The ACIT(OSD)Circle-8, Ahmedabad V. Sal Care Pvt.Ltd., Ahmedabad

ITA 2607/AHD/2012

• Counselvise Citation: 260720514 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: S N SOPARKAR
• Keywords: Charitable institution; Non-deduction of tax; Revenue expenditure
• Section: 154; 2

Judgement Text

ITA NO.2607/AHD/2012 ASSESSMENT YEAR: 2009-10 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S.S. GODARA JM] ITA NO.2607/AHD/2012 ASSESSMENT YEAR: 2009-10 DY. COMMISSIONER OF INCOME TAX, ............ .APPELLANT CIRCLE-8, AHMEDABAD. VS. SAL CARE PVT. LTD., ........................RE SPONDENT C/O. SAL HOSPITAL & MEDICAL INSTITUTE, OPP. DOORDHARSHAN, DRIVE-IN-ROAD, AHMEDABAD. [PAN: AALCS 7886 G] APPEARANCES BY: DINESH SINGH , FOR THE APPELLANT S.N. SOPARKAR, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : APRIL 27, 2015 DATE OF PRONOUNCING THE ORDER : APRIL 30, 2015 O R D E R PER PRAMOD KUMAR AM: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 6 TH SEPTEMBER, 2012 PASSED BY THE LEARNED CIT(A) IN TH E MATTER OF ASSESSMENT UNDER SECTION 154 READ WITH SECTION 2 50 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), FOR THE ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS :-. 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XI V, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DISPOSING OFF THE RECTIFICATION APPLICATION FILED BY THE ASSESSING OFFICER REGARDIN G APPLICABILITY OF ITA NO.2607/AHD/2012 ASSESSMENT YEAR: 2009-10 PAGE 2 OF 4 PROVISION OF SECTION 40(A)(IA) OF THE ACT AS NOT MI STAKE APPARENT FROM RECORDS BEING A DEBATABLE ISSUE. 2. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER H AD DISALLOWED RS.1,63,33,576/- ON ACCOUNT OF PAYMENT OF OPERATION AND MANAGEMENT CHARGES PAID TO ADARSH FOUNDATION AND RS.2,15,31,183/- BEIN G REIMBURSEMENT OF EXPENSES RELATING TO KESAR SAL HOSPITAL, ON THE GRO UND THAT THESE EXPENSE WERE CAPITAL EXPENSES IN NATURE. HOWEVER, WHEN ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), HE REVERSED THE ACTION OF THE ASSESSING OFFICER AND HELD THAT THE EXPENDITURE IN QUESTION IS REVENUE IN NATURE. THE ASSESSING OFFICER THEN MOVED A PETITION BEFORE THE CIT(A) THA T IN CASE HE WAS TO COME TO CONCLUSION THAT THE EXPENDITURE IS REVENUE IN NATUR E, HE ALSO OUGHT TO HAVE EXAMINED AS TO WHETHER TAX DEDUCTION AT SOURCE OBLI GATION, IF ANY, HAVE BEEN DULY COMPLIED WITH SO AS TO ENSURE THAT DISABILITY UNDER SECTION 40(A)(IA) IS NOT INVOKED AND EXPENSES ARE, ON THAT COUNT, NOT DEDUCT IBLE. LEARNED CIT(A) REJECTED THIS PETITION AND OBSERVED AS FOLLOWS :- I HAVE CAREFULLY PERUSED THE APPELLATE ORDER, THE ASSESSMENT ORDER AND THE RECTIFICATION APPLICATION FILED BY THE A.O. IT IS NOTED THAT THE ISSUE OF NON-DEDUCTION OF TAX ON THE PAYMENT MADE BY THE APPELLANT FOR TRANSFER OF OPERATION AND MANAGEMENT RIGHTS WAS NOT A MATTER OF CONSIDERATION AND APPEAL BEFORE ME AND NON-CONSIDERATION OF THE SAME CANNOT BE CONSTRUED AS MISTAKE APPARENT FROM RECORD. THE AO HAS NOT EXPRE SSED ANY OPINION ON THE ISSUE AND, THEREFORE, THE SAME WAS NOT A MATTER OF DISCUSSION WHILE DECIDING THE APPEAL. THERE IS NO GROUND OF APPEAL REGARDING THIS ISSUE. THE ADDITIONAL ISSUE, WHICH HAS NOW BEEN RAISED, REGARD ING DEDUCTION OF TAX FROM THE PAYMENT MADE BY THE APPELLANT COMPANY TO M /S ADARSH FOUNDATION CHARITABLE TRUST, IS A DEBATABLE ONE AND CANNOT BE TAKEN UP IN RECTIFICATION PROCEEDINGS. THEREFORE, THE APPLICAT ION MADE BY THE A.O. CANNOT BE ACTED UPON. 3. THE ASSESSING OFFICER IS AGGRIEVED AND IS IN APP EAL BEFORE US. ITA NO.2607/AHD/2012 ASSESSMENT YEAR: 2009-10 PAGE 3 OF 4 4. LEARNED DEPARTMENTAL REPRESENTATIVES PLEA, IN S UBSTANCE, IS THAT THE CIT(A) HAD THE POWERS TO EXAMINE ALL ASPECTS OF THE ASSESSMENT WHETHER THESE ISSUES ARE SPECIFICALLY TAKEN UP IN APPEAL OR NOT. ONCE HE HAS POWERS TO DO SO, ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIV E, HE HAS CORRESPONDING DUTY TO EXERCISE THESE POWERS WHEN CIRCUMSTANCES SO WARRANT OR JUSTIFY. IT WAS A FIT CASE IN WHICH HE OUGHT TO HAVE EXAMINED WHETH ER OR NOT, EVEN IF THE EXPENDITURE WAS REVENUE EXPENDITURE IN NATURE, ANY OTHER DISABILITY FOR DEDUCTION IS ATTRACTED. LEARNED CIT(A)S INERTIA IN NOT EXAMINING THE MATTER IN THE RIGHT PERSPECTIVE IS ALSO, ACCORDING TO THE LEA RNED DEPARTMENTAL REPRESENTATIVE, A MISTAKE APPARENT ON RECORD. WE A RE THUS URGED TO DIRECT THE CIT(A) TO EXAMINE THE APPLICATION OF SECTION 40(A)( IA) ON THE FACTS OF THIS CASE. 5. LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY OPPO SES THE SUBMISSIONS OF THE ASSESSEE. HE SUBMITS THAT THE ISSUE BEING RAIS ED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IS A PURELY ACADEMIC IS SUE AS THE MATTER IS COVERED, IN FAVOUR OF THE ASSESSEE, BY HONBLE JURI SDICTIONAL HIGH COURTS JUDGEMENT IN THE CASE OF CIT VS. GUJARAT NARMADA VA LLEY FERTILIZERS CO. LTD., 361 ITR 172 WHEREIN IT IS HELD THAT NO TAXES ARE REQUIR ED TO BE DEDUCTED AT SOURCE FROM REIMBURSEMENTS. LEARNED COUNSEL FURTHER SUBMI TS THAT THE CIT(A) WAS QUITE JUSTIFIED IN NOT EXAMINING THE APPLICATION OF SECTION 40(A)(IA) ON THE FACTS OF THIS CASE AS HE WAS NOT CALLED UPON TO DO SO. H E FURTHER POINTED OUT THAT IF WE ARE TO HOLD THAT THE CIT(A) IS TO EXAMINE ALL ASPEC TS OF A DISALLOWANCE, WHETHER THE SAME ARE IN CHALLENGE BEFORE HIM OR NOT, IT WIL L RESULT IN AN UNMANAGEABLE SITUATION AND EXAMINATION OF ALL ASPECTS FROM THE P OINT OF VIEW OF REVISION RATHER THAN APPELLATE ADJUDICATION. IN ANY EVENT, ACCORDING TO LEARNED COUNSEL, THIS IS A HIGHLY CONTENTIOUS ISSUE WHICH CAN NOT BE SUBJECT MATTER OF RECTIFICATION PROCEEDINGS. HE THUS URGED US TO CONFIRM THE STAND OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. ITA NO.2607/AHD/2012 ASSESSMENT YEAR: 2009-10 PAGE 4 OF 4 6. AS HELD BY THE HONBLE SUPREME COURT IN THE LAND MARK CASE OF ITO VS. VOLKART BROTHERS (82 ITR 50), A MISTAKE APPARENT ON RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE D RAWN BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY C ONCEIVABLY BE TWO OPINIONS. AS TO WHETHER THE CIT(A) HAS THE DUTY TO EXAMINE AL L OTHER ASPECTS OF A DISALLOWANCE, EVEN WHEN NOT CHALLENGED IN APPEAL, I S, AT THE MINIMUM, A HIGHLY CONTENTIOUS ISSUE. SUCH POWERS, THEREFORE, COULD N OT, IN ANY CASE, BE INVOKED BE THE ASSESSING OFFICER UNDER THE RECTIFICATION PROCE EDINGS UNDER SECTION 154 OF THE ACT. FOR THIS SHORT REASON ALONE, WE APPROVE T HE CONCLUSIONS ARRIVED AT BY THE LD. CIT(A) AND DECLINE TO INTERFERE IN THE MATT ER. IN THIS VIEW OF THE MATTER, WE ALSO SEE NO NEED TO ADDRESS OURSELVES TO THE ISS UE ON MERITS OF APPLICABILITY OR RATHER INAPPLICABILITY OF SECTION 40(A)(IA) ON T HE FACTS OF THIS CASE. THAT ASPECT OF THE MATTER IS ACADEMIC IN THE PRESENT CON TEXT. 7. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUN CED IN THE OPEN COURT TODAY ON THE 30 TH DAY OF APRIL, 2015. SD/- SD/- S. S. GODARA PRAMOD KUM AR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 30 TH DAY OF APRIL, 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT/DEPUTY REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD