TaxTMI 
TaxTMI 
2022 (3) TMI 647
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....depreciation of Rs. 6,53,933/- on plant and machinery 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,....
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....s case, the customers of the assessee are either the stand alone pathology laboratories or the hospitals with such in-house laboratories, which carry out the diagnosis of a 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....
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....the records of the lower authorities. 7. We are of the considered view that in light of the nature of the business of the assessee as stands gathered from a perusal of the relevant pages of the '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 pr....
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.... of the assessee, and the observations to the contrary so drawn by the lower authorities on the said issue are misconceived and had rightly been dispelled by the Ld. A.R before us. 5.3 We are further 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 cust....
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....,15,79,767/- (supra) reflected in 'Schedule 5' (supra). Thus to be brief and explicit the Ld. A.R well demonstrated before us that the complete details as regards the diagnostic machines of Rs. 52,85,721/- (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 ....
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....o emerged on the basis of his aforesaid misconceived and ill founded observations that the diagnostic machines installed by the assessee at the customers site under the reagent rental contracts were not from the 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'....