DCIT, New Delhi V. M/s. Fortis Healthcare Ltd., New Delhi

ITA 2063/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65479 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 02-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITHI LAL
• Assessee Lawyers: R K KAPOOR
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI JOGINDER SINGH: JUDICIAL MEMBER & SHRI SHAMIM YAHYA: ACCOUNTANT MEMBER ITA NO. 5327/DEL/11 & 2063/DEL/12 A.YRS. 2007-08 & 2008-09 DCIT, CIRCLE 11(1), VS. M/S FORTIS HEALTCARE LTD. , NEW DELHI. ESCORTS HEART INSTITUTE & RESEARCH CENTRE OKHLA ROAD, NEW DELHI-110025. PAN: AAACF 0987 E ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI PRITHI LAL SR. DR RESPONDENT BY : SHRI R.K. KAPOOR CA O R D E R PER JOGINDER SINGH, J.M: : THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDERS DAT ED 13-9-2011 AND 21-2-2012 RESPECTIVELY PASSED BY THE LD. FIRST APPELLATE AUTHORITY FOR A.Y. 2007-08 & 2008-09. 2. THE ONLY GROUND RAISED FOR A.Y. 2007-08 BY THE R EVENUE IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 16,85,948/- MADE ON AC COUNT OF TREATMENT OF RECRUITMENT AND TRAINING EXPENSES AS CAPITAL IN NAT URE. 3. DURING HEARING WE HAVE HEARD SHRI PRITHI LAL LD. SR. DR AND SHRI R.K. KAPOOR, LEARNED COUNSEL FOR THE ASSESSEE. ITA 5327/D/11 & 2063/D/12 FORTIS HEALTH CARE LTD. 2 4. AT THE OUT SET IT WAS CLAIMED BY THE LEARNED COU NSEL FOR THE ASSESSEE THAT THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR A.Y. 2006-07. IN SUPPORT OF ITS CLAIM, THE LD. COUNSEL PLACED COPY OF THE ORDER DATED 16 TH SEPTEMBER 2010 (ITA NO. 1253/DEL/10). THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REVENUE. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE ABOVE, WE FIND THAT FOR A .Y. 2006-07 VIDE AFORESAID ORDER DATED 16 TH SEPTEMBER 2010 IN THE APPEAL FILED BY THE REVENUE, THE TRIBUNAL ON IDENTICAL GROUND CONSIDERE D THE DECISION IN THE CASE OF SONY INDIA (P) LTD. VS. DCIT (114 ITD 448 ( DEL.), THE RELEVANT PORTION OF WHICH STAND REPRODUCED AT PAGE 3 OF THE ORDER OF THE TRIBUNAL, AND DISMISSED THE APPEAL OF THE REVENUE HOLDING THAT IN CURRING OF EXPENDITURE FOR THE PURPOSES OF IMPARTING TRAINING TO THE EMPLOYEES WAS IN ORDER TO INCREASE THEIR EFFICIENCY IN DAY TO DAY WORKING AND SINCE IN CURRING OF EXPENSES WAS NOT IN DOUBT AND ALSO SUCH EXPENSES WERE TO FACILIT ATE THE BUSINESS OPERATION MORE PROFITABLY, THEREFORE, WE FIND NO INFIRMITY I N THE STAND OF THE LD. CIT(A) FOR A.Y. 2007-08. THEREFORE, THE APPEAL OF T HE REVENUE IS DISMISSED. 6. NOW WE SHALL TAKE THE APPEAL OF THE REVENUE FOR A.Y. 2008-09, WHEREIN THE FIRST GROUND PERTAINING TO DELETION OF ADDITION OF RS. 7,12,088/- IS IDENTICAL TO A.Y. 2006-07. IN VIEW OF THE FORESA ID REASONING AND ALSO THE ORDER OF THE TRIBUNAL DATED 16 TH SEPTEMBER 2010, THIS GROUND OF THE REVENUE IS ALSO HAVING NO MERIT, THEREFORE, DISMISSED. ITA 5327/D/11 & 2063/D/12 FORTIS HEALTH CARE LTD. 3 7. THE NEXT GROUND PERTAINS TO DELETION OF ADDITION OF RS. 1,55,981/- ON ACCOUNT OF DISALLOWANCE OF CLUB EXPENSES. THE CRUX OF ARGUMENT ON BEHALF OF REVENUE IS THAT SUCH EXPENSES IS IN THE NATURE OF P ERSONAL EXPENSES AND NO JUSTIFICATION WAS ADDUCED BY THE ASSESSEE, WHEREAS THE ASSERTION OF THE ASSESSEE IS THAT SUCH EXPENSES WERE INCURRED FOR BU SINESS EXPEDIENCY, THEREFORE, HAS TO BE ALLOWED. THE ORDER OF THE LD. CIT(A) WAS DEFENDED. 7.1. ON CONSIDERATION OF SUBMISSIONS PUT-FORTH BY T HE RESPECTIVE COUNSELS, WE FIND THAT THE AMOUNT OF RS. 1,55,981/- WAS PAID TO ANNUAL/ MONTHLY SUBSCRIPTION TO VARIOUS CLUBS AND THE MEMBERSHIP WA S NOT EXCLUSIVELY MEANT FOR DIRECTOR OR FOR THE EMPLOYEES AND IT WAS A CORP ORATE MEMBERSHIP. ADMITTEDLY, THE EXPENSES WERE INCURRED SOLELY AND E XCLUSIVELY FOR PROMOTION OF BUSINESS. IN VIEW OF THE RATIO LAID DO WN BY THE HONBLE DELHI HIGH COURT IN CIT VS. SAMTEL COLOR LTD. 326 ITR 425 (DEL.), THESE ARE ALLOWABLE BUSINESS EXPENDITURE. IN VIEW OF CLEAR CU T JUDICIAL PRONOUNCEMENTS WE FIND NO INFIRMITY IN THE STAND OF THE LD. CIT(A). THEREFORE, THIS GROUND OF THE REVENUE DESERVES TO B E DISMISSED. 8. THE LAST GROUND PERTAINS TO DELETION OF ADDITION OF RS. 6,22,454/- MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES. 8.1. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSE E IS THAT SUCH PRIOR PERIOD EXPENSES WERE NOT CLAIMED BY THE ASSESSEE IN THE P&L A/C WHEREAS THE LD. SR. DR DEFENDED THE ASSESSMENT ORDER. 8.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS UNCONTROVERTED FINDIN G THAT IN ITS P&L A/C FOR ITA 5327/D/11 & 2063/D/12 FORTIS HEALTH CARE LTD. 4 THE PERIOD ENDING 31 ST MARCH 2008, THE PROFIT BEFORE TAX HAS BEEN SHOWN A T RS. 320.57 LACS AND EVEN THE COMPUTATION OF INCOME HAS BEEN STARTED FROM THE SAME AMOUNT. IN ITS COMPUTATION OF INCOME, NO S UCH EXPENSES IS CLAIMED BY THE ASSESSEE. THEREFORE, THE OBSERVATION MADE BY THE ASSESSING OFFICER IS CONTRARY TO FACTS. EVEN BEFORE THE LD. CIT(A) THE ASSESSEE VIDE LETTER DATED 22-12-2010 CLARIFIED THAT NO PRIOR PERIOD EXPENSES WERE CLAIMED. IN VIEW OF THESE FACTS THERE IS NO INFIRMITY IN THE ORDER OF T HE CIT(A) AND THE SAME IS UPHELD. 9. FINALLY, BOTH THE APPEALS OF THE REVENUE ARE DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON 21-09-2012. SD/- SD/- ( SHAMIM YAHYA ) ( JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21-09-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 5327/D/11 & 2063/D/12 FORTIS HEALTH CARE LTD. 5