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Income Tax Appellate Tribunal, KOLKATA BENCH “B”, KOLKATA
Before: SH. M.BALAGANESH & SH. S.S.VISWANETHRA RAVI
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER
This appeal filed by the assessee against the order dated 16.02.2015 passed by Ld. CIT(A), Asansol for AY 2011-12.
The only issue is to be decided is to whether Ld.CIT(A) is justified in confirming the depreciation @ 15% on CT scan, ECG & ECG Accessories and Patient Monitoring System made by the AO against the claim of assessee @ 40% in the facts and circumstances of the case.
The brief facts of the case are that the assessee is a Private Limited Company and conducts its business in the name and style of “H.L.G. Memorial & Charitable Hospital Research Institute Pvt.Ltd.” The assessee filed its e-return of income disclosing at a total income of Rs.51,22,513/-. Notice u/s 143(2) and 142(1) of the Income tax Act, 1961 (in short “Act”) alongwith the detailed questionnaire was issued. In response to which AR of the assessee appeared and furnished replies alongwith the audited statements. The AO perusing the schedule [Assessment Year: 2011-12] of depreciation found that the assessee had claimed depreciation @ 40% in one of the block of assets on the following equipments/items:-
(A) Life Saving Medical Equipments (B) U.S.G. Machine (C) X-ray Equipments (D) U.P.S (E) Computer
On examination of such details provided by the assessee, the AO show caused the assessee to furnish explanation in terms of New Appendix I of the Income Tax Rules, 1962 (in short “”Rules”) in respect of claim of depreciation @ 40% on ECG & ECG Accessories, Patient Monitoring System and CT Scan.
In response to the above show cause, the assessee filed a detailed reply vide letter dated 31.01.2014 by stating that the ECG & ECG Accessories, Patient Monitoring System and colour Doppler devices are used as magnetic medical imaging technique to record heart beat and glucose meter of patients and claimed depreciation @ 40% is well within the corners of law. Further, he submitted that CT Scan is a Life Saving Equipment by taking into support of definition in Dictionary meaning that in device acting to save a person’s life or informally giving help in time of need can be termed as “Life Saving Medical Equipments.”
According to the AO, CT Scan, ECG & ECG Accessories, Patient Monitoring System are not Life Saving Medical Equipment and not included in the New Appendix I under the category of “Life Saving Medical Equipments.” Thereby, the AO restricted the depreciation @ 15% on such items as against the claim of assessee @ 40% and disallowed an amount of Rs.26,67,916/- and added the same to the total income of assessee by an order dated 26.02.2014 passed u/s 143(3) of the Act. [Assessment Year: 2011-12]
Before Ld.CIT(A), the assessee contended that ECG & ECG Accessories, Patient Monitoring System and Colour Doppler device are used as magnetic medical technique to record heart beat and glucose meters of patients and the assessee is entitled to claim @ 40% on such devices ease in accordance with law.
Regarding CT scan under the category of Life Saving Equipments, the assessee submitted that MRI scan and CT scan are identical. CT scan helps in non-invasively in saving a human life. Before invention of MRI, CT scan used for detecting tumors, strokes, degenrative diseases, inflammation, infection and other abnormalities in organs. MRI does not provide any distinct superior functionality than that of CT Scan and submitted the depreciation on CT scan is allowable @ 40 %.
9. CIT(A) did not find force in the submissions of the assessee and upheld the order of AO in making the impugned addition. The relevant portion of which is reproduced as under:-
C. “There are many differences between C.T Scan & MRI. MRI does not emit radiation, CT Scan is suited for bone injuries, Lung and Chest Imaging, Cancer detection whereas MRI is also suited for soft tissue evaluation like spinal cord injury, brain tumour etc. Further the imaging principle is also different as CT scan uses X-Rays whereas MRI uses RF pulse. Thus the scope for MRI is more and diverse and is totally different from CT scan. They are two entirely different medical equipments.
In view of discussion above, I find that the claim of deprecation at 40% on items claimed by assessee as life saying medical equipments is not correct. Accordingly, I uphold the addition made by Assessing Officer.”
Before us in second appeal, AR submits that CT scan is a Life Saving Medical Equipment as that of MRI scan and the assessee is entitled to get 40% depreciation on CT Scan as such it is a Life Saving Medical Equipment. He relied upon the order dated 13.02.2014 of Co-ordinate Bench, ITAT Chennai Bench in AY 2009-10 in the case of ACIT vs M/s Bharat Scans Pvt.Ltd. [Assessment Year: 2011-12] and placed on record the same and referred to para 2 of the said order and argued the issue before the ITAT, Chennai Bench was that whether the diagnostic imaging equipment could be considered in the nature of SPECT Gamma Camera. Further, Ld. AR submits that the Co-ordinate Bench of ITAT, Chennai considered that PET/CT scan is very much used in the treatment of cancer and given both anatomic and metabolic information to assess the present condition of cancer growth in a patient. The said instrument is useful not only in detecting cancer but also treating the cancer by making a proper assessment of the condition of the patient suffering from Cancer even at the advanced stage. The imaging technology is used not only in the treatment of cancer but also in the treatment of heart disease and neurological diseases as the PET/CT scan delivers the condition of vascular system of a patient and referred to para 7 of order of CIT(A) and by adopting the same submissions and argued that when a MRI Scan gives Life Saving Medical Equipment and denial of same category to CT Scan is erroneous and vehemently argued that the assessee is entitled depreciation @ 40% and prayed to allow the grounds of appeal raised by the assessee.
