Shri Vasant Vashrambhai Sapovadia, RAJKOT-GUJARAT V. The Assistant Commr. Income Tax,Cir-3, RAJKOT-GUJARAT

ITA 32/RJT/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5199 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 19-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Gift; Business income; Business expenditure; Retrospective amendment; Corroborative evidences
• Section: 69C; 37(1); 250; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER I.T.A. NO.32/RJT/2016 (ASSESSMENT YEAR : 2010-11) VASANT VASHRAMBHAI SAPOVADIA NETRADEEP EYE HOSPITAL PVT.LTD. KANAK ROAD B/H. S.T. STATION RAJKOT VS. THE ASST.CIT CIR-3 RAJKOT [PAN NO. AJBPS 3164 K] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY : SHRI ANIL KUMAR DAS, DR DATE OF HEARING 19/09/2019 DATE OF PRONOUNCEMENT 22/ 10 /2019 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEA LS)2, RAJKOT [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-2/0008/13-14 DATED 30 /11/2015 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCO ME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'THE ACT') DATED 28/03/2013 RELEVANT TO ASSESSMENT YEAR (AY) 2010-11. - 2 - ITA NO.32/RJT/2016 VASANT VASHRAMBHAI SAPOVADIA VS. ACIT ASST.YEAR 2010-11 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CON FIRMING ADDITION OF RS. 50,000/-. THE ADDITION NEEDS DELETION. 2. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CON FIRMING ADDITION OF RS. 7,00,000/-. THE ADDITION NEEDS DELETION. 3. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CON FIRMING ADDITION OF RS. 7,50,000/- BASED ON FACTUAL POSITION WHICH HE DESCRIBED WRONGLY. THE AD DITION NEEDS DELETION. 4. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CON FIRMING ADDITION OF RS. 7,50,000/- ERRONEOUSLY APPLYING PROVISIONS THOUGH THERE IS NO SUCH STATUTO RY PROVISIONS. THE ADDITION NEEDS DELETION. 5. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CON FIRMING ADDITION OF RS. 7,50,000/- BASED ON WRONG PRESUMPTION AND SURMISES AND AGAINST THE SETT LED POSITION. THE ADDITION NEEDS DELETION. 6. TAKING INTO CONSIDERATION THE LEGAL, STATUTORY, FACTUAL AND ADMINISTRATIVE ASPECTS, NO ADDITION OF AN AMOUNT OF RS.7,50,000/- OUGHT TO HAVE BEEN CO NFIRMED. THE ADDITIONS NEED DELETION. 7. WITHOUT PREJUDICE, THE ASSESSMENT MADE IS BAD IN LAW AND DESERVES ANNULMENT. 8. WITHOUT PREJUDICE, NO ADEQUATE, SUFFICIENT AND R EASONABLE OPPORTUNITY HAS BEEN PROVIDED WHILE PASSING ASSESSMENT ORDER. THE ASSESSMENT NEEDS ANNU LMENT. 9. WITHOUT PREJUDICE, NO ADEQUATE, SUFFICIENT AND R EASONABLE OPPORTUNITY HAS BEEN PROVIDED WHILE PASSING APPEAL ORDER. THE ASSESSMENT NEEDS ANNULMEN T. 10. WITHOUT PREJUDICE, THE ASSESSMENT IS FRAMED BEY OND STATUTORY TIME LIMIT. THE ASSESSMENT NEEDS ANNULMENT. 11. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND A ND/OR SUBSTITUTE ANY OR ALL GROUND OF APPEAL BEFORE THE ACTUAL HEARING TAKES PLACE. 