M/s Siva Ram Hospitals, Karimnagar V. ITO, Karimnagar

ITA 1730/HYD/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1367 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 11-11-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 10-12-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: A V RAGHURAM

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NOS.1730 & 1309 /HYD/08 ASSTT. YEAR 2 004-2005 AND 2005-06 M/S SIVARAMA HOSPITALS, KARIMNAGAR. VS. AC IT, CIRCLE 16 (2), KATUVAPALLI VILLAGE HYDERABAD PAN AIPQS0061B APPLICANT BY : SHRI A .V.RAGHURAM,ADVOCATE RESPONDENT BY : SMT. NIVEDITA BI SWAS, DR O R D E R PER SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST DIFFER ENT ORDERS OF CIT(A) FOR THE ABOVE ASSESSMENT YEARS. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE COMMON IN BOTH T HE APPEALS AND HENCE THEY ARE HEARD TOGETHER FOR DISPOSAL BY THIS COMMON ORDER. 3. ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE O RDER OF THE LEARNED CIT(A) IS ERRONEOUS, ILLEGAL AND THEREFORE NOT SUSTAINABLE IN LAW. 2 2. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTIO N OF THE ASSESSING OFFICER IN SELECTION OF THE APPELLANTS CASE FOR SCRUTINY . THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER H AD VIOLATED THE GUIDELINES/PROCEDURE FOR SELECTION OF CASES FOR SCRUTINY O F NON- CORPORATE ASSESSEES PRESCRIBED BY THE CBDT. 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AP PELLANT FALLS WITHIN CLAUSE (M) OF PARA 2 OF CBDT GUIDELINES FOR FY 2005-06 ON THE ALLEGED GROUND THAT MOST OF THE RECEIPTS OF THE APPELLANT WERE PROFESSIONAL RECEIPTS. 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT M/S SIVARAMA HOSPITALS IS A PARTNERSHIP FIRM FALLING UNDER THE CATEGORY OF HOSPITALS/NURSING HOMES AND THAT ONLY ONE PARTNER IS A PROFESSIONAL. THE LEARNED CIT(A) FURTHER FAILED TO APPRECIATE THA T OTHER PARTNERS OF THE APPELLANT ARE NON-PROFESSIONALS AND HENCE THE INCOME EARNED BY THE APPELLANT CANNOT BE TREATED AS INCOME EARNED BY A PROFESSIONAL. 5. THE LEARNED CIT(A) OUGHT TO HAVE ANNULLED/QUASH ED THE ORDER OF ASSESSMENT IN AS MUCH AS THE ASSESSING OFFICER GROSSLY ABUSED/VIOLATED THE PROCEDURE PRESCRIBED BY THE CBDT FO R SELECTION OF RETURNS/CASES OF NON-CORPORATE ASSESSEES FOR SCRUTINY FOR THE FY 2005- 06. 4. THE CRUX OF THE ABOVE GROUNDS IS THAT THE ASSESSEE IS A FIRM CARRYING ON THE BUSINESS OF NURSING HOME/HOSPITAL, WHICH CO ULD NOT BE TREATED AS A PROFESSIONAL AS SUCH SCRUTINY NORMS AS PRESCRIB ED IN THE INSTRUCTIONS BY CBDT GUIDELINES FOR AY 2005-06 VIDE CLAU SE NO.M IS APPLICABLE INSTEAD OF H APPLIED BY THE ASSESSING OFFICER . FURTHER, FOR SUPPORTING HIS CLAIM, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING CASE LAW. 1. 128 ITR 727 (MADRAS) CIT V. DR.V.K.RAMACHANDRAN12 8 ITR 727 (MADRAS) 2. DR.P.VADAMALAYAN V. CIT74 ITR 94 (MADRAS) 3. WISEBURGH V. DOMVILLE 30 ITR 295 (1956) (IN THE COURT OF APPEAL) 4. CIT V. SMT.NAYANA P.DEDHIA 270 ITR 572 (AP) 5. CIT V. UPASANA HOSPITAL 225 ITR 845 (KER) 3 6. GOPALDAS DAHYABHAI LAVSI V. CIT 108 ITD 534 (GUJ) 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT ASSESSEE IS A PROFESSIONAL. AS SUCH CLAUSE M OF THE ABOVE CIRCULAR IS APPLICABLE AND SHE RELIED ON THE FOLL OWING CASE LAW. 1. YOGESH KUMAR & SONS (HUF) V. ASSESSING OFFICER WARD 1(3), BHATINDA 117 ITD 288 (AMR) 6. WE HAVE HEARD BOTH SIDES AND PERUSED THE MATERIAL O N RECORD. WE HAVE CAREFULLY GONE THROUGH THE FACTS OF THE CASE. I N THE PRESENT CASE, ASSESSEE IS A PARTNERSHIP FIRM WHERE DR.SIVARAMA KRISH NA WAS CARRYING ON THE BUSINESS ALONG WITH HIS FAMILY MEMBERS. PROFIT AND LOSS ACCOUNT SHOWS INCOME FROM VARIOUS PROFESSIONAL RECEIPTS F OR RENDERING SERVICES. AS PER BOARD CIRCULAR CLAUSE H I S APPLICABLE TO FOLLOWING CLASSES OF ASSESSEES. CLAUSE H: CASES OF UNIVERSITIES, EDUCATIONAL INSTITUTIONS, HOSPITALS, NURSING HOMES AND OTHER INSTITUTIONS FOR REHABILITATION OF PATIENTS (OTHER THAN THOSE, WHICH ARE SUBSTANTIALLY FINANCED BY THE GOVERNMENT, THE AGGREGATE ANNUAL RECEIPTS OF WHICH EXC EED RS.10 CRORE IN DELHI, MUMBAI, CHENNAI, KOLKATA, PUNE, HYDE RABAD, BANGALORE AND AHMEDABAD AND RS.5 CRORE OR ABOVE IN OT HER PLACES ( REF. SEC.10(23C) & RULE 2BC) CLAUSE M IS APPLICABLE TO FOLLOWING CLASSES OF ASSESSEES. CLAUSE M : ALL CASES OF PROFESSIONALS WITHGROSSRECEIPTS OF RS.50 LAKH OR MORE AND INCOME DECLARED IS LESS THAN 20% OF G ROSS PROFESSIONAL RECEIPTS. NOW, THE CONTENTION OF THE ASSESSEE IS THAT THE CARRYING O N MEDICAL PROFESSION BY THE ASSESSEE FALLS UNDER THE PURVIEW OF CLAUSE H. WE HAVE CAREFULLY GONE THROUGH THIS CLAUSE. THIS CLAUSE IS A PPLICABLE TO THE ASSESSEES MENTIONED THEREIN WITH A REFERENCE TO CLAIM OF BENEFIT U/S 10(23C) AND RULE 2BC. IN THE PRESENT CASE, IT IS AD MITTED FACT 4 THAT ASSESSEE DO NOT FALL UNDER THE EXEMPTED CATEGORY AN D AN ASSESSEE ENGAGED IN RENDERING MEDICAL SERVICES APPROPRIATE LY FALLS UNDER CATEGORY M. AS SUCH SELECTION OF THE CASES FOR SCRUTI NY IN THESE ASSESSMENT YEARS IS CORRECT. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). COMING TO THE CASE LAW RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, THEY ARE DELIVERED UNDER DIFFE RENT CONTEXT AND CIRCUMSTANCES AND THE CASE TAKES COLOUR FROM ITS FACTS. AS SUCH, THE ABOVE CASE LAW CANNOT BE MADE APPLICABLE TO THE FACT S OF THE PRESENT CASE. IN OUR OPINION, THE DEPARTMENT HAS NOT D EVIATED FROM THE CBDT CIRCULAR AND NO INTERFERENCE IS CALLED FOR FRO M US. THE APPEALS OF THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 -11-2009 SD/- SD/- (N.R.S. GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/- 20-11-2009. *VNR COPY FORWARDED TO: 1. SHRI A.V.RAGHURAM & B.P.RAJULU, ADVOCATES, NO.6-3 -240/3, SARADADEVI STREET, PREMNAGAR, KHAIRATABAD, HYDERABAD -500 004. 2. ACIT, KARIMNAGAR. 3. CIT(A)III, HYDERABAD. 4.CIT, AP, HYDERABAD. 5.. THE D.R., ITAT, HYDERABAD.