11. On the other hand, Ld. DR submits that order of Co-ordinate Bench of Chennai Tribunal relied by AR in support of his contention is not applicable to the present facts and circumstances of the case. He also submits that AO and CIT(A) both have rightly held that CT Scan is not a Life Saving Medical Equipment and the assessee is not entitled to claim deprecation on this equipment @ 40% by stating that functions of MRI & CT Scan are identical. Ld. DR relied upon the orders of AO and CIT(A) and prayed to dismiss the grounds raised by the assessee.
12. Heard both the parties and perused the material available on record. The contention of the assessee before the AO as it could be seen from the reply dated 31.01.2014 in response to show cause notice that ECG and Patient Monitoring System records heart beat and glucose meters of patients, as regards CT Scan, it [Assessment Year: 2011-12] was submitted that any device gives help in time of need in saving a person’s life area Life Saving Equipments. The AO examined the issue and held that the claimed items such as ECG & ECG Accessories, Patient Monitoring System and CT Scan are not Life Saving Equipment in terms of New Appendix I of Rules and the assessee is not entitled to claim depreciation @ 40%. On perusal of the New Appendix I of Rules as referred by the AO, it is clear that the claim of deprecation of block of assets is provided in New Appendix I which is came into force from AY 2006-07 onwards. Rate of depreciation as provided in New Appendix I is applicable to the assessment year under consideration as it belongs to AY 2011-12. The depreciation for Life Saving Medical Equipment is provided in (iii) of part (A) under the head “Machinery & Plant” wherein it is noticed that no deprecation @ 40% is provided to CT scan, ECG & ECG Accessories, Patient Monitoring System.
Therefore, in our opinion, AO is correct in restricting the deprecation on claimed items @ 15%. Before CIT(A), it was contended that the functionality, characteristics and attributes of MRI scan and CT scan are identical. Prior to invention of MRI scan, CT scan were used for the same purpose as MRI scan of detecting tumors,strokes, degenerative diseases, inflammation, infection and other abnormalities in human organs. It is also contended that there is no distinction of functionality between MRI and CT scan except the MRI scan creates only a superior quality of images. For this proposition, Ld.AR placed reliance on the order of ITAT, Chennai Bench in the case of M/s Bharat Scans Pvt.Ltd. (supra) and proposed that the Tribunal discussed the nature of functionality of SPECT Gamma Camera and comparing the with that of nature and use of PET/CT Scan and held the functions, characteristics of SPECT Gamma Camera and PET & CT Scan are identical and the assessee therein entitled to claim deprecation @ 40 % by holding the PET/CT Scan is a Life Saving Medical Equipment. Ld.AR contended before us that in the same way when there is no distinction between MRI scan and CT scan except creating the superior quality of images, the depreciation on the disputed [Assessment Year: 2011-12] items as claimed by the assessee @ 40% is allowable. It is clear from the impugned order, the CIT(A) did not find the submissions of the assessee not acceptable and affirmed the view taken by the AO. Therefore, the point of consideration before us whether CIT(A) was right in confirming the view taken by the AO in terms of table of rates which the deprecation admissible in terms of New Appendix I which came in to force for AY 2006-07. For better understanding in this regard, the relevant portion of New Appendix I governing the depreciation under Life Saving Medical Equipment at (iii) (xia) of para A is extracted hereunder:-
(xia) Life saving medical equipment, being- (a) D.C.Defibrillators for internal use and pace makers (b) Haemodialysors (c) Heart Lung Machine (d) Cobalt Therapy Unit (e) Colour Doppler (f) SPECT Gamma Camera (g) Vascular Angiography System including Digital Subtraction Angiography (h) Ventilator used with anaesthesia apparatus (i) Magnetic Resonance Imaging System (j) Surgical laser (k) Ventilator other than those used with anaesthesia (l) Gamma knife (m) Bone Marrow Transplant Equipment including silastic long standing intravenous catheters for chemotherapy (n) Fibre optic endoscopes including, Paediatric resectoscope/ audit resectoscope, Peritoneoscopes, Athoscope, Microlaryngoscope, Fibreoptic, Flexible Nasa, Pharyngo Bronchoscope, Fibreoptic Flexible Laryngo Bronchoscope, Video Laryngo Bronchoscope and video Oesophago Gastroscope, Stroboscope, Fibreoptic Flexible Oesophago Gastroscope (o) Laparoscope (single incision)
On plain reading of above, it suggests that no deprecation @ 40%was provided to CT scan, ECG/ ECG Accessories and Patient Monitoring System. We find the facts and circumstances in the case of M/s Bharat Scans Pvt.Ltd. of ITAT, [Assessment Year: 2011-12] Chennai Bench, as rightly pointed by Ld.DR, in our opinion, is not applicable with the facts and circumstances of the present case.
As discussed and opined above that CIT(A) is justified in confirming the addition made by the AO and it requires no interference from us. Accordingly, Ground No.1 to 3 raised in this regard by the assessee fails and are dismissed.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court 11.07.2018.