2. THE ISSUES RAISED BY THE ASSESSEE IN ALL THE G ROUNDS OF APPEAL ARE INTERCONNECTED. THEREFORE, WE HAVE CLUBBED ALL OF T HEM TOGETHER FOR THE PURPOSE OF ADJUDICATION, CONVENIENCE AND THE BREVITY. 3. THE EFFECTIVE ISSUE RAISED BY THE ASSESSEE IS T HAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO BY TREATING THE EXPE NDITURE INCURRED FOR - 3 - ITA NO.32/RJT/2016 VASANT VASHRAMBHAI SAPOVADIA VS. ACIT ASST.YEAR 2010-11 RS. 7,50,000/- ON FOREIGN TOURS AS UNEXPLAINED EXPE NDITURE UNDER SECTION 69C OF THE ACT. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE I N THE PRESENT CASE IS AN INDIVIDUAL AND QUALIFIED DOCTOR. THE ASSESSEE IS ALSO A MANAGI NG DIRECTOR IN A COMPANY KNOWN AS NETRADEEP EYE HOSPITAL PVT. LTD. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS VISITED TO FOREIGN COUNTRIES NAMELY THAILAND AN D UNITED STATES OF AMERICA FOR A PERIOD OF 2 DAYS AND 25 DAYS IN THE RESPECTIVE CO UNTRIES. THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS CLAI MED THAT THE EXPENSES ON THE VISIT TO THE AFORESAID COUNTRIES HAVE BEEN SPONSORE D BY AJANTA PHARMA FOR THAILAND TOUR AND NETRADEEP EYE HOSPITAL PVT LTD. FOR THE US A TOUR. THE ASSESSEE ALSO CLAIMED TO HAVE PURCHASED THE FOR EIGN CURRENCY OF THAILAND AND USA FOR RS. 50,000/- AND RS. 2 LAKHS IN CONNECTION WITH THE FOREIGN TOURS. THE ASSESSEE ALSO FILED THE SPONSORSHIP LETTER ISSU ED BY NETRADEEP EYE HOSPITAL PVT. LTD. FOR THE FOREIGN TOUR TO USA. HOWEVER, THE AO WAS OF THE VIEW THAT THE EXPENSES I NCURRED BY THE ASSESSEE ARE UNEXPLAINED EXPENDITURE FOR THE REASONS AS DETAILED BELOW: I. THE MEDICAL COUNCIL OF INDIA VIDE NOTIFICATION NO. 211(1)/2009 (ETHICS)/ 55667 DATED 10 DECEMBER 2009 HAS PROHIBITED THE MED ICAL PRACTITIONER/ THEIR REPRESENTATIVES AND FAMILY MEMBERS FROM ACCEP TING ANY TRAVEL FACILITY INSIDE OR OUTSIDE THE COUNTRY FROM ANY PHA RMACEUTICAL/ALLIED HEALTHCARE INDUSTRY FOR A VACATION OR FOR ATTENDING CONFERENCE, SEMINARS, WORKSHOPS ETC AS DELEGATE. - 4 - ITA NO.32/RJT/2016 VASANT VASHRAMBHAI SAPOVADIA VS. ACIT ASST.YEAR 2010-11 II. THE CBDT IN ITS CIRCULAR NO. 5/2012(F.NO. 225/142/2 012-ITA.III) DATED 1 AUGUST 2012 HAS DIRECTED TO TREAT THE BENEFIT/FRE EBIES ENJOYED BY THE MEDICAL PRACTITIONER TO BE TREATED AS INCOME FROM O THER SOURCES IN THE HANDS OF SUCH MEDICAL PRACTITIONER. III. TOUR TO THAILAND THERE WAS NO DOCUMENTARY EVIDENCE FURNISHED SUGGEST ING THAT THE TOUR TO THAILAND WAS SPONSORED BY THE COMPANY AS CLAIMED BY HIM. ACCORDINGLY THE AO HAS ESTIMATED THE TOTAL EXPENSES AND REDUCED THE EXPENSES INCURRED BY THE ASSESSEE. ACCORDINGLY THE AO MADE T HE ADDITION OF RS. 50,000 IN THE MANNER AS COMPUTED UNDER: TO AND FRO AIR FARE (20,000X2) : RS. 40,000/- BOARDING AND LODGING EXPENSES (FOR 2 DAYS, RS.30,000/- PER DAY) : RS. 60,000/ - ----------------------------------------------- --- TOTAL EXPENDITURE : RS.1,00,000/- LESS: EXPENSE INCURRED BY ASSESSEE AS PER BANK STATEMENT : RS. 50,000/- ------------------------------------------------- TOTAL UNEXPLAINED EXPENDITURE ADDED TO TOTAL INCOME AS INCOME FROM OTHER SOURCES : RS. 50,000 IV. TOUR TO USA THE ASSESSEE HAS BEEN SPONSORED THE TOUR TO THE USA BY THE COMPANY NETRADEEP EYE HOSPITAL PVT LTD. BUT THERE WAS NO EX PENSE DEBITED IN THE BOOKS OF ACCOUNTS OF SUCH COMPANY IN CONNECTION WIT H THE IMPUGNED FOREIGN TOUR. ACCORDINGLY, THE AO ESTIMATED THE TOT AL EXPENSES AND REDUCED THE EXPENSES INCURRED BY THE ASSESSEE. ACCO RDINGLY THE AO MADE THE ADDITION OF RS. 7 LACS IN THE MANNER AS COMPUTE D UNDER: TO AND FRO AIR FARE (75,000X2) : RS.1,5 0,000/- BOARDING AND LODGING EXPENSES (FOR 25 DAYS, RS.30,000/- PER DAY) : RS .7,50,000/- ----------------------------------------------- --- TOTAL EXPENDITURE: RS.9,00,000/- LESS: EXPENSE INCURRED BY ASSESSEE AS PER BANK STATEMENT : RS.2,00, 000/- -- -------------------------------------------------- TOTAL UNEXPLAINED EXPENDITURE U/S.69C ADDED TO - 5 - ITA NO.32/RJT/2016 VASANT VASHRAMBHAI SAPOVADIA VS. ACIT ASST.YEAR 2010-11 TOTAL INCOME : RS.7,00,000/- PENALTY U/S.271(1)(C) INITIATED FOR FURNISHING INACCURATE PARTICULARS OF I NCOME. IN VIEW OF THE ABOVE, THE AO TREATED THE SUM OF RS. 7,50,000/- AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARN ED CIT (A). THE ASSESSEE BEFORE LEARNED CIT(A) SUBMITTED THAT, HIS THAILAND TOUR WAS SPONSORED BY THE AJANTA PHARMA MUMBAI FOR 2 NIGHTS ONLY. HOWEVER AS PER AVAILABLE QUOTATION OF THAILAND TOUR FOR 5 NIGHT AN D 6 DAYS WILL COST TO RS. 35,000/- ONLY. ACCORDINGLY COST FOR 2 NIGHTS COMES TO RS. 14 ,000/- ONLY. THEREFORE ADDITION OF RS. 50000.00 BASED ON ESTIMATION IS UNFOUNDED AN D NEEDS TO BE DELETED. FURTHER, WITH RESPECT TO USA TOUR OF 25 DAYS, ASSES SEE SUBMITTED THAT IT WAS A PROFESSIONAL TOUR SPONSORED BY NETRADEEP EYE HOSPIT AL PVT. LTD. FOR ATTENDING THE SEMINAR CALLED INNOVATIVE CATARCYT SURGURY. THE T OUR WAS SPONSORED TO HIM BEING MD OF COMPANY AND AN EYE EXP ERT. THE ASSESSEE FURTHER CLAIMED THAT DURING THE PERIOD OF USA STAY OF 25 DA YS HE STAYED AT HIS RELATIVE AND FRIEND HOME AT FLORIDA AND NEWJERSY. THEREFORE THE ADDITION OF RS. 7,00,000/- IS BASED ON PRESUMPTION & SURMISE OF THE AO AND THUS T HE SAME IS LIABLE TO BE DELETED. HOWEVER, THE LEARNED CIT(A) DISREGARDED THE CONTENT ION OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER : - 6 - ITA NO.32/RJT/2016 VASANT VASHRAMBHAI SAPOVADIA VS. ACIT ASST.YEAR 2010-11 5.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED FACTS OF THE CASE IN THE ASSESSMENT ORDER. THE A.O. HAS DISALLOWED UNEXP LAINED EXPENDITURE ON FOREIGN TRIP TO THAILAND WAS BEING SPONSORED BY A PHARMA COMPANY IN VIEW OF THE GUIDELINES OF CLAUSE 6.8.1 (B) OF INDIAN MEDICAL COUNCIL (PROFESSIONAL CONDUCT, ET IQUETTE AND ETHICS) REGULATION,2002 AND CBDT CIRCULAR NO. 5/20 122 (F.NO.225/ 142/2012-ITA. III) DATED 1/8/2012. IN THIS REGARD, THE APPELLANT HAS SUBMITTED A QUOTATION FOR THAILAND TR IP OF FIVE NIGHTS AND THREE DAYS COSTING RS.35,000/- AVERAGING COST AT RS.14,000/-QUESTIONIN G THE ARGUMENTS OF THE A.O. AS UNREASONABLE