DCIT, CHENNAI V. M/s. Kumaran Hospitals Pvt Ltd., CHENNAI

ITA 1927/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64599 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-11-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 12-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JUNIOR
• Assessee Lawyers: G BASKAR
• Keywords: Depreciation; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI S.S.GODARA, JUDICIAL MEMBER I.T.A.NO. 1927/MDS/2010 ASSESSMENT YEAR : 2003-04 THE DEPUTY COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-II(4), CHENNAI 34. VS. M/S. KUMARAN HOSPITALS PVT. LTD., 214, EVR PERIYAR SALAI, KILPAUK, CHENNAI - 10. PAN AAACK4398L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E.B.RENGARAJAN, JUNIOR STANDING COUNSEL RESPONDENT BY : SHRI G. BASKAR, ADVOCATE DATE OF HEARING : 22 ND NOVEMBER, 2012 DATE OF PRONOUNCEMENT : 26 TH NOVEMBER, 2012 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2003-04. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-II I, AT CHENNAI ITA 1927/10 :- 2 -: DATED 12.8.2010 AND ARISES OUT OF THE ASSESSMENT CO MPLETED UNDER SEC.143(3) OF THE INCOME-TAX ACT, 1961. 2. THE RELEVANT GROUNDS RAISED BY THE REVENUE IN TH E PRESENT APPEAL READ AS BELOW : 2. THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE TOWARDS DEPRECIATION, RENT, DIESE L CHARGES, ELECTRICITY CHARGES ETC. TOWARDS THE USAGE OF FACILITIES AT THE ASSESSEES HOSPITAL BY S.P. EDUCA TIONAL TRUST. 2.1 THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT T HE HOSPITAL HAS NOT PAID ANY SALARY OR STIPEND TO THE TRUST FOR UTILIZING THE SERVICES OF NURSING STUDENTS OF T HE S.P. EDUCATION TRUST. THE WAIVER OF CHARGES WERE DUE TO COMMERCIAL EXPEDIENCY CANNOT BE ACCEPTED AS THIS AMOUNTS TO BARTER SYSTEM OF ACCOUNTING WHICH IS NOT AN ALLOWABLE METHOD OF ACCOUNTING. 2.2 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED T HAT THE ADDITIONS MADE ON ACCOUNT OF NOTIONAL RENT AND DEPRECIATION ON VEHICLE, DIESEL CHARGES, ELECTRICIT Y ETC., ARE JUSTIFIABLE AND THAT MANY HOSPITALS AND INSTITU TIONS ITA 1927/10 :- 3 -: COLLECT FEE FROM THE TRAINEES FOR IMPARTING TRAININ G AND PROVIDING EXPOSURE. 2.3 IT IS SUBMITTED THAT THE ACCOUNTS MAINTAINED B Y AN ASSESSEE IN ANY FIELD OF THE ECONOMY SHALL CONVEY THE REAL INCOME AND IN THE PRESENT CASE, THE EXPENSES INVOLVED WITH RESPECT TO SERVICES AVAILED BY THE S. P. EDUCATIONAL TRUST HAVE NOT BEEN ACCOUNTED FOR AND HENCE THE ASSESSING OFFICER RESORTED TO DISALLOWANC E UNDER DISPUTE. 3. WE HEARD BOTH SIDES IN DETAIL. M/S. S.P. EDUCAT IONAL TRUST IS RUNNING A NURSING SCHOOL IN THE PREMISES OF THE ASSEESSEE- HOSPITAL. THE ASSESSEE HAS PROVIDED FACILITIES TO THE NURSING SCHOOL TO RUN THE CLASS ROOMS. THE ASSESSEE-HOSPIT AL IS ALSO PROVIDING SOME TRANSPORT AND OTHER FACILITIES TO TH E NURSING SCHOOL FOR THE BENEFIT OF NURSING STUDENTS. AT THE SAME T IME, IT IS TO BE SEEN THAT THE NURSING SCHOOL IS PROVIDING THE SERVI CES OF ITS TRAINEE-STUDENT-NURSES TO THE ASSESSEE-HOSPITAL. A S RIGHTLY POINTED OUT BY THE COMMISSIONER OF INCOME-TAX(APPEA LS), EVEN IF A MINIMUM OF STIPEND/SALARY IS CONSIDERED FOR ABOUT 100 STUDENTS, THE BENEFIT DERIVED BY THE ASSESSEE WOULD BE MUCH H IGHER THAN ITA 1927/10 :- 4 -: THE EXPENSES INCURRED BY IT IN PROVIDING FACILITIES TO THE NURSING SCHOOL. THESE ARE ALL USUAL ARRANGEMENTS MADE IN H OSPITALS AND NURSING SCHOOLS. THERE IS NO QUESTION OF BARTER S YSTEM ETC. AS CONTENDED BY THE REVENUE. 4. WE FIND THAT THIS APPEAL IS WITHOUT ANY MERIT. IT IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 26 TH OF NOVEMBER, 2012 AT CHENNAI. SD/- SD/- (S.S. GODARA) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 26 TH NOVEMBER , 2012 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR