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TMI Blog2016 (11) TMI 1504X X X X Extracts X X X X X X X X Extracts X X X X ..... A) and allow the appeal of the assessee. - ITA No. 6179 to 6182/MUM/2013 - - - Dated:- 23-11-2016 - SHRI R.C SHARMA (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) For The Assesse : Ms. Aarti Visanji and Shri Shalin S. Divatia For The Revenue : Shri A. Ramachandran ORDER PER RAVISH SOOD, JUDICIAL MEMBER : The present appeals filed by the assessee for assessment years 2007-08to 2010- 11 involving a common issue are directed against the respective orders passed by CIT(A)-17, Mumbai, which in turn have arisen from the orders passed by the Assessing Officer (in short A.O ) under section 143(3) of the Income Tax Act, 1961 (in short Act ). 2. The Grounds of appeal raised by the assessee in all the four years pertain to certain common issues. The Grounds of appeal raised by the assessee in its appeal for the assessment year 2007-08, marked as ITA NO. 6179/Mum/2013, read as under:- (A). A.Y. 2007-08 : 1. TheLd. CIT(Appeals)-17 erred in confirming the addition on account of disallowance of depreciation of ₹ 13,10,650/- on plant and machinery belonging to the appellant company and installed at customers premises for the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the customers, i.e the diagnostic laboratories or the hospitals on rental/reagents basis, but observing that as neither the details of additions to plant and machinery which were installed at the customers site on reagents/rental basisdid emerge from the records, nor any evidence was furnished by the assessee to fortify its contention that the diagnostic machines formed part of its block of assets , therefore in the backdrop of the said factual observations so recorded by him,being of the view that the diagnostic machines which were installed at the customers site on rental/reagent basis were part of the Stock in trade of the assessee, and as such no depreciation on the same could be allowed, thus dismissed the appeal of the assessee. 4. The assessee had before us assailed the order of the CIT(A) sustaining the disallowance of depreciation so carried out by the A.O. The Ld. Authorized representative for the assessee (for short A.R ) vehemently opposing the observations of the lower authorities, therein averred that both the CIT(A) and the A.O while drawing adverse inferences in the hands of the assessee company had failed to appreciate the assesses entitlement towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utright sale of diagnostic machine by the assessee to the customer who thereafter being the absolute owner of the same uses it with the liberty to purchase reagents from any party of his choice. (ii). Installation of the diagnostic machine ownedby the assessee at the premises of the customer, though for zero rental and zero deposit, but subject to a conditional agreement that reagents to be used for running of the said diagnostic machine by the customer will be purchased exclusively from the assessee. In such a situation,though the ownership of the diagnostic machine and the responsibility for maintaining the same continues to remain vested with the assessee, however the customer remains under an obligation to purchase the reagents used in running of the diagnostic machine only from the assessee, i.e to the exclusion of any third party supplier. The Ld. A.R in order to fortify her contention that the agreements executed with the customers at whose site the diagnostic machines owned by the assessee were installed at zero rental, subject to the condition that the exclusive purchase of the reagents used in running of the said machines were to be carried out by the said customers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the assessee, can safely and inescapably be held to be the business of the assessee, and the observations to the contrary so drawn by the lower authorities on the said issueare misconceived and had rightly been dispelled by the Ld. A.R before us. 5.3 We are further unable to persuade ourselves to be in agreement with the observations of the CIT(A) that the assessee had not placed on record any details as regards the plant and machinery which had been given to the customers on reagents/rental basis, nor had adduced any evidence that the diagnostic machines under consideration did form part and parcel of its Block of assets . We are of theconsidered view that the CIT(A) on the basis of misconceived facts, had thus erroneously held that diagnostics machines which were installed at the customers site on reagent rental contract basis did form part of the Stock in trade of the tradable diagnostic machines lying with the assessee.That during the course of hearing of the appeal the Ld. A.R dispelling the aforesaid observations of the CIT(A),therein submitted that the diagnostic machines of ₹ 52,85,721/- which were put to such use as on 01.04.2006, were purchased by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave given a thoughtful consideration to the contention of the parties and are of the considered view that in the backdrop of the aforesaid facts as had emerged from the material available on the record of the lower authorities, the observations of the CIT(A) that the assessee had not furnished any details of the additions to the plant and machinery which were installed at the customers site on reagent rental contract basis, nor adduced any evidence that the diagnostic machines installed at the customers site formed part of the Block of assets of the assessee, being absolutely contrary and in complete disregard of the material available on record, therefore cannot be sustained and are herein set aside. Thus in light of our aforesaid observations, we herein vacate the consequential finding of the CIT(A) which had so emerged on the basis of his aforesaid misconceived and ill founded observationsthat the diagnostic machines installed by the assessee at the customers site under the reagent rental contracts were not from the assesses Block of assets , but formed part of the latters Stock in trade . We thus being of the view that the installation of the diagnostic machines owned by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned CIT(Appeals)-17 erred in confirming the addition on account of disallowance of depreciation of ₹ 10,64,821/- on plant and machinery belonging to the appellant company and installed at customers premises for the business of the assessee. 2. The Ld. CIT(A)-17 erred in concluding that the appellant was unable to adduce any evidence to show that the machines were part and parcel of its block of assets, inspite of the fact that: i). The machines were forming part of the annexures to fixed assets annexed with the tax audit report and submitted before the LearnedA.O. 3. The appellant craves leave to add, alter or amend any of the Grounds of appeal and submit a detailed statement of facts and case laws relied upon at the time of the hearing. 7. That adverting to the Ground of appeal No(s).1 to 3 , the Ld. A.R. had brought to our notice that the identical issue was involved in the appeal of the assessee for A.Y. 2007-08, marked as ITA No. 6179/Mum/2013, which factual position had been admitted by the Ld. D.R. Thus in light of the aforesaid facts, we adjudicate the present issue in terms of our order passed in the appeal of the assessee for A.Y. 2007-08, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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