory, which amounts to manufacturing or producing an article or thing. Therefore, the addition made to the plant and machinery are the eligible for additional depreciation u/ s 32(1)(iia). Hence, the disallowance of Rs.71,64,846/- in respect of additional depreciation u/s 32(1)(iia) is not justified.” 2. Assessee by moving application dated 05.10.2021 in the aforesaid appeal sought to admit the additional grounds of appeal under Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 as under :- “1. That on the facts and circumstances of the case and in law, education cess paid by the assessee on total income and dividend distribution tax, should be directed to be allowed as deduction in terms of the law clarified by the Hon’ble Bombay High Court in the case of Sesa Goa Ltd. vs. JCIT 423 ITR 426 (Bom.) and other decisions. 2, On the facts and circumstances on the case and in law, the assessing officer/CIT(A) ought to have allowed the TDS credit to the appellant company which was available in the hands of the entities that merged with the appellant company w.e.f. 01.04.2006. The appellant company is legally entitled to claim the TDS credit of the merged entities.” ITA No.6484/Del./2018 4 on the ground that additional grounds sought to be raised are purely legal in nature and do not require any investigation of facts. Since grounds sought to be raised by the assessee are legal in nature which can be raised at any stage of proceedings and necessary for complete and final adjudication of the controversy at hand, the same are allowed without going into the merits of the cases. 3. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee company is into the business of providing referral laboratory services, diagnostic services etc.. During the scrutiny proceedings, Assessing Officer (AO) noticed that the assessee has claimed additional depreciation to the tune of Rs.71,64,846/- on plant and machinery. Declining the contentions raised by the assessee and by following the earlier year order of AY 2012-13, AO disallowed additional depreciation of Rs.71,64,846/-. By way of raising additional grounds, assessee also sought to direct the AO to allow education cess paid by the assessee on total income and dividend distribution tax. Assessee also raised additional ground that AO/CIT(A) have erred in not allowing the TDS credit to the assessee company which was available in the hands of the entities that merged with the assessee company w.e.f. 01.04.2006. ITA No.6484/Del./2018 5 4. Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has partly allowed the same. Feeling aggrieved by the order passed by the ld. CIT(A), the assessee has come up before the Tribunal by way of filing the present appeal. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUNDS NO.1 TO 6 6. AO/CIT(A) have disallowed the additional depreciation claimed by the assessee u/s 32(1)(iia) of the Income-tax Act, 1961 (for short ‘the Act’) by following the order passed in earlier year i.e. AY 2012-13. However, it is brought to the notice of the Bench by the ld. AR for the assessee, which was not controverted by the ld. DR for the Revenue, that this issue has already been decided in favour of the assessee by the coordinate Bench of the Tribunal in ITA No.1546 & 1547/Del/2018 for AYs 2012-13 & 2014-15 order dated 06.07.2021 by returning following findings :- “12. We have carefully considered the rival contentions and per use the orders of the lower authorities. The issue of the additional depreciation has been dealt with by the learned CIT - A wherein he has noted that the business of pathological testing diagnostic laboratories is the main business of the assessee blood tests etc on collection samples at diagnostic tests at the central facilities can be carried out. The assessee ITA No.6484/Del./2018 6 has set up various collection centers at multiple locations. According to the learned CIT - A these collection centers do not produce any article or thing and therefore are in the nature of office premises hence he disallowed the additional depreciation on these assets. However the learned CIT - A allowed the additional depreciation on the assets which are used in the diagnostic centre and report making central facilities. The revenue has also accepted the stand that assessee is entitled for additional depreciation on machinery installed at diagnostic and report making central facilities. We find that the collection centers are also integral part of the whole process of the business of diagnostic and report making central facilities and therefore there is no reason that additional depreciation on those facilities should not be allowed to the assessee when revenue has already accepted the claim that assessee is entitled to additional depreciation on the assets installed by it. The past assessment record also stated to be acceptance of this claim of assessee which is not negated by revenue. In view of this solitary ground raised by the assessee is allowed and the learned assessing officer is directed to grant claim of additional depreciation of Rs.2,333,715/- to the assessee which was restricted by the learned CIT - A. Accordingly ground number 1 - 3 of the appeal are allowed.” 7. We are of the considered view that additional depreciation qua the assets deployed in diagnostic centre and report making central facilities are eligible for additional depreciation. Even collection centers are also intrinsically linked with diagnostic business. So, in view of what has been discussed above and following the aforesaid order passed by the coordinate Bench of the Tribunal, we hereby allow grounds no.1 to 6 and direct the AO to grant claim of additional depreciation of Rs.71,64,846/- to the assessee after due verification. ITA No.6484/Del./2018 7 ADDITIONAL GROUND NO.1 8. So far as claim of deduction on account of education cess paid on total income and dividend distribution tax made by the assessee company is concerned, by now this issue has already been decided by the decision rendered by Hon’ble Bombay High Court in case of Sesa Goa Ltd. vs. JCIT (2020) 423 ITR 426. In view of the matter, since deduction of education cess is allowable having been covered in favour of the assessee by the decision of Hon’ble Bombay High Court in case of Sesa Goa Ltd. (supra) the AO is directed to allow the same. 9. Similarly in case of claim of dividend distribution tax, this issue is covered against the assessee by the coordinate Bench of the Tribunal in its own case for AY 2012-13 & 2014-15 (supra) by returning following findings :- “21. With respect to the claim of the dividend distribution tax, we find that same is not an expenses incurred by the assessee wholly and exclusively incurred for the purposes of the business and therefore same is not allowable to the assessee u/s 37 (1) of the act. The learned authorized representative also could not show us any other provisions of the income tax act where the expenditure is allowable to the assessee. In the result, the claim of the deduction of dividend distribution tax made by the assessee in this additional ground is rejected.” ITA No.6484/Del./2018 8 10. So, in view of the matter, claim of assessee qua dividend distribution tax has been rightly rejected by the AO as well as ld. CIT (A). Consequently, additional ground no.1 is partly determined in favour of the assessee. ADDITIONAL GROUND NO.2 11. Assessee company contended that AO/CIT(A) have erred in not allowing the TDS credit to the assessee company which was available in the hands of entity companies w.e.f. 01.04.2006. We are of the considered view that assessee is eligible for tax credit of the income which has been included in the return of merged entities w.e.f. 01.04.2006, which fact has not been controverted by the ld. DR for the Revenue. In view of the matter, AO is directed to allow the same subject to the verification of the date of merger and payment of TDS by the merged entities. Consequently, additional ground no.2 is determined in favour of the assessee. 12. Resultantly, the appeal filed by the assessee is partly allowed. Order pronounced in open court on this 18 TH day of November, 2021. SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 18 TH day of November, 2021 TS ITA No.6484/Del./2018 9 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-6, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.