ASST CIT CIR 2, V. GOENKA DIAMOND & JEWELLERS LTD,

ITA 216/JPR/2014

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 4703 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 21-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R KAVITHA
• Keywords: Charitable institution; Set aside
• Section: 12A; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 216 /MUM/20 1 4 (ASSESSMENT YEAR 20 0 8 - 0 9 ) I.T.A. NO. 217/MUM/2014 (ASSESSMENT YEAR 2009 - 10) ITO (EXEMPTION) - 1(1) ROOM NO. 505 PIRA MAL CHAMBERS LAL BAUG, PAREL MUMBAI - 400 012. VS. M/S. BAUN FOUNDATION TRUST 93 - 95, AUGUST KRANTI MARG, KEMPS CORNER MUMBAI - 400 036. PAN : AAATB0678H ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI APURVA SHAH DEPARTMENT BY MS. R. KAVITHA DATE OF H EARING 1 9 . 1 1 . 201 8 DATE OF PRONOUNCEMENT 30 . 1 1 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - BOTH THE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LEARNED CIT(A) - 1, MUMBAI AND THEY RELATE TO A.YS. 2008 - 09 & 2009 - 10. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN DELETING THE ADDITION MAD E BY THE ASSESSING OFFICER U/S. 13 OF T HE ACT AND ALSO IN ALLOWING EXEMPTION U/S. 11 OF THE ACT. 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A CHARITABLE TRUST REGISTERED U/S. 12A OF THE ACT. THE ASSESSEE IS RUNNING A HOSPITAL BY NAME OF CUMBALLA HILL HOSPITAL AND HEART INSTITUTE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2008 - 09, THE ASSESSING OFFICER EXAMINED THE EXPENSES CLAIME D ON PAYMENT MADE TO WARDS DOCTORS FEES. IT WAS NOTICED THAT OUT OF PROFESSIONAL FEES OF ` 195.39 LAKHS PAID TO VARIOUS DOCTORS, A SUM OF ` 155.75 LAKHS HAS BEEN PAID TO A SINGLE PERSON NAMED DR. K.R. SHETTY. IT WAS NOTICED THAT HE IS ONE OF THE TRUSTEES O F THE ASSESSEE TRUST AND ALSO PROVIDES PROFESSIONAL SERVICES AS A DOCTOR. HENCE, THE ASSESSEE WAS ASKED M/S. BAUN FOUNDATION TRUST 2 TO SUBSTANTIATE REASONABLENESS OF PAYMENT MADE TO DR. K.R. SHETTY. THE ASSESSING OFFICER SPECIALLY ASKED THE ASSESSEE TO PROVIDE PATIENTS DETAIL S, DETAI LS OF SPECIALIST D OCTORS WHO PERFORMED OPERATIONS. HOWEVER, THE ASSESSEE DID NOT PROVIDE SUCH DETAILS TO THE ASSESSING OFFICER. UNDER THESE SET OF FACTS, THE ASSESSING OFFICER TOOK THE VIEW THAT THE PAYMENT MADE TO DR. K.R. SHETTY IS EXCESS IVE AND UNREASON ABLE. ACCORDINGLY HE ESTIMATED REMUNERATION PAYABLE TO DR. K.R. SHETTY AT ` 8 LAKHS PER MONTH I.E. ` 96 LAKHS PER ANNUM. ACCORDINGLY, THE ASSESSING OFFICER DETERMINED EXCESS PAYMENT MADE BY WAY OF SALARY TO DR. K.R.SHETTY AT ` 60.75 LAKHS AND DISALLOWED T HE SAME. IN VIEW OF THE CONTRAVENTION OF PROVISIONS OF SECTION 13 (APPARENTLY SEC. 13 (1)(C) ) OF TH E ACT, THE ASSESSING OFFICER DENIED EXEMPTION U/S. 11 OF THE ACT TO THE ASSESSEE. IN THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) DELETED THE DISALLOWANCE MA DE BY THE ASSESSING OFFICER AND ALSO ALLOWED EXEMPTION U/S. 11 OF THE ACT. 3. IN A.Y. 2009 - 10 ALSO , THE ASSESSING OFFICER DETERMINED REMUNERATION PAYABLE TO DR. K.R. SHETTY AT ` 9 LAKHS PER MONTH AND ACCORDINGLY DISALLOWED A SUM OF ` 85 LAKHS OUT OF REMUN ERATION PAID TO DR. K.R. SHETTY. THE ASSESSING OFFICER ALSO DENIED EXEMPTION U/S. 11 OF THE ACT. THE LEARNED CIT(A) REVERSED THE ORDER OF THE ASSESSING OFFICER ON BOTH THE ISSUE S. AGGRIEVED, THE REVENUE HAS FILED THESE APPEALS BEFORE US. 4. AT THE TIME OF HEARING, THE LEARNED AR STRONGLY PLACED RELIANCE ON THE ORDER S PASSED BY THE LEARNED CIT(A). WHEN IT WAS SPECIFICALLY POINTED OUT THAT THE ASSESSEE HAS NOT PROVIDED DETAILS THAT WERE CALLED FOR BY THE ASSESSING OFFICER IN ORDER TO EXAMINE REASONABLENESS O F PAYMENT MADE TO DR. K.R. SHETTY, THE LEARNED AR SUBMITTED THAT THE DETAILS WERE FURNISHED BEFORE THE LEARNED CIT(A). HOWEVER, FROM THE ORDER PASSED BY THE LEARNED CIT(A) , WE NOTICE THAT THE LEARNED CIT(A) HAS RECORDED DETAILS OF PATIENTS WHO HAVE UNDERG ONE ANGIOGRAPHY, ANGIOPLASTY, PACE MAKER, BYPASS SURGERY ETC. THE LD CIT(A) HAS ALSO GIVEN DETAILS OF OPERATIONS UNDERTAKEN BY DR. K.R.SHETTY. WHEN IT WAS SPECIALLY ASKED WHETHER DR. K.R. SHETTY WA S ACTUALLY PERFORMING M/S. BAUN FOUNDATION TRUST 3 THE OPERATIONS, SINCE THE WRITE UP GIVEN ON THE SERVICES RENDERED BY DR. K.R. SHETTY DO ES NOT CONTAIN SUCH DETAILS, THE LEARNED AR ALSO COULD NOT SUBMIT CORRECT POSITION OF FACTS. HE SUBMITTED THAT DR. K.R. SHETTY GENERALLY UNDERTAKES SUPERVIS ORY WORKS AND CONSULTATION WORKS ONLY. THE LD A .R WAS NOT SURE AS TO WHETHER DR. K.R SHETTY HIMSELF HAS PERFORMED OPERATIONS. UNDER THESE SET OF FACTS, WE NOTICED THAT THE FINDINGS GIVEN BY THE LEARNED CIT(A) ARE FLAWED ONE AND IT GOES TO THE ROUTE OF THE MATTER . HENCE, WE ARE OF THE VIEW THAT THIS ISS UE REQUIRES FRESH EXAMINATION AT THE END OF THE LEARNED CIT(A). ACCORDINGLY, WE SET ASIDE THE ORDER S PASSED BY THE LEARNED CIT(A) IN BOTH THE YEARS UNDER CONSIDERATION AND RESTORE ALL THE MATTER S TO HIS FILE FOR EXAMINING THEM AFRESH. 5. IN THE RESULT, B OTH THE APPEALS FILED BY THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 30 . 1 1 .201 8 . SD/ - SD/ - (SANDEEP GOSAIN ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTA NT MEMBER MUMBAI ; DATED : 30 / 1 1 / 20 1 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI