ACIT, Gurgaon V. M/s. Healer Hospital (P) Ltd., New Delhi

ITA 1320/DEL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7859 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 19-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBE
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Business income; Depreciation; Search and seizure; Deemed to accrue or arise in india
• Section: 80HHC; 133A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1320/DEL/2012 ASSESSMENT YEAR : 2008-09 ACIT, M/S HEALER HOSPITAL (P) LTD., CIRCLE-1, 124-IST FLOOR, GHAFFAR MARKET, GURGAON. V. KAROL BAGH, NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AABCH AABCH AABCH AABCH- -- -4826 4826 4826 4826- -- -M MM M APPELLANT BY : SHRI UMESH CHAND DUBE, SR. DR. RESPONDENT BY : SHRI ASHWANI TANEJA, ADVOCATE. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A), FARIDABAD. THE GROUNDS RAISED BY THE REVENUE ARE AS UN DER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITIO N OF ` .40,00,000/- WHICH WAS OFFERED BY THE ASSESSEE AS ADDITIO NAL INCOME FOR TAXATION OVER AND ABOVE THE REGULAR INCO ME/LOSS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN ALLOWING TO SET OFF T HE SURRENDERED INCOME AGAINST BUSINESS LOSSES. THE INCOME DISCLOSED AT THE TIME OF SURVEY WAS DEEMED INCOME U/S 69 AND IT CANNOT BE SET OFF AGAINST BUSINESS LOSS IN VIEW OF THE JUD GMENT OF ITA NO1320/DEL/2012 2 HON'BLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHD . HAJI HASAN V. CIT 247 ITR 290 AND JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SARLA HANDICRAFTS (P) LTD. V. ADDL. CIT 296 ITR 94. 3. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD, A LTER, DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE OF TH E ASSESSEE WAS PICKED UP FOR SCRUTINY UNDER CASS AND DURING ASSESSMENT P ROCEEDINGS IT WAS OBSERVED BY THE ASSESSING OFFICER THAT ON 17.1.200 8 A SURVEY U/S 133A OF THE ACT WAS CONDUCTED AT THE PREMISES OF ASSE SSEE AND STATEMENT OF SHRI TILAK RAJ MALHOTRA, DIRECTOR OF TH E ASSESSEE COMPANY WAS RECORDED ON 18.1.2008. IN HIS STATEMENT IN REPLY T O QUESTION NO.16 HE HAS STATED AS UNDER:- Q). PLEASE GIVE DETAILS OF EXPENDITURE INCURRED ON BU ILDING AND OTHER ASSETS. ANS. UP TO 31.3.2007, THE TOTAL EXPENSES INCURRED AND RECORDED IN THE BOOKS OF ACCOUNTS TOWARDS COST OF FIXED ASSET IS ` .9,48,98,688/-. SINCE THE ASSETS HAVE BEEN PUT TO USE ON 15.4.2007, NO DEPRECIATION WAS CLAIMED UP TO 31.3.20 07. DURING THE CURRENT YEAR, THERE ARE SOME ADDITIONS IN THE FIX ED ASSETS WHICH HAVE BEEN INCURRED THROUGH BANK. THESE EXPENSES ARE BETWEEN ` .5 LAKHS TO ` .10 LAKHS APPROXIMATELY AS FAR AS I REMEMBER. HOWEVER, AT THIS STAGE TO PURCHASE PEACE OF MIND ON BEHALF OF THE COMPANY M/S HEALER HOSPITAL (P) LTD., I WISH TO MAKE VOLUNTARY DISCLOSURE THAT THE COMPANY HAS INCURR ED AN EXPENDITURE OF ` .40,00,000/- OVER AND ABOVE THE EXPENSES TOWARDS FIXED ASSETS RECORDED IN THE BOOKS OF ACCOUNTS AN D ON ITA NO1320/DEL/2012 3 BEHALF OF THE ASSESSEE COMPANY AND AFTER DUE CONSULTAT ION WITH OTHER STAKE HOLDERS I WISH TO OFFER ` .40,00,000/- FOR TAXATION OVER & ABOVE THE REGULAR INCOME/LOSS I.E. ARRIVED AT AS ON 31.3.2008. THIS DISCLOSURE IS BEING MADE SUBJECT TO NO PENAL ACTION OR PROSECUTION. THE DISCLOSURE IS FOR FINANCIAL YEAR 2007 -08 RELEVANT TO ASSESSMENT YEAR 2008-09. 3. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS SHOWN TH E SURRENDER VALUE OF ` .40,00,000/- AS OTHER INCOME IN THE P&L A/C FOR THE FINANCIAL YEAR 2007-08 AND HAS ADJUSTED THE SAME FROM LOSS INCURRED DURING THE YEAR. THE ASSESSING OFFICER DID NOT AGREE WI TH SUCH ADJUSTMENT AND THEREFORE ASSESSED THE INCOME OF THE ASSESSEE AT ` .40,00,000/- WITHOUT CONSIDERING THE SET OFF FROM THE LOSSES. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) AND SUBMITTED THE FOLLOWING SUBMISSIONS BEFORE HIM:- 1) THAT THE OFFER OF SURRENDER OF ` .40,00,000/- CANNOT EFFECT THE PROFIT OR LOSS DECLARED BY THE ASSESSEE FOR THAT YEAR. IT WILL BE ADDED IF THERE IS PROFIT AND IT WILL BE REDUCED IF T HERE IS A LOSS. THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE LD ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE LD ASSESSING OFFICER HAS NOT POINTED OUT ANY DIFFERENCE/DISC REPANCY IN THE AUDITED ACCOUNTS. 2) THAT THE PROVISIONS OF SECTION 71(1) CLEARLY ALLOWS TH E SET OFF OF LOSS FROM ONE HEAD AGAINST INCOME FROM ANOTHER HEAD. 4. RELIANCE WAS PLACED IN THE CASE OF CIT V. CHENSING VENTURES 212 CTR 539 (MAD.). THE LD CIT(A) AFTER HEARING THE SUB MISSIONS OF ITA NO1320/DEL/2012 4 ASSESSEE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER . THE RELEVANT PORTION OF LD CIT(A)S ORDER IS REPRODUCED B ELOW:- THE OTHER INCOME OF ` .68,,38,199/- CREDITED TO THE P&L A/C INCLUDES AN AMOUNT OF ` .27,86,699/- AS MOBILE PHONE BOOSTER TOWER RECEIPTS ` .51,500/- AS LIABILITY WRITTEN BACK AND AMOUNT OF ` .40,00,000/- AS INCOME FROM OTHER SOURCES DECLARED DUR ING THE COURSE OF SURVEY. IN THE COMPUTATION OF INCOME, THE INCOME OF ` .40,00,000/- SURRENDERED BY THE ASSESSEE HAS BEEN SHOWN AS INCOME FROM OTHER SOURCES AND THE SAME HAS BEEN CLAIMED SET OFF AGAINST BUSINESS LOSS OF ` .1,02,34,200/- THEREBY REDUCING THE BUSINESS LOSS TO ` .62,34,200/-. HAVING VERIFIED THE FACTUAL POSITION THERE REMAINS NO DISPUTE TO THE FACT THAT THE ADDITIONAL INCOME OF ` .40,00,000/- DECLARED BY THE APPELLANT WAS DULY INCLUDED IN THE COMPUTATION OF INCOME. THE ADDITION AL INCOME DECLARED WAS CERTAINLY ON ACCOUNT OF UNEXPLAINED INV ESTMENT IN THE CONSTRUCTION OF BUILDING IN TERMS OF PROVISIONS OF SECTION 69 OF THE INCOME TAX ACT, 1961 AND LIABLE TO BE TAXED UNDER THE RESIDUARY HEAD OF INCOME I.E. THE INCOME FROM OTHER SOURCES. THE ADDITIONAL INCOME SURRENDERED FOR TAXATION DOES N OT NECESSARILY INFLICT LIABILITY FOR PAYMENT OF TAX. TH E ONLY CONSEQUENCE OF SUCH SURRENDER WOULD BE THAT THE INCOM E SO SURRENDERED WOULD FORM PART OF COMPUTATION OF TOTAL INCOME. CONSEQUENTLY, THE ADDITION OF ` .40,00,000/- SEPARATELY MADE BY THE ASSESSING OFFICER FOR THE PURPOSE OF PAYMENT OF TAX IS DELETED. 5. AGGRIEVED, THE REVENUE HAS FILED APPEAL BEFORE TH IS TRIBUNAL. ITA NO1320/DEL/2012 5 6. THE LD DR ARGUED THAT INCOME DISCLOSED AT THE TIME OF SURVEY WAS DEEMED INCOME U/S 69 OF THE ACT AND IT CANNOT BESE T OFF AGAINST BUSINESS LOSS IN VIEW OF THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHD. HAJI HASAN (SUPRA) AND THE J UDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SARLA HAN DICRAFTS PVT. LTD. V. ADDL. CIT (SUPRA). 7. THE LD AR, ON THE OTHER HAND, ARGUED THAT INCOME TAX IS ONE TAX AND IT IS IMPOSED ON THE TOTAL INCOME OF THE ASSESSEE AFT ER SETTING OFF LOSSES IF ANY FROM THE OTHER HEADS OF INCOMES. IN SUPPORT HE PUT RELIANCE IN THE CASE OF CIT V. CEHNSING VENTURES (SUPRA ) WHEREIN IT WAS HELD THAT AFTER SETTING OFF LOSSES AGAINST THE INCOME UN DER THE SAME HEAD IF THE NET RESULT HAS STILL A LOSS, THE ASSESSEE CAN SET OFF OF THE SAID LOSS U/S 71 AGAINST INCOME OF THE SAME YEAR UNDER A NY OTHER HEAD EXCEPT FOR LOSSES WHICH ARISE UNDER THE HEAD CAPITAL GA INS. THE INCOME TAX IS ONLY ONE TAX AND LEVIED ON THE SUM TOTAL ON T HE INCOME CLASSIFIED AND CHARGEABLE UNDER THE VARIOUS HEADS. SECTION 14 HA S CLASSIFIED DIFFERENT HEADS OF INCOME AND INCOME UNDER EACH HEAD IS SEPARATELY COMPUTED. THE LD AR FURTHER ARGUED THAT CASES CITED BY LD DR DO NOT FIT SQUARELY IN THE FACTS OF THE PRESENT CASE. HE BROUG HT TO OUR NOTICE THAT IN THE CASE OF SARLA HANDICRAFTS PVT. LTD. REPOR TED IN 293 ITR 94, THE ASSESSEE WAS ENGAGED IN THE EXPORT BUSINESS AND DURING SURVEY U/S 133A OF THE ACT, THE ASSESSEE HAD SURRENDERED AN AMOU NT OF ` .19,00,000/-. THE ASSESSEE IN THIS CASE ARGUED THAT SINCE ITS ONLY SOURCE IS INCOME FROM EXPORT AND SURRENDERED AMOUNT A LSO REPRESENTS EXPORT INCOME AND THUS ELIGIBLE U/S 80HHC OF THE ACT. HOWEVER, ON REFERENCE TO HON'BLE PUBJAB & HARYANA HIGH COURT, T HE COURT DID NOT AGREE WITH THE CONTENTION OF ASSESSEE AND HELD THAT SUR RENDERED INCOME CANNOT BE SAID TO BE INCOME FROM BUSINESS. IN T HE SECOND CASE OF MOHD. HAJI HASSAN V. CIT (SUPRA) IT WAS HELD THAT V ALUE OF GOLD ITA NO1320/DEL/2012 6 CONFISCATED DURING CUSTOM RAID WILL BE INCLUDED IN TH E INCOME OF THE ASSESSEE AS SOURCE OF INVESTMENT IN THE GOLD WAS NOT EXPLAI NED AND THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM THAT THE VAL UE OF CONFISCATED GOLD SHOULD BE ALLOWED AS A DEDUCTION FRO M HIS INCOME. IN VIEW OF THE ABOVE, THE LD AR ARGUED THAT THE FACTS O F THE CASE CITED BY LD DR DO NOT FIT IN THE FACTS OF THE PRESENT CASE AN D RATHER THE FACTS OF THE CASE LAW CITED BY HIM SQUARELY FIT IN THE FACTS OF THE PRESENT CASE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE NOTED THAT CASE LAWS CITED BY THE DEPARTMENT ARE NOT SIMILAR TO THE FACTS OF THE PRESENT CASE AS IN THE FIRST CASE. THE HON'BLE PUNJA B & HARYANA HIGH COURT DID NOT CONSIDER THE SURRENDERED AMOUNT AS BUSINESS INCOME AND THERE IS NO QUESTION OF SETTING OFF AS IN TH E PRESENT CASE. SIMILARLY IN THE SECOND CASE THE HON'BLE HIGH COURT H AD HELD THAT THOUGH CONFISCATED GOLD UNDER THE CUSTOMS ACT WILL BE INCLUDED IN THE INCOME OF ASSESSEE IF ITS SOURCE IS NOT PROPERLY EXPLAINED BUT THE VALUE OF CONFISCATED GOLD WILL NOT BE ALLOWED AS DEDUCTION. THEREFORE, IN THIS CASE ALSO THERE IS NO QUESTION OF SET OFF. THE PRESENT C ASE IS A SIMPLE CASE OF COMPUTATION OF TOTAL INCOME OF AN ASSESSEE AS PER PROVISIONS OF SECTION 71 & 72 OF THE INCOME TAX ACT, 1961 AND THE ASSESSEE HAS COMPUTED ITS TOTAL INCOME KEEPING IN VIEW THESE PROVI SIONS, THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON THE 15 TH DAY OF JUNE, 2012. SD/- SD/- (R.P. TOLANI) (T.S. KAP OOR) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO1320/DEL/2012 7 DT. 15.6.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 21.5.2012 DATE OF DICTATION 5.6.2012 DATE OF TYPING 6.6.2012 DATE OF ORDER SIGNED BY 15.6.2012 BOTH THE MEMBERS & 25.6.2012 PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 25.6.2012 & SENT TO THE BENCH CONCERNED.