Dr. Bhupinder Singh Gaba, Yamunanagar V. DCIT, Yamunanagar

ITA 1353/CHANDI/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77160 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 25-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Non-deduction of tax; Non compliance
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1353/CHD/2010 ASSESSMENT YEAR : 2007-08 DR. BHUPINDER SINGH GABA, VS THE DY. COMMISSIONER OF PROP. GABA HOSPITAL, INCOME TAX, GOBIND PURI ROAD, YAMUNA NAGAR. YAMUNA NAGAR. PAN : ABTPG1327Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ROHIT GOEL RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 05.06.2014 DATE OF PRONOUNCEMENT : 19.06.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PANCHKULA DAT ED 28.09.2010 AGAINST THE ORDER PASSED UNDER SECTION 1 43(3) OF THE INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT AUTHORITIES BELOW HAS ERRED IN LAW AND FACTS I N CONFIRMING THE ADDITION OF RS. 76690/- U/S. 40(A)(IA) FOR NON DEDUCTION OF TAX ON ADVERTISEMENT EXPENSES. 2. THAT AUTHORITIES BELOW HAS ERRED IN LAW AND FACTS I N CONFIRMING THE ADDITION OF RS. 117447/- CALCULATED ON NOTIONAL BASIS ON ACCOUNT OF NON CHARGING OF INTEREST ON DEBIT BALANCE OF RS. 10,90,500/- PAID TO MS. GEETINDER KAUR DAUGHTER OF ASSESSEE. 3. THAT AUTHORITIES BELOW HAS ERRED IN LAW AND FACTS I N CONFIRMING THE ADDITION OF RS. 5913/- ON ACCOUNT OF ELECTRIC I NSTALLATION BEING DIFFERENCE IN RATE OF DEPRECIATION OF 10% ALLOWED I N PLACE OF 15% CLAIMED. 2 4. THAT AUTHORITIES BELOW HAS ERRED IN LAW AND FACTS I N NOT ALLOWING DEPRECIATION OF RS.14953/- DEBITED IN THE PROFIT AND LOSS ACCOUNT ON BUILDING SHED. 3. THE GROUND NO. 3 RAISED BY THE ASSESSEE IS NOT P RESSED HENCE THE SAME IS DISMISSED. 4. THE ISSUE IN GROUND NO. 1 RAISED BY THE ASSESSEE IS AGAINST DISALLOWANCE MADE FOR NON-DEDUCTION OF TAX OUT OF A DVERTISEMENT EXPENSES. 5. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT D URING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD CLAIMED ADVERT ISEMENT EXPENSES OF RS. 113,301/-, OUT OF WHICH PAYMENTS AG GREGATING RS. 76,690/- WERE MADE TO M/S GEETA ADVERTISING AGENCY. THE DETAILED BREAK-UP OF THE PAYMENTS MADE BY THE ASSES SEE ARE TABULATED AT PAGE 2 OF THE ASSESSMENT ORDER. THE A SSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS ASKED TO P RODUCE EVIDENCE REGARDING TAX DEDUCTED AT SOURCE OUT OF SU CH PAYMENTS. AS THE ASSESSEE HAD FAILED TO DEDUCT THE TAX AT SOU RCE, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE VIOLATE D THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IN VIEW OF NON COMPLIANCE OF PROVISIONS OF SECTION 194C OF THE ACT . CONSEQUENTLY, THE EXPENDITURE OF RS. 76,690/- WAS N OT ALLOWED IN THE HANDS OF THE ASSESSEE. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) DELIBER ATED UPON THE ISSUE AT LENGTH AND DECIDED THE ISSUE AFTE R CONSIDERING THE RATIO LAID DOWN BY THE HYDERABAD BENCH OF TRIBU NAL IN TEJA CONSTRUCTION VS ACIT 36 DTR 220 (HYD). THE OTHER A SPECTS OF THE CASE I.E. THE NATURE OF PAYMENTS MADE BY THE AS SESSEE WERE PURSUANT TO A CONTRACT OR NOT AND THE ASSESSEE WAS LIABLE TO DEDUCT 3 TAX AT SOURCE HAD NOT BEEN CONSIDERED BY ANY OF THE AUTHORITIES. BELOW. MERELY BECAUSE THE PAYMENT IN AGGREGATE EXC EEDED RS. 50,000/-, THE ASSESSING OFFICER HAD HELD THE ASSESS EE TO BE IN DEFAULT IN NOT FOLLOWING THE PROVISIONS OF SECTION 194C OF THE ACT AND CONSEQUENTLY THE DISALLOWANCE UNDER SECTION 40( A)(IA). THE PLEA OF THE ASSESSEE BEFORE US WAS THAT THE RECEIPT S HAVE BEEN INCLUDED IN THE HANDS OF THE DEDUCTEE, FOR WHICH CE RTIFICATE WAS FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL S), HAS NOT BEEN CONSIDERED. IN VIEW THEREOF, WE REMIT THE ISS UE BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME IN ACC ORDANCE WITH LAW. REASONABLE OPPORTUNITY OF HEARING SHALL BE AF FORDED TO THE ASSESSEE. THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE IS THUS, ALLOWED FOR STATISTICAL PURPOSE. 7. THE ISSUE IN GROUND NO. 2 IS AGAINST THE DISALLO WANCE OF INTEREST ON THE DEBIT BALANCE OF THE AMOUNT PAID TO MS. GEETINDER KAUR, DAUGHTER OF THE ASSESSEE. 8. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT SIM ILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSEE'S OWN CASE R ELATING TO ASSESSMENT YEAR 2006-07. 9. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HA D ON ONE HAND PAID INTEREST OF RS. 242,733/- ON THE UNSECURED LOA NS AND RS. 11,06,115/ ON THE SECURED LOANS RAISED FROM THE BAN K AND ON THE OTHER HAND, HAD ADVANCED A SUM OF RS. 10,90,500/- I NTEREST FREE TO HIS DAUGHTER MS. GEETINDER KAUR. THE ASSESSING OFF ICER, IN VIEW 4 OF THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARY ANA HIGH COURT IN CIT VS ABHISHEK INDUSTRIES 286 ITR 1 (P&H) HELD THAT THE INTEREST RELATABLE TO SUCH INTEREST FREE ADVANC E WAS NOT ALLOWABLE IN THE HANDS OF THE ASSESSEE. CONSEQUENTL Y, ADDITION OF RS. 117,447/- WAS MADE IN THE HANDS OF THE ASSESSEE , WHICH WAS UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS). 11. THE CASE OF THE ASSESSEE BEFORE US IS THAT THE ASSESSEE WAS RUNNING SOLE PROPRIETORY CONCERN AND HAD ENOUGH CAP ITAL TO MAKE THE SAID ADVANCES INTEREST FREE TO HIS DAUGHTER. T HE CASE OF THE ASSESSEE WAS THAT THE SAID AMOUNT SHOULD IN ACTUAL FACT BE DEBITED TO THE CAPITAL ACCOUNT OF THE PROPRIETOR AND HENCE, NO DISALLOWANCE WAS WARRANTED. WE FIND THAT THE SIMIL AR ISSUE OF DISALLOWANCE OF INTEREST UNDER SECTION 36(1)(III) O F THE ACT ON THE ADVANCES MADE BY THE ASSESSEE TO HIS DAUGHTER AROSE BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2006-07. THE TRIBUNAL IN ITA NO. NO. 1095/CHD/2009 VIDE ORDER DATED 29.06.2011 IN P ARA 20 HAD HELD THAT THE ASSESSEE BEING THE SOLE PROPRIETOR OF BAWA HOSPITAL HAD CAPITAL BALANCE IN HIS ACCOUNT, WHICH WAS SUFFI CIENT TO MEET THE IMPUGNED SUM GIVEN TO HIS DAUGHTER. AS DIVERSI ON OF MONEY WAS FROM THE CAPITAL ACCOUNT, NO DISALLOWANCE WAS W ARRANTED. THE ASSESSEE HAS FILED ON RECORD THE COPY OF THE BA LANCE SHEET ALONGWITH THE ENCLOSURES AT PAGE 22 TO 29 OF THE PA PER BOOK. THE PERUSAL OF THE BALANCE SHEET CLEARLY REFLECT THE CA PITAL ACCOUNT OF THE PROPRIETOR AT RS. 93,70,749/- . THE ASSESSEE D URING THE YEAR UNDER CONSIDERATION HAD ADVANCED SUM OF RS. 10,90,5 00/- TO HIS DAUGHTER MS. GEETINDER KAUR. FOLLOWING THE PARITY OF REASONING AS HELD BY THE TRIBUNAL IN ASSESSMENT YEAR 2006-07, WE FIND THE 5 ISSUE TO BE IDENTICAL AND FOLLOWING THE SAME PARITY OF REASONING, WE DELETE THE ADDITION OF RS. 117,447/-. 12. THE ISSUE IN GROUND NO. 4 RAISED BY THE ASSESSE E IS AGAINST THE DISALLOWANCE OF DEPRECIATION ON THE BUILDING AS SET. SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2006-07 AND AS THE ASSESSEE HAD FAILED TO FURNISH ANY EVIDENCE TO ESTABLISH THAT THE CONSTRUCTION OF THE BUILDING HAD BEEN COMPLETED TILL THE END OF THE YEAR, THE CLAIM OF THE ASSESSEE VIS--VIS DEPRE CIATION ON SUCH BUILDING ASSET WAS DENIED. EVEN FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE OF HAVING CONSTRUCTED AND COMPLETED THE BUILDING ASSET AND IN THE ABSENCE OF THE SAME, WE FIND NO MERIT IN THE CLAIM OF THE A SSESSEE AND THE SAME IS REJECTED. THE GROUND OF APPEAL NO. 4 RAISE D BY THE ASSESSEE IS DISMISSED. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE, 2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOW LA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 TH JUNE, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.