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Facts
The assessee, Trichur Heart Hospital Ltd., claimed depreciation at 40% on a Versa Plus 100 W Holmium Laser Machine and a loss of Rs. 11,02,558/- on revaluation of hospital instruments. The Assessing Officer disallowed the excess depreciation and the revaluation loss. The CIT(A) upheld these disallowances.
Held
The Tribunal held that the assessee failed to provide evidence that the Holmium Laser Machine qualifies as life-saving equipment eligible for 40% depreciation. The Tribunal also noted that the loss on revaluation of hospital instruments was notional and not allowable under the Income-tax Act.
Key Issues
Whether the assessee is eligible for higher depreciation on a medical equipment and whether the loss on revaluation of hospital instruments is allowable.
Sections Cited
Section 143(3), Section 68, Section 154
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO & SHRI SONJOY SARMA
Assessment Year: 2017-18 Trichur Heart Hospital Ltd………………......………………..…..….……….Appellant 33/647254, Shakthan Thampuran Nagar, Thrissur 680001. [PAN:AABCT1092P] vs. DCIT, CIRCLE-1(1) & TPS, THRISSUR.................……........……...…..…..Respondent Appearances by: Shri Harikrishnanunny, CA, appeared on behalf of the assessee. Smt. Leena Lal, Snr AR, appeared on behalf of the Revenue. Date of concluding the hearing: June 09, 2025 Date of pronouncing the order: August 12, 2025 ORDER
Per Sonjoy Sarma, Judicial Member:
This appeal by the assessee is directed against the order dated 19.09.2024 passed by the NFAC for the assessment year 2017-18.
Brief Facts of the Case are that the assessee is a private limited company engaged in business activity and filed its return of income for A.Y. 2017-18 declaring total income of Rs.1,69,95,566/-. The case was selected for scrutiny and assessment was completed under Section 143(3) of the Income-tax Act, 1961, determining total income at Rs.,15,69,566/- after making an addition of Rs.45,74,000/- under Section 68 of the Act on account of unexplained cash credit. Subsequently, during the performance audit by the Audit Party, it was observed that the assessee had claimed depreciation at 40% on Versa Plus 100 W Holmium Laser Machine. However, as per Income Tax Rules, depreciation allowable on such asset is only 15%. Further, the assessee Trichur Heart Hospital Ltd had claimed Rs.11,02,558/-in its Profit& Loss account as loss on revaluation of hospital instruments, which was noted to be notional in nature and hence not allowable. Based on these objections, notice under Section 154 of the Act was issued to rectify the mistake apparent from the record. The assessee submitted that the equipment was a life-saving medical device eligible for higher depreciation. However, no documentary evidence or notification supporting this claim was furnished. As a result, the Assessing Officer made disallowance of Rs.12,33,564/- on account of excess depreciation and Rs.11,02,558/- on account of disallowance of loss on revaluation of hospital equipment.
The ld.CIT(A) sustained both disallowances. Aggrieved by the above order the assessee is in appeal before the Tribunal.
At the time of hearing the learned AR submitted that the higher depreciation40% was rightly claimed as the equipment in question is a life-saving medical equipment. It is argued that under Appendix I to Rule V of the Income Tax Rules,1962, life-saving medical equipment qualifies for depreciation at an enhanced rate. It is further contended that the loss on revaluation of hospital instruments is an allowable expenditure under the consistent accounting policy followed by the company and had been accepted by the department in earlier years.
On the other hand, the Id DR supported the orders of the lower authorities and submitted that the assessee had failed to furnish evidence to prove that the machine is covered under the specific category of life-saving equipment eligible for40% depreciation. It was emphasized that unless the item is specifically listed in Appendix I to Rule V higher depreciation cannot be claimed. Similarly, the loss on revaluation being notional in nature is not allowable as per law and ld. CIT(A)rightly dismissed the appeal.
Trichur Heart Hospital Ltd 6. We have heard the rival submissions and perused the materials available on record. Insofar as the claim of excess depreciation is concerned, we find that the assessee has not been able to furnish any evidence to demonstrate that the Versa Plus 100 W Holmium Laser Machine is listed as a life-saving medical equipment under Appendix I to Rule V of the Income Tax Rules. Hence, the claim of depreciation at 40% was rightly disallowed and the AO's action in allowing depreciation only at 15% is justified. Regarding the claim of 11,02,558/ - as loss on revaluation of hospital instruments, we note that the said loss is notional and not allowable under the provisions of the Income-tax Act. The assessee has failed to produce any documentary evidence or judicial precedents supporting its claim. Therefore, the ld. CIT(A) was correct in sustaining the disallowance. In view of the above discussion, we do not find any merit in the grounds raised by the assessee. Accordingly, we uphold the order of the ld. CIT(A).
In the result, the appeal of the assessee is dismissed.
12th August, 2025
Sd/- Sd/- [Inturi Rama Rao] [Sonjoy Sarma] लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member