Only on the basis that machine not liable to Claim depreciation penalty cannot be imposed under sec 271(1)( C )

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The facts are that during the assessment proceedings, the A.O. noted that the assessee claimed depreciation @ 4O% on the block of assets of life saving equipment which included on addition of Rs.55 lakhs. The assessee furnished two bills in respect of addition of R.55 lakhs, viz., a bill of purchase of CT Scanner System for Rs.51,07,704/-and another bill in lieu of lead glass/UPS/stabilizer for Rs. 3,92, 296/-. Both the bills were dated 29.3.2005 and of M/s VIPRO GE Medical System Ltd., Hosur, Karnatka totaling to Rs.55 lakhs. On perusal of the depreciation table relevant to the assessment year 2005-06 provided in the appendix of Income Tax Rules 1962, it was noted that in the block of plant and machinery at S.No. 3(xia), among the list of life savings medical equipment eligible for depreciation @ 40%, the name of CT .Scan Machine is not mentioned. The AO, therefore, held that CT Scanner machine purchased during the year is not eligible for depreciation @ 40% under the block of life saving medical equipment. The assessee did not offer any explanation in this regard and submitted that depreciation @ 40% was claimed under the bonafide belief that it is covered under 'lifesaving medical equipment' just like Magnetic Resonance Imagine System on which it has been claiming depreciation @ 40% since A.Y. 2003-04. The A.0., however, noted that the assessee reduced the amount of Rs.5 lakh on account of sale of old CT scan machine from the WDV of the block of assets under the head 'plant & machinery' eligible for depreciation @ 4.0% and not from the WDV of block of assets under the head 'life saving medical equipment' eligible for depreciation @ 40%. The A.O. further stated that the assessee could not establish that the CT scan machine purchased was put to use for the purpose of business during the year itself and hence held that the same is not eligible for depreciation in the year under consideration and disallowed CT scan machine of Rs.55 lakh by the assessee.

Citation :
M/s Lala Harbhagwan Dass Memorial & Dr. Prem Hospital (P) Ltd., C/o M/s RRA Taxindia, D-28, South Extension, Part I, New Delhi. (PAN/GIR No.AAACL9072G) (Appellant) Vs. ITO, Ward 39(3), New Delhi. (Respondent)