GMG Healthcare Private Limited, Jalandhar V. The Additional Commissioner of Income Tax, Jalandhar

ITA 191/ASR/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8263 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-02-2020
• Assessment Year: 2007-2008
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Deemed to accrue or arise in india; Capital expenditure; Set aside
• Section: 143(3); 143(1)

Judgement Text

P A G E | 1 ITA NO. 191/ASR./2016 A.Y. 2007-08 M/ S GMG HEALTHCARE PVT.LTD. VS. ACIT IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SHRI L. P. SAHU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 191/ASR./2016 (ASSESSMENT YEAR: 2007-08) M/S . GMG HEALTHCARE PVT.LTD., 124, NEW JAWAHAR NAGAR, JALANDHAR. VS. ACIT, CIRCLE - III, JALANDHAR. PAN AACCG1882B (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI CHARAN DASS, (D.R.) DATE OF HEARING: 06.02.2020 DATE OF PRONOUNCEMENT: 30.06.2020 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER PASSED BY THE CIT(A)-2, JALANDHAR, DATED 16.03.2016, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT IT ACT), DATED 20.11.2009 FOR A.Y. 2007-08. 2. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US: 1. THAT THE LEARNED COMMISSIONER IS WRONG IN CONFI RMING THE ADDITION OF RS. 50,000/- UNDER S. 41(1) O F THE INCOME TAX ACT, 1961 INSPITE OF THE AO HAVING FAILE D TO PROVE THAT LIABILITY HAS CEASED TO EXIST AND T HE APPELLANT HAS CLAIMED THE AMOUNT AS AN EXPENDITURE WHEN THE LIABILITY WAS CREATED. 2. WITHOUT PREJUDICE TO ABOVE THE ADDITION EVEN IF IT HAD TO BE MADE SHOULD HAVE BEEN MADE THE YEAR IN WHICH AMOUNT WAS PAID TO THE PARTY. 3. THAT THE LEARNED COMMISSIONER IS WRONG IN CONFIR MING THE ADDITION OF RS. 6,98,007/- UNDER S. 41(1) OF THE INCOME TAX ACT, 1961 INSPITE OF THE AO HAVING F AILED TO PROVE THAT LIABILITY HAS CEASED TO EXIST A ND THE APPELLANT HAS CLAIMED THE AMOUNT AS AN EXPENDIT URE WHEN THE LIABILITY WAS CREATED. P A G E | 2 ITA NO. 191/ASR./2016 A.Y. 2007-08 M/ S GMG HEALTHCARE PVT.LTD. VS. ACIT 4. ANY OTHER GROUND WHICH MAY BE RAISE AT THE TIME OF HEARING. 3. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS A FRA NCHISEE OF APOLLO HOSPITAL & LIFESTYLE LTD., AND ALSO ENGAGED IN THE BUSINESS OF TRADING IN MEDICINES HAD E-FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON 31.10.2007, DECLARING A BUSINESS LOSS OF (RS. 27,89,110/-). RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SU CH UNDER SEC. 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEEE WAS SELECTE D FOR SCRUTINY ASSESSMENT UNDER SEC.143(2) OF THE ACT. 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O CALLED UPON THE ASSESSEE TO FURNISH COPIES OF ACCOUNT OF ITS CREDITORS VIZ. (I) M/S AAKSHI ELECTRICAL SYS PVT. LTD. : RS. 6,98,007/-; AND (II) M/S HITACHI HOME & LIFE SOLUTI ONS (INDIA) LTD. : RS.50,000/-. ON A PERUSAL OF THE COPIES OF ACCOUNTS OF THE AFOREMENTIONED PARTIE S, IT WAS OBSERVED BY THE A.O THAT THE AFORESAID BALANCES WERE REFLECTED AS SUCH IN THE RE SPECTIVE ACCOUNTS OF THE AFOREMENTIONED PARTIES ON 01.04.2006. STATEMENT OF THE ASSESSES AC COUNT AS APPEARING IN THE BOOKS OF ACCOUNT OF M/S HITACHI HOME & LIFE SOLUTIONS (INDIA ) LTD. FOR THE PERIOD 14.03.2005 TO 18.09.2006 REVEALED A CREDIT OF RS. 50,000/- ON 1 4.03.2005 AND A CORRESPONDING DEBIT OF THE SAME AMOUNT OF 27.07.2005, AND THE ACCOUNT WAS FOUN D TO HAVE BEEN SQUARED UP ON 18.09.2006. AS AGAINST THE AFORESAID, THE ACCOUNT O F THE AFORESAID PARTY I.E. M/S HITACHI HOME & LIFE SOLUTIONS (INDIA) LTD. IN THE BOOKS OF ACCOU NT OF THE ASSESSEE REFLECTED A CREDIT OF RS. 50,000/- ON 31.03.2007. ON A PERUSAL OF THE ACCOUNT OF THE AFORESAID PARTY, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD PURCHASED AIR CONDITI ONERS FROM THE SAID PARTY I.E. M/S HITACHI HOME & LIFE SOLUTIONS (INDIA) LTD., PURSUANT WHERET O THERE WERE CREDIT ENTRIES OF RS. 1,39,411/- AND RS. 66,700/- ON 23.04.2005 AND 04.05.2005, RESP ECTIVELY, AGAINST WHICH THERE WERE CORRESPONDING DEBITS OF THE AMOUNTS THAT WERE PAID BY THE ASSESSEE BY DEMAND DRAFTS. ON BEING QUERIED AS REGARDS THE LIABILITY OF RS. 50,00 0/- THAT WAS APPEARING IN THE ACCOUNT OF THE AFOREMENTIONED PARTY IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, SPECIFICALLY WHEN THE SAME HAD BEEN SQUARED UP BY THE SAID PARTY I.E. M/S HITACHI HOME & LIFE SOLUTIONS (INDIA) LTD., IT WAS SUBMITTED BY THE ASSESSEE THAT THE AFORESAID AMOUNT WAS AN ADVANCE THAT WAS GIVEN BY THE PROMOTER FROM HIS OWN ACCOUNT, WHICH ON HAVING BEEN RECEIVED BACK FROM THE AFORESAID PARTY STOOD REFLECTED AS A CREDIT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. HOWEVER, THE A.O WAS NOT P A G E | 3 ITA NO. 191/ASR./2016 A.Y. 2007-08 M/ S GMG HEALTHCARE PVT.LTD. VS. ACIT INCLINED TO ACCEPT THE AFORESAID CLAIM OF THE ASSES SEE, AND TREATED THE AFORESAID OUTSTANDING LIABILITY OF RS. 50,000/- IN THE BOOKS OF ACCOUNT O F THE ASSESSEE AS A CEASED LIABILITY UNDER SEC.41(1) OF THE ACT. 5. ON BEING QUERIED AS REGARDS THE CREDIT APPEARING IN THE ACCOUNT OF M/S AAKSHI ELECTRICAL SYS PVT. LTD. OF RS. 6,98,007/-, IT WAS SUBMITTED B Y THE ASSESSEE THAT THE BALANCE STANDING IN THE ACCOUNT OF THE AFORESAID PARTY WAS A DISPUTED A MOUNT AND THE PARTY HAD BEEN ASKED TO RECTIFY THE DEFECTS IN ITS BILLS. HOWEVER, AS THE A SSESSEE FAILED TO SUBSTANTIATE THE AFORESAID FACTS SO AVERRED BY IT, THEREFORE, THE A.O ALSO TRE ATED THE SAME AS A CEASED LIABILITY UNDER SEC. 41(1) OF THE ACT. 6. ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE A.O AFTER MAKING THE AFORESTATED ADDITIONS UNDER SEC. 41(1) OF THE ACT, THEREIN SCAL ED DOWN THE LOSS OF THE ASSESSEE TO AN AMOUNT OF RS. 20,41,100/- 7. AGGRIEVED, THE ASSESSEE ASSAILED THE ASSESSMENT ORDER BEFORE THE CIT(A). HOWEVER, NOT FINDING FAVOUR WITH THE CONTENTIONS ADVANCED BY THE ASSESSEE, THE CIT(A) UPHELD THE ADDITIONS MADE BY THE A.O UNDER SEC. 41(1) OF THE A CT AND DISMISSED THE APPEAL. 8. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF T HE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. WE FIND THAT THE ASSESSEE DESPITE HAVING BEEN PUT TO NOTICE ABOUT THE HEARING OF THE APPEAL HAD HOWEVER FAILED TO PUT UP AN APPEARANCE BEFORE US. ACCORDINGLY, IN THE BACKDROP OF THE AFORESAID FACTS, WE ARE CONSTRA INED TO PROCEED WITH AND DISPOSE OFF THE APPEAL AS PER RULE 24 OF THE APPELLATE TRIBUNAL RUL ES, 1963, AFTER HEARING THE RESPONDENT REVENUE AND PERUSING THE ORDERS OF THE LOWERS AUTHO RITIES. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE (FOR SHO RT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE SUBSISTENCE OF THE IMPUGNED LIABIL ITIES TOWARDS THE AFOREMENTIONED CREDITORS, THEREFORE, THE LOWER AUTHORITIES HAD RIGHTLY HELD T HE SAME AS CEASED LIABILITIES WITHIN A MEANING OF SEC. 41(1) OF THE ACT. P A G E | 4 ITA NO. 191/ASR./2016 A.Y. 2007-08 M/ S GMG HEALTHCARE PVT.LTD. VS. ACIT 10. WE HAVE HEARD THE LD. D.R AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. AS IS DISCERNIBLE FROM THE RECORDS, WE FIND THAT IT HAS C ONSISTENTLY BEEN THE CLAIM OF THE ASSESSEE THAT THE OUTSTANDING CREDIT BALANCE OF RS. 50,000/- IN T HE NAME OF M/S HITACHI HOME & LIFE SOLUTIONS (INDIA) LTD. WAS AN ADVANCE THAT WAS INITIALLY GIVE N BY THE DIRECTOR OF THE ASSESSEE COMPANY FROM HIS OWN SOURCES TO THE AFORESAID PARTY FOR SUP PLY OF AIR CONDITIONERS. IT HAS BEEN THE CLAIM OF THE ASSESSEE THAT THE ENTRY AS REGARDS THE ADVAN CE PAID BY THE DIRECTOR ON BEHALF OF THE ASSESSEE COMPANY HAD REMAINED OMITTED TO BE RECORDE D IN ITS BOOKS OF ACCOUNT. ACCORDINGLY, IT IS STATED BY THE ASSESSEE THAT WHEN THE SAID PARTY HAD RETURNED THE AFORESAID AMOUNT OF RS. 50,000/-, THE SAME IN THE ABSENCE OF A CORRESPONDIN G DEBIT, THEREIN CONTINUED TO BE REFLECTED AS A CREDIT BALANCE IN THE BOOKS OF ACCOUNT OF TH E ASSESSEE COMPANY. AS OBSERVED BY US HEREINABOVE, IT REMAINS AS A MATTER OF FACT THAT TH E ASSESSEE HAD PURCHASED AIR CONDITIONERS FROM THE AFOREMENTIONED PARTY I.E. M/S HITACHI HOME & LIFE SOLUTIONS (INDIA) LTD., PURSUANT WHERETO THE CREDIT ENTRIES ALONG WITH THE CORRESPON DING DEBIT ENTRIES ARE FOUND RECORDED IN ITS BOOKS OF ACCOUNT. BE THAT AS IT MAY, IN A CASE WHER E THE DEDUCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF ANY TRADING L IABILITY INCURRED BY THE ASSESSEE, AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR THE ASSESSEE HAD OBTAINED SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSA TION THEREOF, THE BENEFIT ACCRUING TO THE ASSESSEE SHALL BE DEEMED TO BE THE PROFITS AND GAIN S OF ITS BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME TAX AS ITS DEEMED INCOME OF THAT PREVIOUS YEAR WITHIN THE MEANING OF SEC. 41(1) OF THE ACT. BUT THEN, WE HOLD A STRONG CONVICTION THAT THE A.O WHILE MAKING AN ADDITION UNDER SEC. 41(1) REMAINS UNDER A STATUTORY OBLIGATION TO POINT OUT AS TO WHAT BENEFIT THE ASSESSEE HAD OBTAINED IN RESPECT O F THE TRADING LIABILITY DURING A SPECIFIC YEAR UNDER CONSIDERATION. IN THE CURRENT FACT SITUATION OF THE AFORESAID ISSUE BEFORE US, WE FIND THAT THE A.O HAD NOT BEEN ABLE TO DISLODGE THE CLAIM OF THE ASSESSEE THAT THE AMOUNT OF RS. 50,000/- REFLECTED AS AN OUTSTANDING LIABILITY IN T HE ACCOUNT OF THE AFORESAID PARTY I.E. M/S HITACHI HOME & LIFE SOLUTIONS (INDIA) LTD., WAS TOWARDS THE REPAYMENT OF THE ADVANCE THAT WAS GIVEN BY ITS DIRECTOR TO THE AFOREMENTIONED PARTY FOR PUR CHASE OF AIR CONDITIONERS. IN OUR CONSIDERED VIEW, THE A.O BEFORE BRINGING THE AFORESAID AMOUNT WITHIN THE SWEEP OF SEC.41(1) OF THE ACT, WAS OBLIGATED TO HAVE CUMULATIVELY SATISFIED TWO FO LD REQUIREMENTS VIZ. (I) THAT, AN ALLOWANCE OR DEDUCTION HAD BEEN MADE IN THE ASSESSMENT FOR ANY Y EAR IN RESPECT OF THE TRADING LIABILITY UNDER CONSIDERATION; AND (II) THAT, SUBSEQUENTLY DURING A NY PREVIOUS YEAR THE ASSESSEE HAD OBTAINED P A G E | 5 ITA NO. 191/ASR./2016 A.Y. 2007-08 M/ S GMG HEALTHCARE PVT.LTD. VS. ACIT SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY B Y WAY OF REMISSION OR CESSATION THEREOF. NOW, IN THE CASE BEFORE US, THE A.O HAD FAILED TO ESTABL ISH THAT ANY DEDUCTION FOR THE LIABILITY OF RS. 50,000/- REFLECTED AGAINST THE AFORESAID PARTY VIZ. M/S HITACHI HOME & LIFE SOLUTIONS (INDIA) LTD., WAS EVER CLAIMED BY THE ASSESSEE. AS SUCH, IN OUR CONSIDERED VIEW, IN THE ABSENCE OF SATISFACTION OF THE AFORESAID BASIC CONDITION FOR I NVOKING THE PROVISIONS OF SEC.41(1) OF THE ACT, THE OUTSTANDING LIABILITY OF THE ASSESSEE TOWARDS T HE AFORESAID PARTY COULD NOT HAVE SUMMARILY BEEN TREATED AS A CEASED LIABILITY, AS THE SAME WOU LD OTHERWISE FRUSTRATE THE CLEAR MANDATE OF THE SAID STATUTORY PROVISION. IN FACT, WE MAY HEREI N OBSERVE, THAT THE FACT THAT THE BOOKS OF ACCOUNT OF THE AFOREMENTIONED PARTY VIZ. M/S HITACH I HOME & LIFE SOLUTIONS (INDIA) LTD. REVEALS A COMPLETED TRANSACTION I.E. CREDIT OF RS. 50,000/- ON 14.03.2005, AND A CORRESPONDING DEBIT OF THE SAME AMOUNT OF RS. 50,000/- ON 27.07.2005, THER EIN LENDS DUE CREDENCE TO THE AFORESAID EXPLANATION OF THE ASSESSEE AS REGARDS THE NATURE O F THE TRANSACTION UNDER CONSIDERATION. APART FROM THAT, WE ARE UNABLE TO COMPREHEND THAT IN CASE THE A.O HAD ANY DOUBTS AS REGARDS THE VERACITY OF THE AFORESAID CLAIM OF THE ASSESSEE THE N WHAT STOPPED HIM FROM VERIFYING THE FACTUAL POSITION BY CALLING FOR THE REQUISITE DETAILS FROM THE AFOREMENTIONED PARTY? BE THAT AS IT MAY, ON THE BASIS OF THE AFORESAID FACTS, WE ARE OF THE CON SIDERED VIEW THAT DE HORS SATISFACTION OF THE REQUISITE CONDITIONS FOR CHARACTERISING THE AFORESA ID OUTSTANDING LIABILITY OF THE ASSESSEE AS A CEASED LIABILITY WITHIN THE MEANING OF SEC. 41(1) O F THE ACT, THE ADDITION OF RS. 50,000/- THEREIN MADE CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATE D. THE GROUNDS OF APPEAL NOS. 1 & 2 ARE ALLOWED. 11. WE SHALL NOW ADVERT TO THE CHARACTERIZATION OF THE OUTSTANDING LIABILITY OF RS. 6,98,007/- IN THE NAME OF M/S AAKSHI ELECTRICAL SYS PVT. LTD., AS A CEASED LIABILITY WITHIN THE MEANING OF SEC. 41(1) OF THE ACT. AS IS DISCERNIBLE FROM THE O RDERS OF THE LOWER AUTHORITIES, IT HAS BEEN THE CLAIM OF THE ASSESSEE BEFORE THEM THAT IT HAD GIVEN A CONTRACT FOR ELECTRICAL INSTALLATIONS IN ITS HOSPITAL TO M/S AAKSHI ELECTRICAL SYS PVT. LTD., IN LIEU WHEREOF AMOUNT WAS ADVANCED TO THE LATTER. IT IS STATED BY THE ASSESSEE, THAT AFTER TH E COMPLETE BILLS WERE RECEIVED FROM THE AFOREMENTIONED PARTY I.E. M/S AAKSHI ELECTRICAL SYS PVT. LTD., THE SAME WERE CAPITALIZED AND NO EXPENDITURE EXCEPT DEPRECIATION WAS CLAIMED ON THE SAME. HOWEVER, AS THE FITTINGS AND INSTALLATION WERE NOT FOUND UP TO THE MARK, THEREFO RE, THE OUTSTANDING PAYMENT TO THE AFORESAID CONTRACTOR I.E. M/S AAKSHI ELECTRICAL SYS PVT. LTD. IS STATED TO HAVE BEEN WITHHELD BY THE P A G E | 6 ITA NO. 191/ASR./2016 A.Y. 2007-08 M/ S GMG HEALTHCARE PVT.LTD. VS. ACIT ASSESSEE. ACCORDINGLY, IT WAS THE CLAIM OF THE ASSE SSEE BEFORE THE LOWER AUTHORITIES THAT THE AMOUNT REFLECTED IN THE ACCOUNT OF THE AFOREMENTION ED PARTY WAS A DISPUTED OUTSTANDING LIABILITY. IT WAS THE CLAIM OF THE ASSESSEE, THAT T HE AMOUNT OUTSTANDING TOWARDS THE AFOREMENTIONED PARTY COULD NOT BE TREATED AS A CEAS ED LIABILITY WITHIN A MEANING OF SEC. 41(1) OF THE ACT FOR TWO FOLD REASONS VIZ.(I) THAT, THE A MOUNT HAD BEEN SPENT FOR ELECTRICAL FITTINGS AND INSTALLATION WHICH HAD BEEN CAPITALIZED AND NO EXPE NDITURE EXCEPT DEPRECIATION WAS CHARGED TO THE PROFIT AND LOSS ACCOUNT; AND (II) THAT, THE LIA BILITY OUTSTANDING TOWARDS THE AFOREMENTIONED PARTY THOUGH DISPUTED HAD HOWEVER NOT CEASED. AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT THEY HAD SUMMARILY BRUSHE D ASIDE THE AFORESAID CLAIM OF THE ASSESSEE, AND WITHOUT LOOKING INTO THE FACT SITUATION PERTAIN ING TO THE OUTSTANDING LIABILITY OF THE ASSESSEE TOWARDS THE AFORESAID PARTY VIZ. M/S AAKSHI ELECTRI CAL SYS PVT. LTD., THEREIN SUMMARILY BROUGHT THE SAME WITHIN THE MEANING OF A CEASED LIABILITY U NDER SEC.41(1) OF THE ACT. 12. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACT SITUATION PERTAINING TO THE ISSUE UNDER CONSIDERATION I.E. TREATING OF THE OUTSTANDIN G LIABILITY OF THE ASSESSEE TOWARDS M/S AAKSHI ELECTRICAL SYS PVT. LTD., AS A CEASED LIABILITY WIT HIN THE MEANING OF SEC. 41(1) OF THE ACT. AS OBSERVED BY US AT LENGTH HEREINABOVE, FOR INVOKING THE DEEMING PROVISIONS OF SEC. 41(1) OF THE ACT, THE A.O IS OBLIGATED TO SHOW THAT THE LIABILIT Y UNDER CONSIDERATION HAD BEEN CLAIMED AS A DEDUCTION BY THE ASSESSEE, AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR, THE ASSESSEE HAD OBTAINED SOME BENEFIT IN RESPECT OF SUCH TRADING LI ABILITY BY WAY OF REMISSION OR CESSATION THEREOF. IN OUR CONSIDERED VIEW, THE A.O HAD FAILED TO DISCHARGE THE ONUS THAT WAS CAST UPON HIM AS REGARDS PROVING THE SATISFACTION OF THE AFOR ESAID REQUISITE CONDITIONS PRIOR TO INVOKING OF THE PROVISIONS OF SEC.41(1) OF THE ACT. NOT ONLY TH AT, WE FIND THAT EVEN OTHERWISE THERE IS NOTHING DISCERNIBLE FROM THE RECORD WHICH COULD PER SUADE US TO CONCLUDE THAT THE BENEFIT, IF ANY, OBTAINED BY THE ASSESSEE BY WAY OF REMISSION OF CES SATION OF THE AFORESAID LIABILITY COULD BE RELATED TO THE YEAR UNDER CONSIDERATION. AS SUCH, W E FIND THAT THE LOWER AUTHORITIES HAD SHIRKED FROM MAKING NECESSARY VERIFICATIONS, WHICH COULD HA VE SAFELY BE DONE BY CALLING FOR THE REQUISITE DETAILS FROM THE AFOREMENTIONED PARTY I.E . M/S AAKSHI ELECTRICAL SYS PVT. LTD. BUT THEN, WE ALSO CANNOT REMAIN OBLIVIOUS OF THE FACT THAT TH E ASSESSEE HAD ALSO FAILED TO DO THE BARE MINIMUM IN ORDER TO ESTABLISH THAT THE LIABILITY TO WARDS THE AFOREMENTIONED PARTY, THOUGH DISPUTED, WAS HOWEVER OUTSTANDING. APART FROM THAT, EXCEPT FOR HARPING ON THE FACT THAT THE P A G E | 7 ITA NO. 191/ASR./2016 A.Y. 2007-08 M/ S GMG HEALTHCARE PVT.LTD. VS. ACIT PAYMENT TO THE AFOREMENTIONED PARTY WAS TOWARDS AN ADVANCE IN LIEU OF A CONTRACT FOR INSTALLATIONS TO BE CARRIED OUT IN A HOSPITAL I.E. A CAPITAL EXPENDITURE, NOTHING HAD BEEN PLACED ON RECORD BY THE ASSESSEE WHICH COULD IRREFUTABLY S UBSTANTIATE THE SAID FACTUAL POSITION TO THE HILT. IN THE BACKDROP OF THE AFORESAID FACTS, WE AR E OF THE CONSIDERED VIEW THAT IN ALL FAIRNESS THE MATTER REQUIRES TO BE RESTORED TO THE FILE OF THE A .O FOR FRESH ADJUDICATION. NEEDLESS TO SAY, THE ASSESSEE SHALL IN THE COURSE OF THE SET ASIDE PRO CEEDINGS REMAIN AT A LIBERTY TO SUBSTANTIATE ITS CLAIM THAT THE LIABILITY OUTSTANDING TOWARDS THE AF OREMENTIONED PARTY I.E. M/S AAKSHI ELECTRICAL SYS PVT. LTD. DOES NOT FALL WITHIN THE MEANING OF A CEASED LIABILITY UNDER SEC. 41(1) OF THE ACT. THE GROUND OF APPEAL NO. 3 IS ALLOWED FOR STATISTICAL PURPOSES. 13. THE GROUND OF APPEAL NO. 4 BEING GENERAL IS DISMISSED. 14. BEFORE PARTING, WE MAY HEREIN DEAL WITH A PROCE DURAL ISSUE THAT THOUGH THE HEARING OF THE CAPTIONED APPEAL WAS CONCLUDED ON 06/02/2020, H OWEVER, THIS ORDER IS BEING PRONOUNCED MUCH AFTER THE EXPIRY OF 90 DAYS FROM THE DATE OF C ONCLUSION OF HEARING. WE FIND THAT RULE 34(5) OF THE INCOME-TAX APPELLATE TRIBUNAL RULES, 1962, W HICH ENVISAGES THE PROCEDURE FOR PRONOUNCEMENT OF ORDERS, PROVIDES AS FOLLOWS: (5) T HE PRONOUNCEMENT MAY BE IN ANY OF THE FOLLOWING MANNERS: (A) THE BENCH MAY PRONOUNCE THE ORDER IMMEDIATELY UPON THE CONCLUSION OF THE HEARING. (B) IN CASE WHERE THE ORDER IS NOT PRONOUNCED IMMEDIATELY ON THE CONCLUSION OF THE HEARING, THE BENCH SHALL GIVE A DATE FOR PRONOU NCEMENT. IN A CASE WHERE NO DATE OF PRONOUNCEMENT IS GIVEN BY THE BENCH, EVERY ENDEAVOU R SHALL BE MADE BY THE BENCH TO PRONOUNCE THE ORDER WITHIN 60 DAYS FROM THE DATE ON WHICH THE HEARING OF THE CASE WAS CONCLUDED BUT, WHERE IT IS NOT PRACTICABLE SO TO DO ON THE GROUND OF EXCEPTIONAL AND EXTRAORDINARY CIRCUMSTANCES OF THE CASE, THE BENCH SHALL FIX A FUTURE DAY FOR PRONOUNCEMENT OF THE ORDER, AND SUCH DATE SHALL NOT ORDINARILY BE A DAY BEYOND A FURTHER PERIOD OF 30 DAYS AND DUE NOTICE OF THE DAY SO FIXED SHALL BE GIVEN ON TH E NOTICE BOARD. AS SUCH, ORDINARILY THE ORDER ON AN APPEAL SHOULD BE PRONOUNCED BY THE BENCH WITH IN NO MORE THAN 90 DAYS FROM THE DATE OF CONCLUDING THE HEARING. IT IS, HOWEVER, IMPORTANT T O NOTE THAT THE EXPRESSION ORDINARILY HAS BEEN USED IN THE SAID RULE ITSELF. THIS RULE WAS IN SERTED AS A RESULT OF DIRECTIONS OF HONBLE HIGH COURT IN THE CASE OF SHIVSAGAR VEG RESTAURANT VS AC IT [(2009) 317 ITR 433 (BOM)] WHEREIN IT WAS INTER ALIA, OBSERVED AS UNDER: P A G E | 8 ITA NO. 191/ASR./2016 A.Y. 2007-08 M/ S GMG HEALTHCARE PVT.LTD. VS. ACIT WE, THEREFORE, DIRECT THE PRESIDENT OF THE APPELLA TE TRIBUNAL TO FRAME AND LAY DOWN THE GUIDELINES IN THE SIMILAR LINES AS ARE LAID DOWN BY THE APEX COURT IN THE CASE OF ANIL RAI (SUPRA) AND TO ISSUE APPROPRI ATE ADMINISTRATIVE DIRECTIONS TO ALL THE BENCHES OF THE TRIBUNAL IN THAT BEHALF. WE HOPE AND TRUST THAT SU ITABLE GUIDELINES SHALL BE FRAMED AND ISSUED BY THE PRESID ENT OF THE APPELLATE TRIBUNAL WITHIN SHORTEST REASONABLE TIME AND FOLLOWED STRICTLY BY ALL THE BE NCHES OF THE TRIBUNAL. IN THE MEANWHILE (EMPHASIS, BY UNDERLINING, SUPPLIED BY US NOW), ALL THE REVISIONA L AND APPELLATE AUTHORITIES UNDER THE INCOME-TAX