METROPOLIS HEALTHCARE LTD.,MUMBAI vs. DCIT, CIRCLE- 16(2), NEW DELHI

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

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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.

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

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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.”

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.”

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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.

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.

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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.

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

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

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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.”

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.

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ADDITIONAL GROUND NO.1

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.

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.”

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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 18TH day of November, 2021.

SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 18TH day of November, 2021 TS

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