9911796707
TMI Blog2018 (9) TMI 1414X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Tribunal has gone through the paper book submitted by the assessee running about 224 pages explaining the nature of equipment, purchase of equipment, various write-up of the equipments, bills, vouchers, etc., and after having been satisfied that they all form part of the life saving equipments, granted the relief. Thus, we find that the Tribunal was fully justified in granting the relief of depreciation at 40%. Hence, the finding rendered by the Tribunal on the said issue is confirmed. Deduction of payments made to doctors, who referred patients for diagnosis, as they are illegal payments and prohibited under the Medical Council (Professional Conduct, Etiquette and Ethics) - assessee contended that the disallowance of the expenses incurred especially the component of expenses relatable to providing gifts to medical doctors cannot be made straightaway by applying the Board's circular without examination of the income tax file of the beneficiary medical doctors - Held that:- Tribunal was not justified in directing the Assessing Officer to delete the addition. The learned counsel for the assessee would submit that the assessee has got entire details with them and they are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 ? iii. Whether on the facts and circumstances of the case, the tribunal was right in deleting the disallowance made under section 40A(3), holding that the turnover is huge and the expenses incurred by the assessee is meager and deleted the addition without giving any reasons ? 2.The respondent-assessee is a private limited company registered under the Companies Act, 1956 and runs a multi-speciality hospital and in particular, specializing in cancer treatment. The assessee filed revised return of income dated 25.09.2013 for the Assessment Year 2012-13 admitting taxable income of ₹ 3,35,22,730/-. The case was selected for scrutiny and assessment was completed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), vide order dated 26.02.2015. In the said order, the Assessing Officer disallowed higher depreciation on Life Saving Equipments; disallowed ESI payments; disallowed expenses incurred for gift of gold coins to Doctors; and disallowed cash payment above ₹ 20,000/- in a single day to the tune of ₹ 3,25,000/- under Section 40A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes of depreciation, they appear to be similar in nature and since depreciation is a beneficial provision to the assessee, it has to be broadly viewed and applied beneficially to the assessee and the equipments will either become obsolete in a short time or will have a short life span. Therefore, the Tribunal directed the Assessing Officer to allow the claim of depreciation at 40%. 8.Mr.M.Swaminathan, learned standing counsel, is right to the extent that the Schedule under the Income Tax Rules prescribing the rates of depreciation does not contain the items of machinery and equipments furnished by the assessee. The question would be as to how the entry requires to be interpreted. By way of illustration, if we take up one of the equipments listed in Part A III 3(xia) (d), the equipment is Cobalt Therapy Unit. It is submitted by the learned counsel for the assessee that the Cobalt Therapy Unit has no longer been used and much advanced technology has come into place for effective treatment of radiotherapy. It is the case of the assessee that they have procured the 5th generation linear particle accelerator and the entire write-up of the equipment were placed before the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l was fully justified in granting the relief of depreciation at 40%. Hence, the finding rendered by the Tribunal on the said issue is confirmed. 10.The second issue for consideration is whether the Tribunal was justified in allowing deduction of payments made to doctors, who referred patients for diagnosis, as they are illegal payments and prohibited under the Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002. The Assessing Officer held that the assessee purchased gold coins by making payment in cash and the Authorised Representative (Chartered Accountant) during the personal hearing, stated that the gifts are given to doctors and it is the routine practice in medical industry. However, the list of details to whom such gifts were given were not furnished by the assessee. In this factual background, the Assessing Officer referred to the circular of the Central Board of Direct Taxes (CBDT) dated 01.08.2012 and held that freebies provided by pharmaceutical companies, diagnostic centres and others in medical business to doctors is illegal and accordingly, disallowed the expenses, which were classified as 'marketing expenses'. 11.The CIT (A), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee and not for the purpose of canvassing the patients and the assessee is not a diagnostic centre, but a multi-speciality hospital specialising in cancer treatment. 14.In the light of the stand taken by the assessee, we are of the view that the CIT (A) ought to have made an exercise to verify the details and if necessary, directed cause of verification to the same. However, such exercise was not done by the CIT (A) nor by the Tribunal. Thus, we are of the view that the Tribunal was not justified in directing the Assessing Officer to delete the addition. The learned counsel for the assessee would submit that the assessee has got entire details with them and they are ready to produce the details before the Assessing Officer. In the light of the above, so far as the second question is concerned, we are of the view that the matter requires to be remanded to the Assessing Officer to consider the materials that will be placed by the assessee to establish their stand that gifts were given to their doctors and it is not a prohibited practice and it is not for the purpose of referring or canvassing patients. The assessing Officer shall afford an opportunity to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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