WITHOUT ANY DOCUMENTARY EVIDENCES. CONSIDERING THE FACT THAT THE APPELLANT WAS NOT ONLY A DOCTOR BUT ALSO MANAGING DIRECTOR OF NETRADEEP EYE HOSPITA L, RAJKOT, THE EXPENDITURE ESTIMATED BY THE A.O. ON FIVE DAYS TRIP TO THAILAND ARE VERY MUCH RE ASONABLE AT RS.60,000/- ONLY (RS. 12000 PER DAY) COMPRISING LODGING AND BOARDING EXPENSES AND A FTER DEDUCTING THE WITHDRAWAL FROM THE BANK ACCOUNT, THE BALANCE AMOUNT IS RIGHTLY TREATED AS UNEXPLAINED EXPENDITURE IN ABSENCE OF ANY DOCUMENTARY EVIDENCES TO SUPPORT THE SAID EXPENDITU RE BY THE APPELLANT. 5.3 LIKEWISE, THE APPELLANT HAS BEEN ON A FOREIGN T OUR TO USA FROM 26/3/2010 TO 19/4/2013, I.E. FOR 25 DAYS, INCLUDING TOUR SPONSORED BY NETRADEEP EYE HOSPITAL, RAJKOT FOR CONFERENCE SCHEDULED TO BE HELD FROM 10/4/2010 TO 14/4/2010 (F IVE DAYS) IN BOSTON (USA). HOWEVER, ON PERUSAL OF AUDIT REPORT OF NETRADEEP EYE HOSPITAL, IT WAS NOTICED BY THE A.O. THAT NO SUCH EXPENDITURE ON SPONSORSHIP TO USA WAS REFLECTED IN THE P&L A/C. APPELLANT ALSO FAILED TO PRODUCE ANY OTHER DOCUMENTARY EVIDENCES, LIKE BANK STATEMENT OF HOSPITAL, HOTEL BILL ETC. IN SUPPORT OF SPONSORSHIP, EXCEPT SPONSORSHIP LETTER O F NETRADEEP EYE HOSPITAL P. LTD. SUPPORTING EVIDENCES SHOULD ALSO INCLUDE ANY EXPENDITURE ON SP ONSORSHIP TO USA TOUR INCLUDED IN THE AUDITED P&L A/C. OF NETRADEEP EYE HOSPITAL. THE APP ELLANT HIMSELF IS THE MANAGING DIRECTOR OF THE NETRADEEP EYE HOSPITAL. HE IS COMPETENT TO ISSU E SPONSORSHIP LETTER IN HIS NAME OR IN NAME OF ANY PERSON AT ANY POINT OF TIME WHICH IN NO CASE CO NSTITUTE ANY LEGAL DOCUMENTARY EVIDENCE WITHOUT SUPPORTING EVIDENCES SUCH AS BANK STATEMENT OF NETRADEEP EYE HOSPITAL INCURRING SPONSORSHIP EXPENDITURE ON THE FOREIGN TRIP, INCLUD ING HOTEL BILLS WHICH THE APPELLANT FAILED TO PRODUCE. THE APPELLANT HAS CONTENDED THAT DURING TH E PERIOD OF STAY AT USA AT DIFFERENT STATIONS, HE HAS STAYED WITH HIS RELATIVES AND FRIENDS HENCE NO EXPENDITURE WAS INCURRED ON HOTEL EXPENDITURE. IT IS FURTHER CONTENDED BY THE APPELLA NT THAT THE TOUR SPONSORED BY NETRADEEP EYE HOSPITAL FOR ATTENDING SEMINAR ON 'INNOVATIVE CATAR ACT SERVICES'. THE APPELLANT STAYED IN FLORIDA FROM 29/03/2010 TO 04/04/2010 AT HOME OF HIS FRIEND SHRI RAJESH KALARIA, STAYED IN NEWJERSY FROM 5/04/2010 TO 6/04/2010 AT HOME OF HIS RELATIVE SHRI DEVENDRA SAPOADIA, FROM DT.07/04/2010 TO 14/04/2010 ATTENDED PROFESSIONAL S EMINAR AND RETURNED TO NEWJERSY ON 14/04/2010, FROM 14/04/2010 TO 17/04/2010 HE STAYED AT HOME OF HIS RELATIVE SHRI DEVENDRA SAPOVADIA. THE APPELLANT HAS SHOWN WITHDRAWAL OF RS .2 LAKHS ONLY FOR PROFESSIONAL TOUR OF USA FROM HIS SAVINGS BANK ACCOUNT. 5.4 FACT EMERGES OUT OF THE DISCUSSION ON PROFESSIO NAL TOUR TO USA IS THAT THE APPELLANT HAS BEEN ON PROFESSIONAL TOUR OF USA FOR 25 DAYS, INCLUDING FIVE DAYS OF PROFESSIONAL SEMINAR IN THE CAPACITY OF MANAGING DIRECTOR, AS CLAIMED BY THE AP PELLANT THE EXPENDITURE FOR REST OF THE PERIOD OF 21 DAYS REMAINED UNEXPLAINED. THE APPELLANT HAS ALSO FAILED TO PRODUCE THE PERSONS CLAIMED AS HIS FRIENDS OR KIND OF RELATIONSHIP HE HAS WITH THE FRIENDS WHETHER FAMILY FRIEND OR FRIEND IN BLOOD RELATION. THE APPELLANT ALSO FAILED TO FURNIS H ANY DOCUMENTARY EVIDENCES TO PROVE FRIENDLY RELATIONSHIP WITH THE PERSONS WITH WHOM HE STAYED W ITH THEM IN USA DURING PERIOD TO CRYSTALLIZE THE EXPENDITURE FOR THE PERIOD OF 21 DAYS WHICH SHO ULD HAVE BEEN SUBSTANTIATED WITH RELEVANT EVIDENCES. THE APPELLANT'S SUBMISSION HAS NO FORCE AND SUBSTANCE TO PROVE THE RELATIONSHIP WITH THE PERSONS CLAIMED AS FRIENDS WITH WHOM THE APPELL ANT CLAIMED DEEMED STAY IN USA TO SUBSTANTIATE THE FOREIGN TOUR EXPENDITURE OF 21 DAY S. UNDER THE CIRCUMSTANCES, ESTIMATION OF THE - 7 - ITA NO.32/RJT/2016 VASANT VASHRAMBHAI SAPOVADIA VS. ACIT ASST.YEAR 2010-11 A.O. OF RS.9 LAKHS @ RS.30,000/- PER DAY IS QUITE R EASONABLE ESTIMATE FOR THE FOREIGN TOUR TAKEN UP TO USA BY THE APPELLANT DURING THE YEAR UNDER AP PEAL. HENCE, I AM OF THE OPINION THAT THE FOREIGN TOUR TO USA IS QUESTION OF FACTS, WHICH IS NOT PROVED AND SUBSTANTIATED WITH NECESSARY DOCUMENTARY EVIDENCES BY THE APPELLANT. THEREFORE, IT IS HELD TO BE A PERSONAL NATURE AND NOT AS A SPONSORSHIP BY THE NETRADEEP EYE HOSPITAL IN ABSE NCE OF REQUIRED NECESSARY LEGAL DOCUMENTARY EVIDENCES. NO INTERFERENCE IS CALLED FOR IN THE ORD ER OF THE A.O. 6.0 GROUND NO.7, 8 & 9 ARE GENERAL IN NATURE AN D DO NOT REQUIRE TO BE ADJUDICATED SEPARATELY. 7.0 IN THE RESULT, THE APPEAL IS DISMISSED. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) , THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED AR BEFORE US FILED A WRITTEN SUBMIS SION WHICH READS UNDER: 3.2 THE LD. A.O. HAS CONSIDERED THE ABOVE EXPERISE ON ESTIMATING BASES WITHOUT ANY SUPPORTING BASE. A COPY OF QUOTATION FOR THAILAND TOUR FOR FIV E NIGHTS AND SIX DAYS ISSUED BY VRAJ TRAVELS RAJKOT IS SUBMITTED HEREWITH TOGETHER WITH ADVERTIS EMENT PUBLISHED BY S.R. COMMUNICATION (ENCLOSE PAGE 1 & 2). THIS SHOWS THAT FOR SIX NIGHTS AND SEVEN DAYS THEY TOTAL CHARGES ARE RS. 34,999/-. 3.3 THUS WHEN THE TOURING EXPENSES FROM VRAJ TTRAVE LS ARE UPTO 35,000/- PLUS 3.9% S.T. AND FROM S.R. COMMUNICATION IT IS ALSO 35,000/-, AT PAR BOTH . THUS WHEN THE TRAVELS COMPANY CHARGES RS. 35000 APPRO, FOR ABOVE FIVE DAYS TO CONSIDER THE TO TAL EXPENSES AT RS. 1,00,000/- FOR TWO DAYS ONLY BY THE LD. A.O. IS BASELESS AND NEEDS DELETION . SINCE THE LD. A.O. HIMSELF HAS ACCEPTED THAT INCURRING 50000 BY WITHDRAWAL FROM BANK BY THE ASSE SSEE. 4. IN RESPECT OF ADDITION OF RS. 700000/- PERTAININ G TO U.S.A. A COPY OF LETTER DATED 21-10-2015 SUBMITTED BEFORE THE LD. CIT(A) SHOWS AT PARA.5 THA T ASSESSEE HAS PAID AT U.S.A. AT THE RESIDENCE OF HIS FRIENDS AND RELATIVES AS UNDER: 1. FROM 29-3-10 TO 4-4-10 AT FLORIDA IT IS FR IEND'S HOME RAJESH KALARIYA 2. FROM 5-4-10 TO 6-4-10 AT NEW JERSEY WIT H RELATIVE DEVENDRA SAPOVADIYA 3. FROM 7-4-10 TO 14-4-10 ATTENDED PROFESSIONAL SEM INAR ON INNOVATIVE CATERACTSURGERY SOLUTION 4. FROM 14-4-10 TO 17-4-10 AT NEW JERSEY WITH R ELATIVE DEVENDRA SAPOVADIYA 5. THE LD. A.O. HAS ACCEPTED THAT THIS IS A PROFESS IONAL TOUR SPONSORED BY NETRDEEP EYE HOSPITAL AND ASSESSEE HAS WITHDRAWN RS. 2,00,000/- FROM HIS BANK ACCOUNT. 6. THUS THE ESTIMATION MADE FOR TO AND FRO AIRFARE OF RS. 1,50,000/- BY THE LD. A.O. IS TOTALLY BASELESS. RELEVANT PAPERS OF THE FOREIGN TOUR SPONS ORED ARE ALSO ENCLOSED HEREWITH. THIS SHOWS - 8 - ITA NO.32/RJT/2016 VASANT VASHRAMBHAI SAPOVADIA VS. ACIT ASST.YEAR 2010-11 THAT TOTAL AIR FAIR FOR BOMBAY TO NEW JERSEY BY THE ASSESSEE IS INCURRED IS RS. 59,309/- (ENCLOSE PAGE 3) AS AGAINST ESTIMATION OF RS. L,50,000/- BY THELD. A.O. 7. AS REGARD LODGING AND BOARDING CHARGES ESTIMATED AT RS. 30.000/- PER DAY FOR 25 DAYS, I.E. RS. 7,50,000/- FOR ENTIRE TOUR IS ALSO NOT SUPPORTED BY ANY COGENT EVIDENCE. A COPY OF REGISTRATION TO BE MADE FOR ASCRS ASOA SYMPOSISM AND CONGREES HELD AT BOSTAN, FROM 9-4-10 TO 14-4- 10 SHOWS THAT EVEN FOR 49 DAYS PROGRAM AS MENTION A T THE TOP OF THE LETTER FOR 49 DAYS SHOWS TOTAL COST OF $ RS. 35,567 A COPY OF FLAMINGO TRANSWARD ( ENCLOSED PAGE 4 & 5) SHOWS FOR 22 NIGHTS AND 23 DAYS FOR USA TOURS COST RS. 160000 + 3990$ ONLY. THUS LD. A.O'S ESTIMATION IS BASELESS. 8. THUS AS AGAINST MAKING BASELESS ADDITION OF RS. 7,00,000/- CONSIDERING THE PAPER FURNISHED, TAKING INTO CONSIDERATION RS. 2,00,000 INCURRED BY THE ASSESSEE OUGHT TO HAVE BEEN ACCEPTED THE ADDITION MADE OF RS. 7,00,000/- BY THE LD. A.O. NEE DS DELETION MADE SIMPLY ON PRESUMPTION AND SURMISES AS IS EVIDENCE FROM ABOVE THAT LD. A.O. HA S CONSIDER LODGING AND BOARDING EXPENSES OF RS. 30,000/- FOR THAILAND AS WELL AS U.S.A. TREATIN G BOTH THE COUNTRY ARE AT PAR WHICH REQUIRE DELETION ACCEPTING ADMISSION MADE BY THE LD. A.O. O F RS. 50,000/- FOR THAILAND AND RS. 2,00,000/- FOR U.S.A. 9. IT IS THEREFORE REQUESTED THAT APPEAL MA Y KINDLY BE ALLOWED AS PRAYED FOR. 6. ON THE OTHER HAND THE LEARNED DR VEHEMENTLY SUP PORTED THE ORDER OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE IN THE PRESENT CASE HAS CLAIMED TO HAVE TRAVELED TO 2 DIFFERENT FOREIGN COUNTRIES ON THE SP ONSORSHIP EXTENDED BY M/S AJANTA PHARMA AND NETRADEEP EYE HOSPITAL. REGARDING THE TOUR TO THAILAND, WE NOTE THAT THE AS SESSEE FAILED TO FURNISH THE BASIC DOCUMENT SUGGESTING THAT THE TOUR WAS SPONSORED BY THE AJANTA PHARMA. THUS THE ASSESSEE FAILED TO DISCHARGE THE PRIMARY ONUS CAST UPON HIM. THERE IS NO DISPUTE THAT THE GIFTS, FREEBIES AND AN Y OTHER BENEFIT TO THE DOCTORS ARE PROHIBITED AS PER EXPLANATION TO SECTION 37 OF THE ACT. SIMILARLY, SUCH GIFTS AND FREEBIES TO THE DOCTORS SHALL BE TREATED AS THEIR I NCOME AS PER THE CIRCULAR BEARING - 9 - ITA NO.32/RJT/2016 VASANT VASHRAMBHAI SAPOVADIA VS. ACIT ASST.YEAR 2010-11 NUMBER 5/2012 (F.NO.225/142/2012-ITA.II) DATED 1 ST AUGUST 2012 ISSUED BY THE CBDT WHICH PROHIBITS SUCH GIFTS OF THE DOCTORS. ACC ORDING TO THE CIRCULAR, THE DEDUCTION TO THE PHARMACEUTICAL COMPANY IN RESPECT OF SUCH EXPENSES WILL NOT BE AVAILABLE. THE HONBLE HIMACHAL PRADESH HIGH COURT ALSO UPHELD THE VALIDITY OF THE CIRCULAR IN THE CASE OF CONFEDERATION OF INDIA PHARMACEUTICALS INDUSTRY (SSI) VS. CBDT REPORTED IN 353 ITR 388 WHEREIN IT WAS HEL D AS UNDER: SHRI VISHAL MOHAN, ADVOCATE, ON BEHALF OF THE PETI TIONER CONTENDS THAT THE CIRCULAR GOES BEYOND THE SECTION ITSELF. WE ARE NOT IN AGREEMENT WITH TH IS SUBMISSION. THE EXPLANATION TO SECTION 37(1) MAKES IT CLEAR THAT ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PURPOSE WHICH IS PROHIBITED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FO R THE PURPOSE OF BUSINESS OR PROFESSION. THE SUM AND SUBSTANCE OF THE CIRCULARS ALSO THE SAME. I N CASE THE ASSESSING AUTHORITIES ARE NOT PROPERLY UNDERSTANDING THE CIRCULAR THEN THE REMEDY LIES FOR EACH INDIVIDUAL ASSESSEE TO FILE APPEALS UNDER THE INCOME-TAX ACT BUT THE CIRCULAR W HICH IS TOTALLY IN LINE WITH SECTION 37(1) CANNOT BE SAID TO BE ILLEGAL. IN FACT PARAGRAPH 4 O F THE CIRCULAR QUOTED HEREINABOVE ITSELF CLARIFIES THAT THE VALUE OF THE FREEBIES ENJOYED BY THE MEDIC AL PRACTITIONER IS ALSO TAXABLE AS BUSINESS INCOME OR INCOME FROM OTHER SOURCES DEPENDING ON TH E FACTS OF EACH CASE. THEREFORE, IF THE ASSESSEE SATISFIES THE ASSESSING AUTHORITY THAT THE EXPENDITURE IS NOT IN VIOLATION OF THE REGULATIONS FRAMED BY THE MEDICAL COUNCIL THEN IT MAY LEGITIMAT ELY CLAIM A DEDUCTION, BUT IT IS FOR THE ASSESSEE TO SATISFY THE ASSESSING OFFICER THAT THE EXPENSE I S NOT IN VIOLATION OF THE MEDICAL COUNCIL REGULATIONS REFERRED TO ABOVE. HOWEVER, WE NOTE THAT THE IMPUGNED CIRCULAR WAS ISS UED BY THE CBDT DATED 1 AUGUST 2012 AND THEREFORE THE SAME IS APPLICABLE EF FECTIVE FROM 1 APRIL 2013 AS HELD BY THIS TRIBUNAL IN THE CASE OF CADILA PHARMAC EUTICALS LTD. VS. DCIT REPORTED IN 85 TAXMANN.COM 354. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: WE HAVE HEARD BOTH THE PARTIES. MR. SOPARKAR IS VE RY FAIR IN POINTING OUT AT THE OUTSET THAT THIS TRIBUNAL'S DECISION IN ASSTT. CIT V. LIVA HEALTHCAR E LTD. [2016] 161 ITD 63/73TAXMANN.COM 171 (MUM. - TRIB.) UPHOLDING SUCH A DISALLOWANCE IN CASE OF PHARMACEU TICAL COMPANIES OFFERING FREE SAMPLES TO DOCTOR POST INTRODUCTION OF THE RELEVANT PRODUCT IN MARKET AFTER ESTABLISHING END USE; IS HIT BY SECTION 37(1) EXPLANATION. HE HOWEVER REF ERS TO ANOTHER CO-ORDINATE BENCH DECISION IN MACLEODS PHARMACEUTICALS LTD. V. ADDL. CIT [2016 ] 161 ITD 291/74TAXMANN.COM 250 (MUM. - TRIB.) HOLDING THAT THE ABOVE BOARD'S CIRCULAR DATED 01.0 8.2012 WOULD NOT HAVE ANY RETROSPECTIVE EFFECT SINCE NOT OPERATING IN ASSESSMENT YEARS 2010 -11. HE FURTHER QUOTES ANOTHER CO-ORDINATE BENCH DECISION IN DY. CIT V. PHL PHARMA (P.) LTD. [ 2017] 163 ITD 10/78TAXMANN.COM 36 (MUM. - TRIB.) DISTINGUISHING THE ABOVE CASE LAW IN REVENUE'S FAV OUR WHILST DELETING AN IDENTICAL DISALLOWANCE ON THE GROUND THAT SUCH BUSINESS PROMO TION EXPENSES ARE ALLOWABLE AS BUSINESS EXPENDITURE NOT HIT U/S. 37(1) EXPLANATION. WE AFFO RDED AMPLE REBUTTAL OPPORTUNITY TO THE REVENUE. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO INDICATE ANY DISTINGUISHING FEATURES THEREIN. WE FIND THAT THE ABOVE LATTER CO-ORDINATE BENCH HAS ELABORATELY DISCUSSED ALL CASE LAWS, - 10 - ITA NO.32/RJT/2016 VASANT VASHRAMBHAI SAPOVADIA VS. ACIT ASST.YEAR 2010-11 IMC REGULATIONS AS WELL AS BOARD'S CIRCULAR IN DECI DING THE ISSUE. WE THEREFORE ADOPT THE VERY REASONING HEREIN AS WELL TO DELETE THE IMPUGNED DIS ALLOWANCE. THE ASSESSEE SUCCEEDS IN ITS INSTANT SUBSTANTIVE GROUND. FROM THE ABOVE, IT IS CLEAR THAT THE PROVISIONS AS SPECIFIED IN THE CBDT CIRCULAR CANNOT BE APPLIED TO THE CASE ON HAND. THEREFORE SU CH FREEBIES CANNOT BE TREATED AS INCOME IN THE HANDS OF THE ASSESSEE FOR THE YEAR UN DER CONSIDERATION. HOWEVER, BEFORE PARTING WE REITERATE THE FACT THAT THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE SUGGESTING THAT THE EXPENS ES ON THE TOUR TO THAILAND WAS SPONSORED BY THE AJANTA PHARMA. AS SUCH THE ASS ESSEE WAS UNDER THE OBLIGATION TO FURNISH THE DETAILS OF THE EXPENSES S UCH AS TRAVELLING EXPENSES, ACCOMMODATION EXPENSES, FOOD EXPENSES AND OTHER EXP ENSES IF ANY TO JUSTIFY HIS STAND. IN OUR CONSIDERED VIEW, SIMPLY FURNISHING TH E QUOTATION FROM THE TRAVEL AGENT WILL NOT ABSOLVE THE ASSESSEE FROM FURNISHING THE NECESSARY DOCUMENTS IN SUPPORT OF THE EXPENSES INCURRED BY HIM. WE ARE ALS O CONSCIOUS TO THE FACT THAT IN THE INSTANT CASE THE AO HAS ESTIMATED THE TOTAL EXP ENSES INCURRED ON THE VISIT TO THAILAND BUT THE AO HAD TO RESORT TO SUCH ESTIMATIO N AS THE ASSESSEE HAS NOT FILED THE NECESSARY DETAILS. THUS IN THE ABSENCE OF SUFFI CIENT DOCUMENTARY EVIDENCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARN ED CIT (A). REGARDING THE TOUR TO USA, THE ASSESSEE CLAIMED THA T THE EXPENSES HAVE BEEN SPONSORED BY NETRADEEP EYE HOSPITAL OF WHICH THE AS SESSEE WAS THE DIRECTOR. HOWEVER, THE AO OBSERVED THAT THERE WAS NO CLAIM MA DE BY THE COMPANY NAMELY NETRADEEP EYE HOSPITAL IN ITS BOOKS OF ACCOUNTS FOR SUCH EXPENSES. THUS, IT IS INFERRED THAT THE IMPUGNED EXPENSES WERE INCURRED B Y THE ASSESSEE FROM THE INCOME OF UNDISCLOSED SOURCES. - 11 - ITA NO.32/RJT/2016 VASANT VASHRAMBHAI SAPOVADIA VS. ACIT ASST.YEAR 2010-11 SIMILARLY, THERE WAS ONUS ON THE ASSESSEE TO FURNIS H THE DETAILS OF THE FRIENDS AND RELATIVES SUCH AS THEIR ID AND RESIDENCE PROOF WHER E HE STAYED WITH THEM DURING THE VISIT IN THE USA. BUT HE FAILED TO DO SO. THUS IN T HE ABSENCE OF NECESSARY EVIDENCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LEARNED CIT (A). HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 22/ 10 /2019 SD/- SD/- ( RAJPAL YADAV ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 22/ 10 /2019 .., . ../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-2, RAJKOT 5. '#$ , % , /DR,ITAT, RAJKOT 6. $23 45 / GUARD FILE. / BY ORDER, ' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, / ITAT, RAJKOT