- (1.) The present appeal has been filed under Section 260 (A) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') against the order dated 25.2.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench "E" New Delhi (hereinafter referred to as the 'Tribunal'). The appeal has been admitted vide order dated 5.9.2007 on the two substantial questions of law said to be arising out of the Tribunal's order : - "1. Whether on the facts and circumstances of the case, the Hon'ble ITAT was legally justified in allowing depreciation on the nursing home building at a higher rate as claimed by the assessee treating it as plant and machinery and holding that the decision in case of CIT Vs. Dr. B. Vankata Rao, 2000 243 ITR 81 (SC) is applicable in the case, overlooking the later decision of the Apex Court in the case of CIT Vs. Anand Theater, 2000 244 ITR 192 and thereby ignoring the test of functionality? 2. Whether on the facts and circumstances of the case, the Hon'ble ITAT was legally justified in holding that the Department is expected to adopt consistent approach without appreciating the fact that under the tax law every year is independent and the principle or res-judicata is not applicable to tax proceedings?"
(2.) Briefly stated, the facts giving rise to the present appeal are as follows: The appeal relates to the Assessment Years 1995-96. The respondent-assessee is a public limited company and running a nursing home in the name and style of M/s Shashi Nursing Home Limited. It had filed its return of income declaring a loss of income Rs.4,12,680/- which was processed under Section 143 (1) (a) of the Act. In response to the notice issued respondent's representative attended the proceedings. The respondent-assessee had claimed depreciation on Hospital building @ 25% treating it as a plant and machinery. The Assessing Officer did not allow the same and held that the depreciation will be allowed to the respondent-assessee as per normal rate applicable to building rather than plant and machinery. Feeling aggrieved the respondent-assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Meerut, who vide order dated 28.7.1999 had accepted the claim of the respondent-assessee and held that the depreciation of 25% is applicable to the plant and machinery be allowed. Feeling aggrieved, Revenue filed appeal before the Tribunal. The Tribunal by the impugned order upheld the order of the Commissioner of Income Tax (Appeals) and dismissed the appeal by holding as follows: "8. We have carefully considered the facts and circumstances relating to this matter and the rival submissions. According to the learned CIT(A), nursing home building fulfilled the conditions as laid down by the Hon'ble Karnataka High Court in the case of Dr. D. Venkata Rao. Thus, the learned CIT(A) has taken the nursing home as plant & machinery and allowed the depreciation accordingly. He has also pointed out that in A.Y. 1993-94 also the depreciation was allowed by the Department in the assessment which was completed u/s 143(3) and in subsequent years also similar approach has been adopted. The department has not controverted the findings of fact recorded by the Ld. CIT(A) and in view of various equipments fitted in the hospital building, it fulfills the functional test also. It is not the case of the deptt, that the hospital building of the assessee is meant merely for housing the patients. If the building is mainly used for diagnosis or treatment of patients and fully equipped with scientific and pathological instruments like X-Ray plant, oxygen plant and sterilization system, etc., then it is covered within the definition of plant and machinery. The Ld. D.R. could not show us any authority in favour of his submissions that the nursing home/hospital of the assessee is not a plant whereas the claim of the assessee is found to be supported by the decision of Hon'ble Supreme Court of India in the case of CIT vs. Dr. B. Venkata Rao, 2000 243 ITR 81 in which case the Hon'ble Apex Court made the following observations: - "We find from the order of the Tribunal as also the assessment order that the assesses nursing home is equipped to enable the sterilization of surgical instruments and bandages to be carried on. It is reasonable to assume in the circumstances, particularly having regard to the Tribunal's order which states that the sterilization room covers about 250 sq. ft. that the nursing home is also equipped with an operation theatre. In the circumstances, we think that the finding of the High Court should be accepted." 9. In view of the above and on going through the entire material we find that the nursing home of the assessee which was equipped with scientific instruments should be treated as plant & machinery and depreciation should be allowed on it accordingly. It may be pointed out that the Department has also treated the nursing home of the assessee as plant in subsequent years and in earlier years and therefore the Department is expected to adopt consistent approach. In view of the above, we do not find any scope to interfere on this issue also. Hence, this ground stands rejected."
(3.) We have heard Sri Shambhu Chopra, learned Senior Standing Counsel for the Revenue. Sri Krishna Agrawal has appeared for the respondent assessee.;