DCIT CIR 7(1), MUMBAI V. NPIL LABORATORIES & DIAGNOSTICS P. LTD, MUMBAI

ITA 3048/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7172 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED USMAN
• Assessee Lawyers: M D INAMDAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I,MUMBAI BEFORE SMT.P.MADHAVI DEVI (J.M) & RAJENDRA SI NGH(A.M) ITA NO.3048/M/2009(A.Y. 2005-06) THE DCIT 7(1), ROOM NO.622, 6 TH FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 20. (APPELLANT) VS. M/S. NPIL LABORATORIES & DIAGNOSTICS P. LTD., NICHOLAS PIRAMAL TOWER, GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI 13. PAN: AAACT 9117E (RESPONDENT) APPELLANT BY : SHRI MOHAMMED USMAN RESPONDENT BY : SHRI M.D.INAMDAR ORDER PER RAJENDRA SINGH, A.M, THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER DATED 27/2/2009 OF THE CIT(A) FOR THE ASSESSMENT YEAR 2005-06. THE ONLY D ISPUTE RAISED IN THIS APPEAL BY THE REVENUE IS REGARDING DISALLOWANCE OF 50% OF PRO FESSIONAL FEES PAID BY THE ASSESSEE TO DR. SUBHENDU ROY. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING PATHOLOGICAL LABORARY AND MEDIC AL DIAGNOSTIC CENTER. THE A.O DURING THE ASSESSMENT PROCEEDINGS NOTED THAT THE AS SESSEE HAD PAID PROFESSIONAL FEES OF RS. 1,32,83,163/- TO DR. SUBHENDU ROY, WHILE FEE S PAID TO THE REMAINING THREE DOCTORS TAKEN TOGETHER WAS ONLY RS. 26,88,500/-. THE ASSESSEE EXPLAINED THAT DR. SUBHENDU ROY WAS A LEADING HESTOPATHOLOGIST FOR MO RE THAN TWENTY YEARS AND WAS INCHARGE OF DAY TO DAY OPERATIONS, FUNCTIONING , MO DERNIZATION AND UP GRADATION OF LABORATORY. THE PATIENTS CAME TO LAB BECAUSE OF TH E REPUTATION AND CREDIBILITY OF DR. ROY. THE A.O WAS HOWEVER NOT SATISFIED WITH THE E XPLANATION AND DISALLOWED 50% OF ITA NO.3048/M/2009(A.Y. 2005-06) 2 THE CLAIM. IN APPEAL LD. CIT(A) OBSERVED THAT THE PAYMENTS HAD BEEN MADE IN TERMS OF AN AGREEMENT AND THE ASSESSEE HAD GIVEN COMPLETE BR EAK UP OF FEES PAID ON DIFFERENT ACCOUNTS. HE, THEREFORE, ALLOWED THE CLAIM OF THE ASSESSEE, AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y 2000-01 AND 2001-02 IN ITA NOS. 2987 & 7577/M/04. IN THOSE YEARS ALSO THE AO HAD MADE SIM ILAR DISALLOWANCE OUT OF THE FEES PAID TO DR. SUBHENDU ROY. THE TRIBUNAL NOTED THAT THE ASSESSEE HAD EARNED CRORES OF RUPEES WITH THE EFFORTS OF DR. ROY, TO WHOM THE PRO FESSIONAL FEES HAD BEEN PAID AS PER THE AGREEMENT. THERE WAS NO DISPUTE THAT DR. ROY H AD RENDERED SERVICES TO THE ASSESSEE. THE TRIBUNAL ALSO OBSERVED THAT IT WAS F OR THE ASSESSEE TO DECIDE AS TO HOW MUCH HAS TO BE PAID TO THE PERSON OF WHOM THE SERV ICES HAVE BEEN OBTAINED. THE TRIBUNAL ACCORDINGLY CONFIRMED THE ORDER OF LD. CIT (A) AND ALLOWED THE CLAIM IN FULL. THE FACTS IN THIS YEAR ARE IDENTICAL. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN A.YS 2000-01 AND 2001-02 (SUPRA) SEE N O INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHELD. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON THE 30 TH DAY OF MARCH, 2010. SD/- SD/- (P.MADHAVI DEVI) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT. 30 TH MARCH, 2010 ITA NO.3048/M/2009(A.Y. 2005-06) 3 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT(A)CONCERNED 4. THE CIT,CITY -CONCERNED. 5. THE D.RI BENC H. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.3048/M/2009(A.Y. 2005-06) 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 25/3/2010 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 25/03/2010 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER ITA NO.3048/M/2009(A.Y. 2005-06) 5 ITA NO.3048/M/2009(A.Y. 2005-06) 6