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TMI Blog2018 (10) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions bearing No. 3 of 2018 prohibiting its subordinate authorities from filing of the appeal to the Tribunal against the order of the CIT(A) where the tax effect by virtue of the relief given by the CIT(A) is less than Rs. 20 lakhs. The instructions have been made applicable with retrospective effect, meaning thereby, these instructions are applicable on pending appeals also. In the present case, the disputed addition is of Rs. 45 lakhs, and therefore, the "tax effect" as per CBDT Circular is tax on the total income assessed minus the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issue against which appeal is filed, would be less than Rs. 20 lakhs. Therefore, the present appeal of the Revenue is hit by the CBDT Circular and hence not maintainable. Further, ld.DR has not pointed out whether the case of the Revenue fall within the ambit of exceptions provided in the Circular or not. Thus, keeping in view the above CBDT circular and provisions of section 268A of the Income Tax Act, we are of the view that the present appeal of the Revenue deserves to be dismissed. It is accordingly dismissed. However, it is observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above expenditure by holding that these were not incurred for the purpose of business. On appeal, the ld.CIT(A) has confirmed disallowance at Rs. 11,57,514/- as against Rs. 17,99,461/- debited by the assessee in the Asstt.Year 2012-13. In the Asstt.Year 2011-12, the ld.CIT(A) has confirmed the disallowance of Rs. 21,72,749/- as against expenditure debited at Rs. 26,89,430/-. As observed earlier, there is no disparity of facts about the nature of expenditure as well as business carried out by the assessee. We find that the ld.CIT(A) has examined each expenditure analytically and exhaustively. The finding of the ld.CIT(A) recorded in the Asstt.Year 2011-12 is worth to note. It reads as under: "I have considered the facts of the case, the AO's observations and submission made by the AR of the appellant. The expenses disallowed by the AO in the form of gift expenses, business, promotion expenses and entertainment expenses consists of several sub-heads of such expenses. The allowability of the same is being discussed in following paragraph:- i) Out of gift expenditure an amount of Rs. 3,198/- has been incurred for celebrating birthday of staff member, marriage gift etc. Such ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been incurred for the purpose of business or profession and no deduction or allowance \shall be made in respect of such expenditure.)" 3. Shri Vishal Mohan, Advocate, on behalf of the petitioner contends that the circular goes beyond the section itself. We are not in agreement with this submission. The explanation to Section 37(1) makes it clear that any expenditure incurred by an assessee for any purpose which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession. The sum [and substance of the circular is also the same. In case the assessing authorities are 'not properly understanding the circular then the remedy lies for each individual assessee to fife appeals under the Income-tax Act but the circular which is totally in line with Section 37(1) cannot be said to be illegal. In fact para 4 of the circular quoted hereinabove itself clarifies that the value of the freebies enjoyed by the medical practitioner is also taxable as business income or income from other sources depending on the facts of each case. Therefore, if the assessee satisfies the assessing authority that the expenditure is not in violation of the regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re concerned, the same are not allowable on the basis of the discussions made regarding gift expense incurred for doctors above. These expenses are nothing but bribery given to the doctors and hence the same are illegal expenses as per the regulations of Medical Council of India and hence are not allowable as per the provisions of section 37 of the IT Act. How organizing the viewing of IPL matches at farmhouses result into advertisement of the appellant's business has nowhere been explained by the appellant. The appellant earns money from patients and not from .doctors. If the appellant's claim that these expenses are in the nature of advertisement expenses is accepted, then it only means that these are the inducements given by the appellant to doctors to refer more and more patients to its hospitals and again it makes the expenses illegal as per the guidelines of MCI. Hence, disallowance of these expenses are upheld." 8. The ld.counsel for the assessee at the time of hearing fairly admitted that similar disallowance was made in the Asstt.Year 2008-09 and that disallowance was upheld upto the Tribunal. However, he contended that assessee is in the business of providing med ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency, these grounds of appeals are rejected in both the assessment years. 10. Next common issue agitated by the assessee in both the year is with respect to depreciation required to be granted to the assessee on the alleged life saving equipments. In the details of assets, on which depreciation has been claimed, the assessee has shown the following machineries: "1. Stress Test Machine 2. TMT Machine, TMT Machine with PC Printer/Accessories 3. Trade Mills for Stress Test Machine 4. Regulator, Life pressure Alarm 5. Syringe Pump 6. Patient Monitor System with Accessories and Modules New ICU Monitors 8. Vital Signs View Station 9. KLV 46W400A Sony LCD TV & DAV DZ87 ow sony HT 10.Heat Exchanger and Lithium Bromide 11.Pluga make 100 mm Sumbersibale Pump set Model 12.IPB Module for Monitor V24 13.1 Big trolly with 3 tray and small trolly with 2 tray 14.OT Instrument with OT table and Different Light Sets 15.Opthalmic Sight Saving Equipments 16.Microscope 17.Monitors, 40" Monitor, Multipa Monitor for ICU 18.AMD Diplomax PHACO Machine 19. Neotech Chair Unit and OT Table 20.Horizontal Cylinder gas sterilizer with vacuum pump" 11. According to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been claimed by the assessee at 40% is not being provided in the Appendix. Therefore, the depreciation on such machinery is at 15% which has rightly been upheld by the ld.CIT(A). This ground of appeal is rejected in both years. 13. In the next ground o0f appeal, the assessee has claimed depreciation on certain electrical installation at 15% which has been restricted by the AO to 10%. While dealing with this issue in the Asstt.Year 2011-12, the ld.CIT(A) has taken note of the finding given by the AO as well as submissions made by the assessee. Thereafter, the ld.CIT(A) has upheld disallowance. The discussion made by the ld.CIT(A) reads as under: "6. The third ground of appeal is as follows:- "3. The Id. AO erred in fact and in law in restricting the claim of depreciation on electrical installation to 10% instead of 15% claimed by the Appellant and thereby disallowing depreciation of Rs. 2,08,952/- 6.1. The AO has stated in his order as follows:- "7.0 Disallowance of excess Depreciation on Electric Installation:- 7.1 On verification of depreciation chart annexed along with the return of income, it is noted that the assessee company has claimed depreciation of @ 15% on i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st your kind office to allow the depreciation on electrical installation @ 15% as claimed by the Appellant. 6.3. I have considered the facts of the case, the AO's observations and submission made by the AR of the appellant. Again, the appellant has failed to explain with supporting evidences that the electric installation is in the nature of part and parcel of the medical equipments. The industrial cable of various sizes for running the medical equipments, PCC penal etc. are in the nature of electrical wiring and other fittings only. Hence, the disallowance made by the AO is upheld and this ground of appeal is dismissed." 14. With the assistance of the ld.representtives, we have gone through the record. We find that depreciation has been restricted at the rate of 10% by the ld.AO because the assessee failed to demonstrate that electrical panel installed by it was part of the machinery. He considered electrical installation as independent asset than the medical equipments. The ld.CIT(A) has considered all these aspects in right perspective and no interference is called on this issue. Hence, this ground of appeal is also rejected. 15. In the result, all appeals of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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