Dr. Smt. Kusum J Singh, V. The ACIT, 3(1),

CO 108/IND/2006

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4665 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 6 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2010
• Assessment Year: misc
• Appeal Filed On: 26-10-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: RAVI SARDA
• Keywords: Capital asset; Revenue expenditure

Judgement Text

PAGE 1 OF 8 - DR.(MRS.)KUSUM J. SINGH, PROP. M/S.G REATER KAILASH NURSING HOME,INDORE. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : N.A. I.T.A.NO.180/IND/2006 A.Y. : 2001-02 ACIT, DR.(SMT.)KUSUM J. SINGH, 3(1), VS PROP. M/S. GREATER KAILASH NURSING HOME, INDORE. 11/2, OLD PALASIA, INDORE. APPELLANT RESPONDENT PAN NO. : N.A. C.O.NO.108/IND/2006 (ARISING OUT OF I.T.A.NO.180/IND/2006) A.Y. : 2001-02 DR.(SMT.)KUSUM J. SINGH, ACIT, PROP. M/S. GREATER KAILASH NURSINGH HOME, VS 3(1), 11/2, OLD PALASIA, INDORE. INDORE. CROSS OBJECTOR RESPONDENT PAN NO. : N.A. I.T.A.NO.610/IND/2006 A.Y. : 2003-04 PAGE 2 OF 8 - DR.(MRS.)KUSUM J. SINGH, PROP. M/S.G REATER KAILASH NURSING HOME,INDORE. DR.(SMT.)KUSUM J. SINGH, ACIT, PROP. M/S. GREATER KAILASH NURSING HOME, VS 3(1), 11/2, OLD PALASIA, INDORE. INDORE. APPELLANT RESPONDENT I.T.A.NO. 648/IND/2006 A.Y. : 2001-02 ACIT, DR.(SMT.)KUSUM J. SINGH, 3(1), VS PROP. M/S. GREATER KAILASH NURSING HOME, INDORE. 11/2, OLD PALASIA, INDORE. APPELLANT RESPONDENT PAN NO. : N.A. C.O.NO.81/IND/2006 (ARISING OUT OF I.T.A.NO.466/IND/2006) A.Y. : 2002-03 DR.(SMT.)KUSUM J. SINGH, ACIT, PROP. M/S. GREATER KAILASH NURSING HOME, VS 3(1), 11/2, OLD PALASIA, INDORE. INDORE. CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SMT.APARNA KARAN, SR. DR ASSESSEE BY : SHRI RAVI SARDA, ADV. DATE OF HEARING : 27.04.2010 PAGE 3 OF 8 - DR.(MRS.)KUSUM J. SINGH, PROP. M/S.G REATER KAILASH NURSING HOME,INDORE. O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTI ON FILED BY THE ASSESSEE INVOLVE COMMON ISSUES, HENCE, THESE WERE H EARD TOGETHER AND THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDAT ED ORDER FOR THE SAKE OF CONVENIENCE. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. FIRST, WE SHALL TAKE UP REVENUES APPEAL IN I.T.A.N O. 180/IND/2006. 4. THE LD. DEPARTMENTAL REPRESENTATIVE, AT THE VERY OU T-SET, DREW OUR ATTENTION TO GROUND NO.2 WHEREIN THE REVENUE HA D RAISED A SPECIFIC ISSUE THAT THE LD. CIT(A), WHILE DISPOSING OF THE V ARIOUS ISSUES, HAD NOT CONSIDERED THE MATERIAL FACTS ON RECORD AND MERELY FOLLOWED THE ORDER OF HIS PREDECESSOR ON MOST OF THE GROUNDS. THE LD. SR. DR, THEREAFTER, REFERRED TO THE DIRECTIONS OF THE TRIBUNAL, AS REPR ODUCED BY THE LD. CIT(A) AT PAGE 1 & 2 OF THE APPELLATE ORDER, WHEREI N THE VARIOUS ISSUES WERE RESTORED BY THE TRIBUNAL TO THE FILE OF LD. CI T(A) FOR DECISION PAGE 4 OF 8 - DR.(MRS.)KUSUM J. SINGH, PROP. M/S.G REATER KAILASH NURSING HOME,INDORE. THEREON AFRESH AFTER GIVING A DUE OPPORTUNITY TO TH E ASSESSEE. THE LD. SR. DR THEREAFTER REFERRED TO THE FINDINGS BY THE LD. CIT(A) ON VARIOUS GROUNDS OF APPEALS, WHICH REVEALED THAT IN MOST OF ISSUES, THE LD. CIT(A) AFTER RECORDING SUBMISSIONS OF THE ASSESSEE AND REP RODUCING THE FINDINGS OF THE OFFICE PREDECESSOR IN THE ORIGINAL APPELLATE ORDER DECIDED THE ISSUE WITHOUT GIVING ANY INDEPENDENT FINDING. IT WAS ALSO STARTED THAT EVEN NO INDEPENDENT ANALYSIS WAS DONE OF THE FACT AS REQUIR ED BY THE TRIBUNAL WAS ALSO NOT DONE. THE LEARNED COUNSEL FOR THE ASSESSEE AT THIS STAGE SUBMITTED THAT THE ISSUES WERE DECIDED BY THE LD. CIT(A) ON MERITS AND MERELY BECAUSE THE LD. CIT(A) FOLLOWED THE EARLIER APPELLATE ORDER, THE ASSESSEE COULD NOT BE FAULTED WITH FOR SUCH ACTION OF THE LD. CIT(A). IT WAS ALSO STRONGLY CONTENDED THAT IF THE ISSUE WAS R ESTORED TO THE FILE OF LD. CIT(A) ON THIS MERELY FOR THIS REASON THEN THAT WOULD RESULT INTO MULTIPLICITY OF PROCEEDINGS. THE BENCH, HOWEVER, MA DE IT CLEAR THAT RATHER IN THE OPINION OF THE BENCH, THE ASSESSEE WAS, PRIM A FACIE, HAVING STRONG MERITS ON ALL THE ISSUES. HOWEVER, THE MANNER IN WH ICH THE LD. CIT(A) HAD DISPOSED OF THE APPEAL, WAS NOT REASONABLE NOR IN ACCORDANCE WITH THE SPIRIT OF THE DIRECTIONS OF THE TRIBUNAL AS WELL AS PROVISIONS OF LAW. HENCE, EVEN IF THE CONCLUSION HAD TO BE THE SAME, T HE JUDICIAL PROPRIETY DEMANDED THAT THE MATTER SHOULD GO BACK TO THE FILE OF LD. CIT(A), WHO WILL DECIDE THE SAME BY PASSING THE SPEAKING ORDER BY GIVING INDEPENDENT PAGE 5 OF 8 - DR.(MRS.)KUSUM J. SINGH, PROP. M/S.G REATER KAILASH NURSING HOME,INDORE. FINDINGS. ACCORDINGLY, ALL THE ISSUES RAISED, IN TH IS APPEAL, AND CORRESPONDING C.O.NO.108/IND/2006 ARE RESTORED TO T HE FILE OF THE LD. CIT(A) FOR DISPOSAL OF THE APPEAL AFRESH IN ACCORDA NCE WITH THE OBSERVATIONS MADE BY US HEREINBEFORE. 5. IN THE RESULT, THE REVENUES APPEAL AS WELL AS CROS S OBJECTION STAND ALLOWED FOR STATISTICAL PURPOSES. 6. IN I.T.A.NOS.610/IND/2006 AND 648/IND/2006, SIMILA R CONSIDERATIONS ARE INVOLVED AND THE MOST OF THE ISS UES HAVE BEEN DISPOSED OF ON THE BASIS OF APPELLATE ORDER FOR ASSESSMENT Y EAR 2001-02. HENCE, THE ISSUES RAISED, IN THIS APPEAL, ARE ALSO NEEDED TO B E RE-ADJUDICATED BY THE CIT(A) IN TERMS OF OUR DIRECTIONS IN I.T.A.NOS. 180 /IND/2006 HEREINBEFORE. THUS, BOTH THESE APPEALS STAND ALLOWE D FOR STATISTICAL PURPOSES, IN A SIMILAR MANNER. 7. NOW, WE SHALL TAKE UP ASSESSEES CROSS OBJECTION NO.81/IND/2006. 8. IT WAS SUBMITTED THAT CORRESPONDING REVENUES APPEA L IN I.T.A.NO. 466/IND/2006 HAD ALREADY BEEN DISPOSED OF BY THE TRIBUNAL BY DISMISSAL OF THE SAME FOR THE REASON THAT TAKES EFF ECT INVOLVED THEREIN WAS LESS THAN RS. 2 LAKHS. IN THESE CIRCUMSTANCES, IT W AS THOUGHT FIT TO HEAR THIS CROSS OBJECTION ON MERITS AND ALSO FOR THE REA SON THAT SUBSTANTIAL ISSUES WERE NOT INVOLVED. PAGE 6 OF 8 - DR.(MRS.)KUSUM J. SINGH, PROP. M/S.G REATER KAILASH NURSING HOME,INDORE. 9. IN GROUND NOS. 1 & 1(2), THE ISSUE INVOLVED IS REGA RDING AD HOC DISALLOWANCE OUT OF SALARY PAID TO STAFF INVOLVED I N MEDICAL STORE RUN BY THE ASSESSEE AND PROFESSION CHARGES PAID BY THE ASS ESSEE TO THE CONSULTING DOCTORS. THE A.O. MADE DISALLOWANCE @ 50%, WHICH HA S BEEN REDUCED BY THE CIT(A) TO 35 %. HOWEVER, THE LEARNED COUNSEL CO NTENDED THAT THE EMPLOYEES IN MEDICAL STORES WERE ON MUSTER ROLLS AN D ,SIMILARLY, FACTUM OF RENDERING OF SERVICE BY THE EMPLOYEES AS WELL AS PROFESSIONAL PERSONS WAS NOT IN DISPUTE. HENCE, SUCH AD HOC DISALLOWANCE WAS NOT WARRANTED. 10. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, REFERRED TO RELY ON THE ORDER OF THE LD. CIT(A). 11. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 12. WE FIND THAT IT IS A CASE OF AD HOC DISALLOWANCES, WHEREIN THE RENDERING OF SERVICES BY THE EMPLOYEES AS WELL AS CONCERNED PROFESSIONAL HAVE NOT BEEN DISPUTED. FURTHER, IT IS NOT THE CASE OF THE REVENUE AUTHORITIES THAT THE QUANTUM OF SUCH SALARY OR PROF ESSIONAL CHARGES IS UNREASONABLE OR EXCESSIVE. HENCE, ONCE A PART THERE OF IS ALLOWED, THEN THE GENUINENESS OF THE CLAIM OF THE ASSESSEE CANNOT BE DOUBTED. ACCORDINGLY, BOTH THE ISSUES INVOLVED IN GROUND NO.1 ARE ACCEPTE D. 13. IN GROUND NO.2, THE ISSUE IS REGARDING THE DISALLOW ANCE OF RS. 65,000/- BEING THE AMOUNT OF LEGAL EXPENSES INCURRE D BY THE ASSESSEE FOR PAGE 7 OF 8 - DR.(MRS.)KUSUM J. SINGH, PROP. M/S.G REATER KAILASH NURSING HOME,INDORE. OBTAINING LOAN AND PAYMENT OF FEE. THE A.O. DISALLO WED THIS EXPENDITURE AS THE PURPOSE OF THIS EXPENDITURE COULD NOT BE EXP LAINED. HOWEVER, THE LD. CIT(A) TREATED IT AS OF CAPITAL NATURE AS IT WA S INCURRED IN RESPECT OF ACQUISITION OF CAPITAL ASSETS. 14. THE LEARNED COUNSEL SUBMITTED THAT THE EXPENDITURE WAS INCURRED IN RESPECT OF LOAN TAKEN FOR CAPITAL ASSET S AND NOT AS COST OR EXPENSES INCURRED FOR ACQUISITION OF CAPITAL ASSETS AND, THEREFORE, SUCH EXPENDITURE WAS ALLOWABLE AS A REVENUE EXPENDITURE. IT WAS ALSO CONTENDED THAT IT WAS A CASE OF EXTENSION OF EXISTI NG BUSINESS AND FOR THIS REASON ALSO, THE IMPUGNED EXPENDITURE WAS ALLOWABLE . THE LEARNED COUNSEL FURTHER PLACED RELIANCE ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF DCIT VS. TATA CHEMICALS, 256 ITR 395. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, PLACED STRONG RELIANCE ON THE ORDER OF A.O. 15. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 16. IT IS NOTED THAT THESE EXPENSES HAVE BEEN INCURRED IN CONNECTION WITH THE BORROWING OF MONEY FROM BANK BY WAY OF LOA N. HENCE, SUCH EXPENSES ARE IN THE NATURE OF LEGAL EXPENSES AND, T HEREFORE, ALLOWABLE AS REVENUE EXPENDITURE. WE FURTHER FIND THAT SUCH LOAN IS BEING TAKEN FOR EXTENSION OF EXISTING BUSINESS ACTIVITIES, HENCE, F OR THIS REASON ALSO, THESE PAGE 8 OF 8 - DR.(MRS.)KUSUM J. SINGH, PROP. M/S.G REATER KAILASH NURSING HOME,INDORE. EXPENSES ARE ALLOWABLE AS REVENUE EXPENDITURE. THUS , THIS GROUND OF THE ASSESSEES CROSS OBJECTION IS ALSO ALLOWED. 17. IN THE RESULT, THIS CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 18. TO SUM UP, THE REVENUES APPEAL IN I.T.A.NO. 180/IN D/2006 AND 648/IND/2006 AND ASSESSEES CROSS OBJECTION IN I.T.A.NO.108/IND/2006, THE ASSESSEES APPEAL IN I.T .A.NO. 610/IND/2006 STAND ALLOWED FOR STATISTICAL PURPOSES, WHEREAS THE ASSESSEES CROSS OBJECTION NO.81/IND/2006 STANDS ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27 TH APRIL, 2010. CPU*