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TMI Blog2005 (11) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... count of cost of construction of the building? 2. Whether, the Appellate Tribunal is right in law and on facts in holding that running the heart hospital and the intensive coronary care unit is an independent business activity quite different from professional services rendered as a physician and in further holding that the intensive coronary care unit is a small-scale undertaking within the meaning of section 32A of the Income-tax Act and directing the Income-tax Officer to allow investment allowance on heart monitoring machine and treadmill machine in the hospital? 3. Whether, the Appellate Tribunal is right in law and on facts in directing the Income-tax Officer to allow additional depreciation without verifying the utilization and loc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as shown by the assessee was very low. He, accordingly, adopted the rate of construction at Rs. 1,000 per sq. mtr. as against the rate of Rs. 650 which was the actual cost of construction shown by the assessee and estimated the cost of construction at Rs. 3,81,000. After adjusting the cost of Rs. 2,48,000 estimated by the assessee, the Assessing Officer made an addition of Rs. 1,33,000 treating it as the concealed income of the assessee. During the year under consideration, the assessee had installed a heart monitoring machine and treadmill in the hospital. The assessee claimed investment allowance under section 32A of the Act. The assessee also claimed additional depreciation on air-conditioners and fans. The Assessing Officer rejected t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, I agree with the appellant, that the Income-tax Officer was not justified in adopting the rate of Rs. 1,000 per sq. mtr. as the cost of construction without any proper basis. The reasons forwarded by the appellant justifying as to how the cost of construction, which works out to Rs. 650 per sq. mtr. was fair and reasonable in the case, are satisfactory and convincing. If the Income-tax Officer had appreciated the facts of the case in this perspective, he would have had no reason to take a different view in the matter. In any case, since the Income-tax Officer has not located any defects in the valuation report of the appellant's registered valuer and since no reference has been made on any of the points to the Departmental Valuer in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of this court in the case of Natvarlal Ambalal Dave v. CIT [1997] 225 ITR 936, wherein this court has held that an X-ray machine satisfies the conditions of section 32A of the Act, in that it is plant and machinery through which an article or thing could be produced for sale. It is further held that merely because a person happens to be a professionally qualified doctor, it cannot be said that such person's activity cannot be treated as an activity of carrying on business. However, Mrs. Bhatt sought to distinguish the aforesaid decision by placing reliance upon a decision of the Andhra Pradesh High Court in the case of CIT v. Dr. S. Surender Reddy [2000] 243 ITR 110 wherein it has been held that the report given by conducting the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal has held that the assessee is entitled to investment allowance in relation to the aforesaid machines. This court in the case of Natvarlal Ambalal Dave [1997] 225 ITR 936 has held that an X-ray machine satisfies the conditions of section 32A of the Act, in that it is plant and machinery which produces an article or thing. In the facts of the present case, when a patient is subjected to graded exercise on the tread mill machine and the functional data of the heart operation is recorded on the heart monitoring machine, the functional status is recorded on the ECG paper which is produced by the combined functioning of the aforesaid machines. Drawing an analogy from the aforesaid decision, the printing of the functional status on the E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd questions Nos. 1 and 2 in relation to the assessment year 1983-84 are answered in the affirmative, i.e., in favour of the assessee and against the Revenue. In so far as question No. 3 for both the assessment years is concerned, additional depreciation qua air-conditioners and fans stands on the same footing as the aforesaid machines and as such would be covered by the aforesaid decision of this court. Moreover, in the aforesaid decision of the Andhra Pradesh High Court upon which reliance has been placed on behalf of the Revenue, it has been held that other electrical items such as stabilizer, electric fans, scanner and air-conditioners used to keep analytical systems at a particular temperature were necessary for the purposes of produc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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