Assets installed at collection centers of laboratory situated at multiple locations eligible for additional dep.: ITAT

Case details: Metropolis Healthcare Ltd. v. DCIT - [2021] 129 taxmann.com 171 (Delhi - Trib.)

Judiciary and Counsel Details

• • Amit Shukla, Judicial Member and Prashant Maharishi, Accountant Member
  • Mayank Patwari, CA for the Appellant. 
  • S.S. Negi, Sr. DR for the Respondent.

Facts of the Case

Assessee was engaged in the business of providing referral laboratory services and diagnostics services etc. Assessee filed its return of income. Assessing Officer (AO) noted that assessee had claimed additional depreciation on the plant and Machinery. Assessee submitted that it had been claiming such additional depreciation in the earlier assessment year also. There was no disallowance on this account in prior years. However, AO disallowed the additional depreciation claimed on the grounds that assessee had not invested in the industrial undertaking as it was engaged in providing referral and diagnostic services.

Aggrieved by order of AO, assessee preferred an appeal before the CIT(A). The CIT(A) held that depreciation was not available on the asset used at the collection centers at multiple locations. However, in respect of all other assets used for diagnostic and report making, assessee’s claim for depreciation was allowed.

ITAT held

On further appeal, the Delhi ITAT held that the business of pathological testing diagnostic laboratories was the main business of the assessee. Assessee had set up various collection centers at multiple locations. Collection centers were also an integral part of the whole process of the business of diagnostic and report-making central facilities. There was no reason that additional depreciation on those facilities should not be allowed to assessee when revenue had already accepted the claim that assessee was entitled to additional depreciation on the assets installed in the diagnostic center and report-making central facilities. The past assessment record also stated accepting this assessee’s claim, which was not negated by revenue. In view of this, AO was directed to grant additional depreciation on these assets to assessee.

Case Review

• • Sesa Goa Ltd. v. Jt. CIT [2020] 117 taxmann.com 96/423 ITR 426 (Bom.) (para 20) followed.

List of Cases Referred to

• • CIT v. Suresh Amin family Trust [2007] 158 Taxman 105/288 ITR 101 (Guj.) (para 5)
  • Dr. Suresh Amin Family Trust v. Asstt. CIT [1995] 81 Taxman 109 (Mag.) (Ahd.) (para 5)
  • CIT v. Dr. S. Surender Reddy [2002] 123 Taxman 166/[2000] 243 ITR 110 (A.P.) (para 6)
  • CIT v. VTM Ltd. [2010] 187 Taxman 319/[2009] 319 ITR 336 (Mad.) (para 10)
  • Texas Instruments (India) (P.) Ltd. v. Addl. CIT [2020] 115 taxmann.com 154/183 ITD 7 (Bang. – Trib.) (para 10)
  • Dy. CIT v. Bengal Beverages (P.) Ltd. [2017] 87 taxmann.com 103/167 ITD 393 (Kol. – Trib.) (para 10)
  • CIT v. Trinity Hospital [1996] 87 Taxman 127/[1997] 225 ITR 178 (Raj.) (para 10)
  • Bikanervala Foods (P.) Ltd. v. Dy. CIT [IT Appeal No. 6357 (Delhi) of 2015, dated 6-6-2019] (para 10)
  • National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) (para 13)
  • DCM Benetton India Ltd. v. CIT [2008] 173 Taxman 283 (Delhi) (para 13)
  • Sesa Goa Ltd. v. Jt. CIT [2020] 117 taxmann.com 96/423 ITR 426 (Bom.) (para 18).