AC T ARE DIRECTED TO DECIDE MATTERS HEARD BY THEM WITHIN A PERIOD OF THREE MONTHS FROM THE DATE CASE IS CLOSED FOR JUDGMENT. IN THE RULE SO FRAMED, AS A RESULT OF THESE DIRECTI ONS, THE EXPRESSION ORDINARILY HAS BEEN INSERTED IN THE REQUIREMENT TO PRONOUNCE THE ORDER WITHIN A PERIOD OF 90 DAYS. THE QUESTION THEN ARISES WHETHER OR NOT THE PASSING OF THIS ORDE R, BEYOND A PERIOD OF NINETY DAYS IN THE CASE BEFORE US WAS NECESSITATED BY ANY EXTRAORDINARY C IRCUMSTANCES. 15. WE FIND THAT THE AFORESAID ISSUE AFTER EXHAUST IVE DELIBERATIONS HAD BEEN ANSWERED BY A COORDINATE BENCH OF THE TRIBUNAL VIZ. ITAT, MUMBAI F BENCH IN DCIT, CENTRAL CIRCLE-3(2), MUMBAI VS. JSW LIMITED & ORS. [ITA NO. 6264/MUM/18 ; DATED 14/05/2020, WHEREIN IT WAS OBSERVED AS UNDER : LET US IN THIS LIGHT REVERT TO THE PREVAILING SI TUATION IN THE COUNTRY. ON 24TH MARCH, 2020, HONBL E PRIME MINISTER OF INDIA TOOK THE BOLD STEP OF IMPOSING A NATIONWIDE LOCKDOWN, FOR 21 DAYS, TO PREVENT THE SPREAD OF COVID 19 EPIDEMIC, AND THIS LOCKDOWN WAS EXTENDED FROM TIME TO TIME. THE EPIDEMIC SITUATION BEING GRAVE, THERE WAS NOT MUCH OF A RELA XATION IN SUBSEQUENT LOCKDOWNS ALSO. IN ANY CASE, THERE WAS UNPRECEDENTED DISRUPTION OF JUDICIAL WOK ALL OVER THE COUNTRY. AS A MATTER OF FACT, IT HAS B EEN SUCH AN UNPRECEDENTED SITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY, THAT HONBLE SUPREME COURT OF INDIA, IN AN UNPRECEDENTED ORDER IN THE HISTORY OF INDIA AND VIDE ORDER DATED 6.5.2020 READ WITH ORDER DATED 23.3.2020, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LOCKDOWN PERIOD BUT ALSO A FEW MORE DAYS PRIOR TO, AND AFTER , THE LOCKDOWN BY OBSERVING THAT IN CASE THE LIMITATION EXPIRED AFTER 15.03.2020 THEN THE PERIOD FROM 15.03.2020 TILL THE DATE ON WHICH THE LOCKDOW N IS LIFTED IN THE JURISDICTIONAL AREA WHERE THE DISP UTE LIES OR WHERE THE CAUSE OF ACTION ARISES SHALL BE EXTENDED FOR A PERIOD OF 15 DAYS AFTER THE LIFTING OF LOCKDOWN. HONBLE BOMBAY HIGH COURT, IN AN ORDE R DATED 15TH APRIL 2020, HAS, BESIDES EXTENDING THE V ALIDITY OF ALL INTERIM ORDERS, HAS ALSO OBSERVED TH AT, IT IS ALSO CLARIFIED THAT WHILE CALCULATING TIME F OR DISPOSAL OF MATTERS MADE TIME-BOUND BY THIS COUR T, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CO NTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY, AND ALSO OBSERVED THAT ARRANGEMENT CONTINUED BY AN ORDER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SHALL CONTINUE FURT HER TILL 15TH JUNE 2020. IT HAS BEEN AN UNPRECEDEN TED SITUATION NOT ONLY IN INDIA BUT ALL OVER THE WORLD. GOVERNMENT OF INDIA HAS, VIDE NOTIFICATION DATED 1 9TH FEBRUARY 2020, TAKEN THE STAND THAT, THE CORONAVIRU S SHOULD BE CONSIDERED A CASE OF NATURAL CALAMITY AND FMC (I.E. FORCE MAJEURE CLAUSE) MAYBE INVOKED, WHEREVER CONSIDERED APPROPRIATE, FOLLOWING THE DUE PROCEDURE. THE TERM FORCE MAJEURE HAS BEEN DEFINED IN BLACKS LAW DICTIONARY, AS AN EVENT OR EFFECT THAT CAN BE NEITHER ANTICIPATED NOR CONTROLL ED WHEN SUCH IS THE POSITION, AND IT IS OFFICIALLY SO NOTIFIED BY THE GOVERNMENT OF INDIA AND THE COVID-1 9 EPIDEMIC HAS BEEN NOTIFIED AS A DISASTER UNDER THE NATIONAL DISASTER MANAGEMENT ACT, 2005, AND ALS O IN THE LIGHT OF THE DISCUSSIONS ABOVE, THE PERIOD DURING WHICH LOCKDOWN WAS IN FORCE CAN BE ANYTHING BUT AN ORDINARY PERIOD. 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING PRONOUNCEMENT O F ORDERS WITHIN 90 DAYS, DISREGARDING THE IMPORTANT FACT THAT THE ENTIRE COUNTRY WAS IN LOCKDOWN, WE SH OULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDING AT LEAST THE PERIOD DURING WHICH THE LOCKDOWN WAS IN F ORCE. WE MUST FACTOR GROUND REALITIES IN MIND WHILE P A G E | 9 ITA NO. 191/ASR./2016 A.Y. 2007-08 M/ S GMG HEALTHCARE PVT.LTD. VS. ACIT INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEMENT O F THE ORDER. LAW IS NOT BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. TH E TENETS OF LAW BEING ENACTED ON THE BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE INTERPRETATION SO ASSIGNED BY US I S NOT ONLY IN CONSONANCE WITH THE LETTER AND SPIRIT O F RULE 34(5) BUT IS ALSO A PRAGMATIC APPROACH AT A TIME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER MANAGE MENT ACT 2005, IS CAUSING UNPRECEDENTED DISRUPTION IN THE FUNCTIONING OF OUR JUSTICE DELIVE RY SYSTEM. UNDOUBTEDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2017) 392 ITR 244 (BOM)], HONBLE BOMBAY HIGH COURT DID NOT APPROVE AN ORDER BEING PASSED BY THE TRIBUNAL BEYOND A PERIOD OF 90 DAYS, BUT THEN I N THE PRESENT SITUATION HONBLE BOMBAY HIGH COURT ITSELF HAS, VIDE JUDGMENT DATED 15TH APRIL 2020, HE LD THAT DIRECTED WHILE CALCULATING THE TIME FOR DI SPOSAL OF MATTERS MADE TIME BOUND BY THIS COURT, THE PERIO D FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY. THE EXTRAORDINARY STEPS TAKEN SUO MOTU BY THE HONBLE HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS PERIOD OF LOCKDOWN CANNOT BE TREATED AS AN ORDINARY PERIOD DURING WHICH THE NORMAL TIME LIMITS ARE TO REMAIN IN FORCE. IN OUR CONSIDERED VIEW, EVEN WITHO UT THE WORDS ORDINARILY, IN THE LIGHT OF THE ABOV E ANALYSIS OF THE LEGAL POSITION, THE PERIOD DURING W HICH LOCKOUT WAS IN FORCE IS TO EXCLUDED FOR THE PU RPOSE OF TIME LIMITS SET OUT IN RULE 34(5) OF THE APPELLA TE TRIBUNAL RULES, 1963. VIEWED THUS, THE EXCEPTION , TO 90-DAY TIME-LIMIT FOR PRONOUNCEMENT OF ORDERS, INHE RENT IN RULE 34(5)(C), WITH RESPECT TO THE PRONOUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE AFO RESAID OBSERVATIONS OF THE TRIBUNAL AND FINDING OURSELVES TO BE IN AGREEMENT WITH THE SAME, THEREIN RESPECTFULLY FOLLOW THE SAME. AS SUCH, WE ARE OF THE CONSIDERED VIEW THAT THE PERIOD DURING WHICH THE LOCKOUT WAS IN FORCE SHALL STAND EXCLUDED FOR THE PURPOSE OF WORKING OUT THE T IME LIMIT FOR PRONOUNCEMENT ORDERS, AS ENVISAGED IN RULE 34(5) OF THE APPELLATE TRIBUNAL R ULES, 1963. 16. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TA X (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD. SD/- SD/- (L. P. SAHU) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 30.06.2020 P A G E | 10 ITA NO. 191/ASR./2016 A.Y. 2007-08 M/ S GMG HEALTHCARE PVT.LTD. VS. ACIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. DR, ITAT, AMRITSAR BENCH, AMRITS A R 6. / GUARD FILE. //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) /ITAT, AMRITSAR. BENCH, AMRITSAR.