The ACIT, Circle-7, Surat V. M/s. Aayush ICU & Multispeciality Hospital, Surat

ITA 2006/AHD/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2358 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: R N VEPARI
• Keywords: Unexplained expenditure; Depreciation; Business expenditure; Income from undisclosed sources
• Section: 69C; 133A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 2006/AHD/2012 / ASSESSMENT YEAR: 2009-10 ACIT, CIRCLE-7, SURAT .. APPELLANT VS M/S. AAYUSH ICU & MULTISPECIALTY HOSPITAL, 5 TH FLOOR, AAYUSH DOCTOR HOUSE STATION, LAL DARWAJA ROAD, SURAT 395 003 .. RESPONDENT PAN : AANFA 7182 N REVENUE BY : SHRI DINESH SINGH, SR. DR. ASSESSEE(S) BY : SHRI R. N. VEPARI, AR / DATE OF HEARING 29/03/2016 /DATE OF PRONOUNCEMENT 31/03/2016 / O R D E R PER SHAILENDRA K. YADAV, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V , SURAT DATED 06.06.2012 FOR ASSESSMENT YEAR 2009-10, ON TH E FOLLOWING GROUNDS:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.50,00,000/- OF ADDITIONAL INCOME OFF ERED DURING THE SURVEY. ITA NO. 2006/AHD /2012 ACIT VS. AAYUSH ICU & MULTISPECIALTY HOSPITAL AY 2009-10 - 2 - 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.5,00,000/- BEING DISALLOWANCE OF DEPRECIATION @ 10% ON THE HOSPITAL BUILDING. 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATE THE FACT THAT IT WAS AN AFTERTHOUGHT OF THE ASSESSEE FIRM THAT THE EXPENDITURE IS INCURRED/INVE STED IN HOSPITAL BUILDING AND GIVEN THE TREATMENT AS INVESTMENT IN BOOKS OF ACCOUNTS. IT WAS DETECTED BY THE DEPARTMENT DURING THE COURSE OF SURVEY, WHICH WOULD HAVE REMAINED OUT OF THE BOOKS OF THE ASSESSEE FORE VER HAD THERE BEEN NO SURVEY; AND AS SUCH IT CANNOT BE SAID THAT THE ASSESSEE DISCLOSED THE ADDITIONAL INC OME OF RS.50,00,000/- VOLUNTARILY. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. IT IS THEREFORE PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 6. THAT THE REVENUE CRAVES LEAVE TO ADD, AMEND, ALTER OR WITHDRAW ANY GROUNDS OF APPEAL. 2. IN THIS CASE, THE SURVEY PROCEEDINGS U/S 133A WA S CARRIED OUT ON 20.08.2009, WHEREIN THE ASSESSEE DISCLOSED A N AMOUNT OF RS.50 LACS AS ITS ADDITIONAL UNACCOUNTED INCOME WHICH WAS CLAIMED TO BE EXPENDED FOR FURNISHING AND RENOVATIO N OF HOSPITAL PREMISES OVER AND ABOVE THE INVESTMENT REC ORDED IN THE BOOKS. ON PERUSAL OF DETAILS FILED BY ASSESSEE, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHO WN THE INCOME OF RS.7,10,790/- THOUGH IT HAD OFFERED RS. 5 0 LACS AS ITS UNDISCLOSED ADDITIONAL INCOME FOR THE YEAR UNDER CONSIDERATION. FURTHER, THE ASSESSING OFFICER OBSERVED THAT THE AS SESSEE HAS CLAIMED DEPRECIATION TO TUNE OF RS.61,78,996/- WHIC H INCLUDED DEPRECIATION CLAIMED ON THE AMOUNT OF RS.50 LACS, W HICH WAS OFFERED BY THE ASSESSEE AS ITS UNDISCLOSED INCOME D URING THE ITA NO. 2006/AHD /2012 ACIT VS. AAYUSH ICU & MULTISPECIALTY HOSPITAL AY 2009-10 - 3 - TIME OF SURVEY. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT NO DEDUCTION WHATSOEVER SHALL BE ALLOWED TO ASSESSEE ON UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT AND HE ALSO HELD THAT THE CONTENTION OF ASSESSE E THAT THIS EXPENDITURE FALLS UNDER SECTION 69B AND NOT UNDER 6 9C WAS ALSO NOT TENABLE AS THE ASSESSEE ITSELF HAD ACCEPTE D THAT IT HAD SPENT RS.50 LACS WHICH WAS NOT ACCOUNTED IN ITS BOO KS OF ACCOUNTS. THE ASSESSING OFFICER ACCORDINGLY ADDED RS.50 LACS TO THE TOTAL INCOME OF THE ASSESSEE. MOREOVER, AN AMOUNT OF RS.5,00,000/- WAS ALSO ADDED TO THE TOTAL INCOME OF THE ASSESSEE TOWARDS DEPRECIATION @ 10% ON RS.50 LACS . 3. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F THE ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) GRANTED RELIEF TO THE ASSESSEE ON BOTH COUNTS BY DELETING R S.50 LACS ADDITIONAL INCOME OFFERED DURING SURVEY AND DISALLO WANCE OF RS.5 LACS OUT OF DEPRECIATION. THE ORDER OF CIT(A) HAS BEEN OPPOSED ON BEHALF OF THE REVENUE INTER ALIA SUBMITTING THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.50 LACS OF ADDITIONAL INCOME OFFERED DURING THE SURVEY AND ALS O ERRED IN DELETING THE ADDITION OF RS.5 LACS BEING DISALLOWAN CE OF DEPRECIATION @ 10% ON THE HOSPITAL BUILDING. THE LD . DEPARTMENTAL REPRESENTATIVE ACCORDINGLY PLEADED THA T THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE AS SESSING OFFICER BE RESTORED. ON THE OTHER HAND, THE LD. AU THORIZED REPRESENTATIVE SUPPORTED THE ORDER OF THE CIT(A). 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IN THE PRESENT CAS E A SURVEY ITA NO. 2006/AHD /2012 ACIT VS. AAYUSH ICU & MULTISPECIALTY HOSPITAL AY 2009-10 - 4 - PROCEEDINGS U/S 133A OF THE ACT WAS UNDERTAKEN ON 20.08.2009 AND DURING THE SURVEY PROCEEDINGS, THE A SSESSEE DISCLOSED A SUM OF RS.50 LACS BEING THE AMOUNT NOT ACCOUNTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE SA ME WAS OFFERED FOR TAXATION. THIS AMOUNT WAS REFLECTED IN THE PROFIT AND LOSS ACCOUNT, WHICH HAS BEEN PLACED ON RECORD. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AUTHORIZED REP RESENTATIVE SUBMITTED THAT ALL THE CAPITAL EXPENSES WERE RECORD ED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE-FIRM AND THE ASSE SSEE HAD DULY PRODUCED ALL THE LEDGER ACCOUNTS ALONGWITH THE VOUCHERS FOR ADDITION OF FIXED ASSET BEFORE THE ASSESSING OF FICER. THE ASSESSING OFFICER HAS VERIFIED ALL THE CAPITAL EXPE NSES AND ACCEPTED THE GENUINENESS OF EXPENDITURE RECORDED. T HE ASSESSEE HAS GIVEN THE SOURCE OF EXPENDITURE INCURR ED. AS PER DEPARTMENT CIRCULAR NO.772 DATED 23.12.1998 ON THE SCOPE AND EFFECT OF NEWLY INSERTED (W.E.F. 01.04.1999) PR OVISO TO SECTION 69C BY FINANCE ACT, 1998 UNDER THE EXISTING PROVISIONS, WHERE AS EXPENDITURE INCURRED BY THE TA XPAYER IN RESPECT OF WHICH HE EITHER OFFERS NO EXPLANATION RE GARDING THE SOURCE OF SUCH EXPENDITURE AND WHERE EXPLANATION FO UND UNSATISFACTORY, THE EXPENDITURE IS TREATED AS 'INCO ME' UNDER SECTION 69C. THERE IS NO CORRESPONDING PROVISION FO R DISALLOWANCE OF SUCH EXPENDITURE. THIS USED TO ENAB LE THE TAXPAYER CHARGED TO TAX U/S.69C TO CLAIM THE EXPEND ITURE AS DEDUCTION U/S.37 DEFEATING THE VERY OBJECTIVE OF TH E SECTION. FROM THE AFORESAID CIRCULAR, IT IS CLEAR THAT THE I NTENTION BEHIND INSERTING PROVISO TO SECTION 69C IS TO PREVENT THE ASSESSEE FROM CLAIMING AS BUSINESS EXPENDITURE WHICH IS DEEMED AS INCOME WITH RESPECT TO UNEXPLAINED EXPENDITURE. ITA NO. 2006/AHD /2012 ACIT VS. AAYUSH ICU & MULTISPECIALTY HOSPITAL AY 2009-10 - 5 - 4.1 THE ASSESSEE-FIRM HAS DECLARED UNEXPLAINED INVE STMENT IN HOSPITAL BUILDING. THUS, THE CASE OF THE ASSESSEE D OES NOT FALL UNDER SECTION 69C, SO PROVISO TO SECTION 69C IS NOT APPLICABLE, MEANING THEREBY THAT THE DECLARED UNDISCLOSED CAPIT AL EXPENDITURE ON HOSPITAL BUILDINGS DOES NOT FALL UND ER THE CATEGORY OF PROVISO TO SECTION 69C OF THE ACT. PROV ISO TO SECTION 69C HAS DIRECT REFERENCE TO DISALLOWANCE OF UNEXPLA INED EXPENDITURE WHICH IS OTHERWISE ALLOWABLE U/S.37 OF THE INCOME- TAX ACT, 1961. IN VIEW OF THE ABOVE, CIT(A) RIGHTL Y HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE-FIRM IS COVERE D BY PROVISIONS OF SECTION 69B OF THE ACT, AS THE AMOUNT SPENT HAS GIVEN RISE TO AN ASSET ON WHICH DEPRECIATION IS ALL OWABLE. IN THIS CASE, EXPENDITURE WAS INCURRED IN DEVELOPMENT OF THE HOSPITAL BUILDING WHICH HAS GIVEN RISE AN ASSET AND ON THIS ASSET DEPRECIATION IS ALLOWABLE. THEREFORE, THE ADD ITION OF RS.50,00,000/- AND ADDITION ON ACCOUNT OF DISALLOWA NCE OF DEPRECIATION AMOUNTING TO RS.5,00,000/-, WERE RIGHT LY DELETED BY THE CIT(A). THESE REASONED FINDINGS OF THE LD. CIT(A) NEED NO INTERFERENCE FROM OUR SIDE AND WE UPHOLD THE SAM E. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 31 ST OF MARCH 2016 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (SHAILENDRA K . YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 31/03/2016 *BIJU T., PS ITA NO. 2006/AHD /2012 ACIT VS. AAYUSH ICU & MULTISPECIALTY HOSPITAL AY 2009-10 - 6 - / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT. 3. && ' / CONCERNED CIT 4. ' ( ) / THE CIT(A), 5. ()* $++ , , / DR, ITAT, AHMEDABAD 6. *,- / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) ! ' , / ITAT, AHMEDABAD