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TMI Blog2022 (3) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... ry belonging to the appellant company and installed at customer's premises for the business of the assessee. 2. The Learned CIT(Appeals)-17 erred in confirming the addition of Rs. 1,88,922/- on account of the difference between the income credited to the Profit and Loss account and the income reflected in Form 26AS." 3. The brief facts are, the assessee company is engaged in the business of trading in diagnostic kits and instrumentation used for medical purposes. It also does marketing of related medical instrumentation on commission basis. The assessing officer, on finding that the assessee claimed depreciation of Rs. 22,06,050/- on plant and machinery. Further he observed, the assessee claimed depreciation on machines which were gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medical disease by subjecting the patients sample with the use of reagents in the diagnostic machines/instruments. The modus operand! adopted by the assessee for running its business of trading in diagnostic machines and reagents, which is commonly followed in the trade line of diagnostic industry, can briefly be culled out as under:- (i). Outright sale of diagnostic machine by the assessee to the customer who thereafter being the absolute owner of the same uses it with the liberty to purchase reagents from any party of his choice. (ii). Installation of the diagnostic machine owned by the assessee at the premises of the customer, though for zero rental and zero deposit, but subject to a conditional agreement that reagents to be used fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'APB', the conditional deployment of the diagnostic machines owned by the assessee, at the customers site, on the basis of agreements contemplating a strict stipulation that the customers shall remain under an obligation to exclusively purchase the reagents used in running of the said diagnostic machines from the assessee, is a purposive, conscious and intentional modus operandi adopted by the assessee to boost the sales of the reagents, which can safely be characterized as a strategic approach of the assessee prompted by business prudence in the very interest of its business. The Ld. A.R in order to fortify her contention that the diagnostic machines in the normal course of the business of the assessee, with the intent to boost th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unable to persuade ourselves to be in agreement with the observations of the CIT(A) that the assessee had not placed on record any details as regards the plant and machinery which had been given to the customers on reagents/rental basis, nor had adduced any evidence that the diagnostic machines under consideration did form part and parcel of its 'Block of assets'. We are of the considered view that the CIT(A) on the basis of misconceived facts, had thus erroneously held that diagnostics machines which were installed at the customers site on reagent rental contract basis did form part of the 'Stock in trade' of the tradable diagnostic machines lying with the assessee. That during the course of hearing of the appeal the Ld. A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21/- (supra) formed part of the 'Block of assets' of the assessee, and had been installed at the customers sites on reagent sale basis during the year under consideration, were very much available before the lower authorities. It was thus submitted by the Ld. A.R that in the backdrop of the aforesaid factual position, the observations of the CIT(A) that the assessee had failed to furnish details and adduce any evidence in support of his contention that the diagnostic machines installed at the customers site were part of its 'Block of assets', were proved to be blatantly contrary to the material available on record, and the A.O had most whimsically concluded that the same were part of the 'Stock in trade' of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assesses 'Block of assets', but formed part of the letters 'Stock in trade'. We thus being of the view that the installation of the diagnostic machines owned by the assessee and forming part of its 'Block of assets' at the customers site, being a part of the business of the assessee, and rather as a matter of fact a modus operand! adopted by the assessee to boost its sales of reagents, therefore the latter being found to have duly satisfied the requisite conditions contemplated u/s. 32(1) of the 'Act', is thus entitled to deprecation on the said diagnostic machines. We thus in light of our aforesaid observations set aside the order of the CIT(A) and allow the appeal of the assessee." 8. Consistent with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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