M/s Warriers Hospital & Panchakarma Centre, Kayamkulam V. ITO, Thiruvalla

ITA 209/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61571 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 18-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: R SRINIVASAN
• Keywords: Reasonable cause

Judgement Text

1 ITA NO. 209/COCH/2010 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 209/COCH/2010 (ASSESSMENT YEAR 2005-06) M/S WARRIERS HOSPITAL & VS DY.CIT, CIR.1 PANCHAKARMA CENTRE ALLEPPEY VALANCHIRA, KAYAMKULAM PAN : AAAFW5661R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R SRINIVASAN RESPONDENT BY : SHRI ABHIMANYU SINGH YADAV DATE OF HEARING : 19-07-2012 DATE OF PRONOUNCEMENT : 27-07-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX(A)-IV, KOCHI DATED 17-12-2008 AND PERTAI NS TO ASSESSMENT YEAR 2005-06. 2. THERE WAS A DELAY OF 338 DAYS IN FILING THE APPE AL BEFORE THIS TRIBUNAL. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION O F DELAY. 3. SHRI R SRINIVASAN, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF RUNNING AYU RVED HOSPITAL CUM PANCHAKARMA CENTRE IN AT VELANCHIRA, ALLEPPEY DISTRICT. ACCORD ING TO THE LD.REPRESENTATIVE, THE MANAGING PARTNER OF THE ASSESSEE FIRM USED TO TRAVE L TO KOCHI AND GURUVAYOOR AND USED TO BE AWAY FROM THE HEADQUARTERS FOR 3-4 DAYS IN A WEEK. ACCORDING TO THE 2 ITA NO. 209/COCH/2010 LD.REPRESENTATIVE, THE ORDER OF THE FIRST APPELLATE AUTHORITY WAS RECEIVED IN THE OFFICE WHEN THE MANAGING PARTNER WAS AWAY FROM THE HEADQUA RTERS. THE RECEIPT OF THE FIRST APPELLATE AUTHORITYS ORDER WAS NOT BROUGHT TO THE NOTICE OF THE MANAGING PARTNER. THEREFORE, APPEAL COULD NOT BE FILED IN TIME. THE MANAGING PARTNER CAME TO KNOW ABOUT THE ORDER PASSED BY THE FIRST APPELLATE AUTHORITY W HEN DEMAND NOTICE FROM THE ASSESSING OFFICER WAS RECEIVED. IMMEDIATELY HE FIL ED THE APPEAL BEFORE THIS TRIBUNAL. ACCORDING TO THE LD.REPRESENTATIVE, THE FAILURE TO FILE THE APPEAL IN TIME DUE TO THE FAILURE ON THE PART OF THE EMPLOYEE WHO RECEIVED TH E COPY OF THE FIRST APPELLATE AUTHORITYS ORDER IN BRINGING THE SAME TO THE ATTEN TION OF THE MANAGING PARTNER. IT WAS THEREFORE, PLEADED THAT THE DELAY IN FILING THE APP EAL WAS BEYOND THE CONTROL OF THE ASSESSEE. THEREFORE, THE LD.REPRESENTATIVE SUBMITT ED THAT THE DELAY MAY BE CONDONED AND THE APPEAL ADMITTED. 4. WE HEARD SHRI ABHIMANYU SINGH YADAV, THE LD.DR A LSO. THE LD.DR SUBMITTED THAT THERE IS NO REASONABLE CAUSE FOR NOT FILING THE APP EAL IN TIME. ADMITTEDLY, THE ORDER WAS SERVED IN THE OFFICE OF THE ASSEESSEE AND THE ASSES SEE HAS NOT TAKEN ANY STEPS TO FILE THE APPEAL IN TIME. THEREFORE, THERE IS NO REASONABLE CAUSE FOR NOT FILING THE APPEAL WITHIN THE TIME PRESCRIBED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THERE WA S A DELAY OF 338 DAYS IN FILING THE APPEAL BEFORE THIS TRIBUNAL. THE CONTENTION OF THE ASSESSEE IS THAT THE RECEIPT OF COPY OF THE ORDER WAS NOT BROUGHT TO THE NOTICE OF THE MANA GING PARTNER, THEREFORE, THE APPEAL COULD NOT BE FILED IN TIME. WHEN THE EMPLOYEE MADE THE MISTAKE IN NOT BRINGING THE FACT OF RECEIPT OF THE COPY OF THE FIRST APPELLATE AUTHORITYS ORDER TO THE KNOWLEDGE OF THE MANAGING PARTNER, WE CANNOT BLAME THE MANAGING PARTNER IN TOTO. THERE MAY BE A VICARIOUS LIABILITY ON THE PART OF THE MANAGING PAR TNER ALSO. IN OTHER WORDS, THE NEGLIGENCE AND INACTION OF THE EMPLOYEE IN NOT BRIN GING THE FACT OF RECEIPT OF THE ORDER TO THE NOTICE OF THE MANAGING PARTNER IS EQUALLY AF FECTS THE MANAGING PARTNER ALSO. BUT 3 ITA NO. 209/COCH/2010 THE ASSESSEE FIRM IS AN INDEPENDENT ASSESSEE, THERE FORE, THE NEGLIGENCE OF THE EMPLOYEE CANNOT BE PUT AGAINST THE PARTNERSHIP FIRM. THE MA NAGING PARTNER BEING AN AYURVED PRACTITIONER, HAS TO NECESSARILY DEPEND UPON HIS EM PLOYEES IN CARRYING OUT TAXATION MATTERS. THEREFORE THE FAILURE ON THE PART OF THE EMPLOYEE CANNOT BE A REASON TO SHUT THE DOORS OF THE COURT ESPECIALLY WHEN THE APPEAL I S FILED. IN OTHER WORDS, THIS TRIBUNAL IS OF THE OPINION THAT THERE WAS A REASONABLE CAUSE ON THE PART OF THE ASSESSEE IN NOT FILING THE APPEAL BEFORE THIS TRIBUNAL. ACCORDINGL Y, THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED. 6. NOW COMING TO THE MERIT OF THE APPEAL, THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISALLOWANCE OF RS.2,28,917 TOWARDS THE RESEARCH AN D DEVELOPMENT EXPENDITURE. 7. SHRI R SREENIVASAN, THE LD.REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSEE HAS DEBITED RS.2,28,917 UNDER ADMINISTRATI VE EXPENSES. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE HAS PAID RS.2 LAKHS TO MR. BIJUMONY FOR RESEARCH AND DEVELOPMENT. HOWEVER, THE ASSESSING OFFICER DISALL OWED THE AMOUNT AND ADDED TO THE TOTAL INCOME. ACCORDING TO THE LD.REPRESENTATIVE, THE ENTIRE PAYMENT TO MR. BIJUMONY IS ONLY RESEARCH AND DEVELOPMENT EXPENDITURE; THEREFOR E, IT CANNOT BE DISALLOWED. ACCORDING TO THE LD.REPRESENTATIVE, IN THE NATURE O F THE ASSESSEES BUSINESS RESEARCH AND DEVELOPMENT IS A CONTINUOUS PROCESS, THEREFORE, THE DISALLOWANCE CANNOT BE JUSTIFIED. 8. ON THE CONTRARY, SHRI ABHIMANYU SINGH YADAV, THE LD.DR SUBMITTED THAT THE ASSESSEE HAS NOT UNDERTAKEN ANY RESEARCH. ACCORDIN G TO THE LD.DR THE ASSESSEE DID NOT HAVE ANY FACILITY FOR RESEARCH AND DEVELOPMENT. AC CORDING TO THE LD.DR, A SUM OF RS.2 LAKHS WAS PAID TO MR. BIJUMONY IN CONNECTION WITH D EVELOPMENT OF NEW PRODUCT, VIZ. SOAP AND SHAMPOO. THEREFORE, THE PAYMENT MADE TO M R. BIJUMONY CANNOT BE CONSIDERED TO BE A RESEARCH AND DEVELOPMENT EXPENDI TURE. 4 ITA NO. 209/COCH/2010 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. NO DOUBT, AYURVED PR ACTICE NEEDS CONTINUOUS RESEARCH AND DEVELOPMENT ACTIVITY. IN THIS CASE, THE ASSESS EE HAS NO SUCH FACILITY FOR RESEARCH. THE PAYMENT WAS ADMITTEDLY MADE TO MR. BIJUMONY FOR DEVELOPING NEW PRODUCTS, VIZ. SOAP AND SHAMPOO. IT IS NOT CORRECT TO SAY THAT TH E ASSESSEE HAS INCURRED THE EXPENDITURE FOR RESEARCH AND DEVELOPMENT. AS ALREA DY POINTED OUT, THE ASSESSEE HAS NO FACILITY TO UNDERTAKE ANY RESEARCH ACTIVITY IN ITS TREATMENT CENTRE. IN THIS CIRCUMSTANCES, THE PAYMENT OF RS.2 LAKHS TO MR. BIJUMONY IS RIGHTL Y DISALLOWED BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER OF INCOME-TAX(A). WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH JULY, 2012. (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 27 TH JULY, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH