ITo, Agra V. M/s Jai Hospital 7 Research Centre P.LTd, Agra

ITA 27/AGR/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6807 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 02-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R C SHARMA JR D R SHRI
• Assessee Lawyers: E PASS ROAD AGRA PAN AAACJ G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.27/AGR/2009 ASST. YEAR: 2005-06 INCOME-TAX OFFICER 4(2), VS. M/S. JAI HOSPITAL & RESEARCH CENTER AGRA. (P) LTD., 396, BYE PASS ROAD, AGRA. (PAN : AAACJ 3965 G). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.C. SHARMA, JR. D.R. RESPONDENT BY : SHRI PANKAJ GARGH, ADVOCATE ORDER PER P.K. BANSAL, A.M.: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 14.11.2008. 2. THE ONLY ISSUE IN THIS APPEAL RELATES TO THE DEL ETION OF THE ADDITION OF RS.3,09,656 + RS.63,420/- + RS.1,50,000/- AND RS.1,12,320/-. 3. AFTER HEARING THE RIVAL SUBMISSIONS AND GOING TH ROUGH THE ORDER OF THE CIT(A), WE NOTE THAT THE ADDITION OF RS.3,09,656/- HAS BEEN MADE BY THE A.O. BY INVOKING THE PROVISIONS OF SECTION 145(3), REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) TOOK THE VIEW THAT THE A.O. WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE UNDER SECTION 145(3) OF TH E ACT. THE REVENUE HAS NOT COME IN APPEAL AGAINST THE ORDER OF THE CIT(A) NOT APPROVING THE A CTION OF THE A.O. REJECTING THE BOOKS OF 2 ACCOUNTS. IN VIEW OF THIS FACT, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE DELETION OF THE ADDITION OF RS.3,09,656/- 4. IN REGARD TO THE NEXT DELETION OF ADDITION OF RS .63,420/-, THE A.O. DISALLOWED 50% OF THE HOSPITAL EXPENSES AND 10% ON OT EXPENSES AND MADE AN ADDITION OF RS.63,420/- MAINLY ON THE REASONING THAT THERE WAS FALL IN THE RECEIPTS OF TH E HOSPITAL AND THE INCREASE IN THE EXPENDITURE. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) NOTED THAT THE ASSESSEE HAS SUBMITTED COMPLETE DETAILS OF THE EXPENSES AND THE DISALLOWAN CE MADE BY THE A.O. WAS MERELY AN ADHOC DISALLOWANCE WHICH CANNOT BE SUSTAINED. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND GOING TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW, WE AGREE WITH THE ORDER OF THE CIT(A) THAT NO DISAL LOWANCE CAN BE MADE ON ADHOC BASIS. ONCE THE ASSESSEE HAS SUBMITTED THE COMPLETE DETAILS OF THE EXPENSES, THE A.O. IS BOUND TO POINT OUT THE SPECIFIC EXPENDITURE WHICH CANNOT BE ALLOWED. I N VIEW OF THIS FACT, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE DELETION OF THE A DDITION OF RS.63,420/-. 6. THE NEXT DISALLOWANCE WHICH WAS DELETED BY THE C IT(A) AMOUNTING TO RS.1,50,000/- REPRESENTS THE PROPORTIONATE DISALLOWANCE OUT OF IN TEREST PAID ON THE AMOUNT AND INTEREST FREE ADVANCES OF RS.7,50,000/- MADE TO EACH OF THE TWO D IRECTORS, NAMELY DR. MANVENDRA SWARUP SHARMA AND SHRI KUNWAR UDAYVIR SINGH. THE A.O. HAS NOTED THAT THE ASSESSEE HAS MADE ADVANCES OF RS.7,50,000/- EACH TO TWO DIRECTORS OF THE COMPANY WHILE THE ASSESSEE COMPANY HAS PAID INTEREST TO THE EXTENT OF RS.6,20,486/- ON BANK LOAN. HE ACCORDINGLY MADE PROPORTIONATE DISALLOWANCE. WHEN THE MATTER WENT BEFORE THE CIT( A), FOLLOWING THE DECISION OF S.A. BUILDERS LIMITED VS. CIT, 158 TAXMANN 74 (SC) AND AFTER GIVI NG THE FINDING ON APPRECIATION OF BALANCE 3 SHEET THAT THE ASSESSEE WAS HAVING SUFFICIENT NON-I NTEREST BEARING FUNDS, THE PROPORTIONATE DISALLOWANCE OF INTEREST OF RS.1,50,000/- WAS DELET ED BY THE CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. NO COGENT MATERIAL OR EVIDENCE WAS PLACED BEFORE US TO DISPRO VE THE FINDING OF THE CIT(A) THAT THE ASSESSEE WAS NOT HAVING SUFFICIENT NON-INTEREST BEARING FUND S. UNDER THESE FACTS, WE CONFIRM THE ACTION OF THE CIT(A). 8. THE NEXT DISALLOWANCE DELETED BY THE CIT(A) IS O F RS.1,12,320/-. THIS ADDITION HAS MERELY BEEN MADE BY ESTIMATING THE COST OF CONSTRUC TION OF THE HOSPITAL BUILDING AT RS.30,00,000/- WHILE THE ASSESSEE ACTUALLY SHOWN IN HIS BOOKS OF ACCOUNTS THE EXPENDITURE AT RS.28,87,682/-. WHEN THE MATTER WENT BEFORE THE CI T(A), THE CIT(A) DELETED THE ADDITION. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. IN OUR OPINION, THE CIT(A) WAS CORRECT IN LAW IN DELETING THE ADDIT ION AS THE ADDITION WAS MERELY MADE ON ESTIMATING THE COST OF CONSTRUCTION. WE ACCORDINGL Y CONFIRM THE ORDER OF THE CIT(A). 10. IN THE RESULT, APPEAL OF THE REVENUE STANDS DIS MISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.06.201 0). SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 25 TH JUNE, 2010. PBN/* 4 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY