ACIT, New Delhi V. Sh. Ajit Gupta, New Delhi

ITA 3339/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5875 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 06-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Keywords: Unexplained investment; Depreciation; Rule of consistency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE MS. SUSHMA CHOWLA, VICE PRESIDENT DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (E-COURT MODULE) ITA NO. 3339/DEL/2016 : ASSTT. YEAR : 2010-11 ACIT, CIRCLE-61(1), NEW DELHI-110002 VS DR. AJIT GUPTA, C/O PARK HOSPITAL, 12, MEERA ENCLAVE, NEAR KESHOPUR DEPOT, OUTER RING ROAD, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAHPG3320Q ITA NO. 2916/DEL/2016 : ASSTT. YEAR : 2010-11 DR. AJIT GUPTA, C/O PARK HOSPITAL, 12, MEERA ENCLAVE, NEAR KESHOPUR DEPOT, OUTER RING ROAD, NEW DELHI VS ACIT, CIRCLE-61(1), NEW DELHI-110002 (APPELLANT) (RESPONDENT) PAN NO. AAHPG3320Q ASSESSEE BY : SH. SALIL KAPOOR, ADV. REVENUE BY : SH. SARAS KUMAR, SR. DR DATE OF HEAR ING: 11 . 0 8 .20 20 DATE OF PRONOUNCEMENT: 15 .0 9 .20 20 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN FILED BY THE REVENUE AND THE ASSESSEE AGAINST THE ORDERS OF THE LD. CIT(A)-2 0, NEW DELHI DATED 31.03.2016. ITA NOS. 2916 & 3339/DEL/2016 DR. AJIT GUPTA 2 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENU E: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN LAW IN REDUCING THE ADDITION MADE BY THE AO ON ACCOUNT OF DEPRECIATION FROM RS.67,06,506/- T O RS.24,07,000/-, WITHOUT APPRECIATING THE FACTS OF T HE CASE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN LAW DELETING THE ADDITION OF RS.1,61,01,000/- BEING UNEXPLAINED SOURCE OF INVEST MENT IN LAND WITHOUT APPRECIATING THE FACTS OF THE CASE. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN LAW DELETING THE ADDITION OF RS.1,25,47,407/- OUT OF RS.1,29,72,681/- ON ACCOUNT OF COURTESY CONSULTANTS EXPENSES WITHOUT APPRECIATING THE FACTS OF THE CASE. 3. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT THE LD. CIT (A) HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS.42,62,284/- IN RESPECT OF REFERRAL FEES/COMMISSION MADE BY THE AO INSPITE OF THE FACT THAT THE EXPENDITURE OF THE SAM E NATURE IS GENERAL FEATURE IN HOSPITAL INDUSTRY AND THE SAME WAS CLAIMED AND ALLOWED TO THE ASSESSEE IN PAS T AYS EXCEPT DISALLOWANCE OF SMALL SUM TO PREVENT LEAKAGE OF REVENUE. ITA NO. 3339/DEL/2016: DEPRECIATION : 4. DURING THE YEAR, THE ASSESSEE HAS PURCHASED LAND FOR RS.1,61,00,000/- AND CONSTRUCTED BUILDING WORTH RS.7,66,62,560/- AND CLAIMED DEPRECIATION UNDER THE HEAD FIXED ASSETS. OUT OF THE AMOUNT OF DEPRECIATION C LAIMED ON THE BUILDING, THE AO DISALLOWED RS.67,06,506/- ON THE G ROUNDS THAT THE BILLS, INVOICES AND VOUCHERS RELATING TO THE CO NSTRUCTION ACTIVITY HAVE NOT BEEN PROVIDED. ITA NOS. 2916 & 3339/DEL/2016 DR. AJIT GUPTA 3 5. BEFORE THE LD. CIT (A), THE ASSESSEE HAS SUBMITT ED THAT HE HAS INADVERTENTLY CLAIMED DEPRECIATION ON LAND @10% ON THE TOTAL VALUE OF THE LAND OF RS.2,40,70,000/- AND HAS WITHDRAWN THE CLAIM OF RS.2,40,70,000/-. THE LD. CIT (A) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE [PAGE NOS. 27, 28 OF THE CIT(A)] AND REDUCED THE DEPRECIATION CLAIMED BY RS.24,07,000/-. SINCE, THE ACTION OF THE LD. CIT (A) CANNOT BE FAULTED, NO INT ERFERENCE IN THE ORDER IS REQUIRED. 6. FOR THE SAKE OF BREVITY, THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT (A) IS REPRODUCED HEREWITH: 7.2 APPELLANTS SUBMISSION: HOWEVER, WE WOULD LIKE TO PLACE BEFORE YOUR HONOUR THAT AN ERROR HAS BEEN CREPT IN COMPUTING THE CLAIM OF DEPRECIATION ON HOSPITAL BUILDING MADE BY THE ASSES SEE IN ITS RETURN OF INCOME. THE ASSESSEE HAS CLAIMED DEPRECIATION AT 10% ON LAND PURCHASED FOR HOSPITAL AT NAJAFGARH IN THE F. Y. 2008-09 AND THE SAME WAS DEBITED IN THE ACCOUNT OF PARK SUPER SPECIALTY HOSP ITAL IN THE BOOKS. DURING THE CURRENT YEAR, THIS LAND HA S BEEN DEBITED IN THE ACCOUNT OF HOSPITAL BUILDING AN D INADVERTENTLY DEPRECIATION @10% HAS BEEN CLAIMED ON THE SAME, WHEN FINALIZING THE TAX RETURN. SINCE, NO BUILDING WAS CONSTRUCTED THEREON AND NO HOSPITAL OPERATION WAS STARTED DURING THE YEAR ON SAID LAND, THE DEPRECIATION CLAIM ON THE SAME IS NOT ADMISSIBLE UN DER THE PROVISIONS OF THE ACT. WE APOLOGIZE FOR THIS INADVERTENT MISTAKE COMMITTED BY THE ASSEESSEE WITHOUT ANY MALAFIDE INTENTION AND NOW PROPOSE TO WITHDRAW THE SAID CLAIM OF DEPRECIATION AMOUNTING T O RS.24,07,000/- COMPUTED AT THE RATE OF 10% ON LAND VALUE OF RS.2,40,70,000/-. 7.3 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND THE ASSESSMENT ORDER, IT HAS BEEN FOUND THAT DURING THE YEAR THE APPELLANT HAD BIFURCATED THE LA ND AND BUILDING IN THE SCHEDULE OF ASSETS. HOWEVER, IT IS ALSO NOTICED THAT THE APPELLANT HAD CLAIMED ITA NOS. 2916 & 3339/DEL/2016 DR. AJIT GUPTA 4 DEPRECIATION ON LAND VALUE OF RS.2,40,70,000/- WHIC H IS NOT ALLOWABLE. THE APPELLANT HAS ALSO AGREED THAT T HE DEPRECIATION ON LAND WAS CLAIMED. ACCORDINGLY, THE ADDITION ON ACCOUNT OF DEPRECIATIO N IS REDUCED TO RS.24,07,000/-. THEREFORE, THE APPELLANT S GROUND OF APPEAL ON THIS ISSUE IS PARTLY ALLOWED. 7. IN EFFECT, THE DEPRECIATION WOULD BE COMPUTED AS UNDER: A. DEPRECIATION CLAIMED BY THE ASSESSEE XX B. DEPRECIATION DISALLOWED BY THE AO RS.67,06,506/- C. DEPRECIATION AFTER THE ASSESSMENT ORDER YY = (XX-67,06,506) D. DEPRECIATION WITHDRAWN BEFORE CIT(A) BY THE ASSESEE 24,07,000 E . DEPRECIATION DISALLOWABLE AFTER CIT(A) ORDER ZZ = XX - (YY + 24,07,000) APPEAL OF THE REVENUE ON THIS GROUND IS DISMISSED A S INFRUCTUOUS. UNEXPLAINED INVESTMENT : 8. THE AO TREATED THE INVESTMENT OF RS.1.61 CR. IN THE LAND AS UNEXPLAINED AS THE ASSESSEE HAS NOT FURNISHED THE S OURCE OF INVESTMENT. 9. THE LD. CIT (A) HAS ACCEPTED THE ADDITIONAL EVID ENCES FILED BY THE ASSESSEE UNDER RULE 46A DURING THE APPELLATE PROCEEDINGS ON THE GROUNDS THAT SUCH EVIDENCES ARE NECESSARY FOR ADJUDICATION OF THE ISSUE BEFORE HIM. THE LD. C IT (A) HAS ITA NOS. 2916 & 3339/DEL/2016 DR. AJIT GUPTA 5 GIVEN A CATEGORICAL FINDING THAT THE SOURCES HAVE B EEN DULY EXPLAINED AS PER THE PAPER BOOK D AT PAGE NOS. 1 TO 6 AND THE PURCHASE AGREEMENT FOR ACQUIRING THESE PROPERTIES W ERE PLACED AT PAGES 7 TO 50. THE LD. CIT (A) HAVING EXAMINED T HE LOANS TAKEN FROM THE BANK AND AVAILING OF OD FACILITY FRO M BANK OF BARODA FOR ACQUIRING THE PROPERTIES ACCEPTED THE CO NTENTION OF THE ASSESSEE. SINCE, THE LD. CIT (A) HAS HIMSELF EX AMINED THE SOURCES AND ACCEPTED AND IN THE ABSENCE OF ANY EVID ENCES CONTRA PRODUCED BY THE REVENUE, WE HEREBY DECLINE T O INTERFERE WITH THE ORDER OF THE LD. CIT (A). CONSULTANCY EXPENSES: 10. THE AO DISALLOWED COURTESY CONSULTANCY EXPENSES OF RS.1.29 CR. PAID TO VARIOUS CONSULTANTS, ON THE GRO UNDS THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS OF THESE EXP ENSES. 11. THE LD. CIT (A) HAS DELETED THE ADDITION ON THE GROUNDS THAT THE DETAILS HAVE ALREADY BEEN SUBMITTED BEFORE THE AO AND THE AO FAILED TO TAKE COGNIGANCE OF THE DETAILS. HO WEVER, THE LD. CIT (A) HAS AGAIN OBTAINED A REMAND REPORT FROM THE AO AND AFTER RECEIVING THE REMAND REPORT, AND AFTER EXAMIN ING THE FACT THAT ALL THE PAYMENTS WERE MADE TO THE BANK ACCOUNT OF THE CONSULTANTS (EXCEPT RS.4,25,274/-) HAS DELETED ADDI TION MADE BY THE AO. SINCE, THE LD. CIT (A) HAS HIMSELF EXAMI NED THE EXPENSES AND ACCEPTED AND IN THE ABSENCE OF ANY EVI DENCES CONTRA PRODUCED BY THE REVENUE, WE HEREBY DECLINE T O INTERFERE WITH THE ORDER OF THE LD. CIT (A). ITA NOS. 2916 & 3339/DEL/2016 DR. AJIT GUPTA 6 ITA NO. 2916/DEL/2016: COMMISSION EXPENSES: 12. DURING THE YEAR, THE ASSESSEE HAS INCURRED COMM ISSION EXPENSES OF RS.42,62,284/-. THE AO HAS DISALLOWED T HE EXPENSES AS THE ASSESSEE FAILED TO FURNISH ANY DOCU MENTARY EVIDENCE DURING THE ASSESSMENT PROCEEDINGS. 13. BEFORE THE LD. CIT (A), IT WAS SUBMITTED THAT T HE ASSESSEE MADE PAYMENT OF REFERRAL CHARGES TO OTHER PERSONS/D OCTORS WHO HAD REFERRED THE PATIENTS TO THE ASSESSEE DURING TH E YEAR. IT WAS ARGUED THAT THIS IS ONE SORT OF INCENTIVE PAYME NTS TO PERSON FOR REFERRING PATIENT TO THE HOSPITAL WHICH IS A GE NERAL TREND IN THE INDUSTRY. SINCE, THEY WERE INCURRED FOR THE PUR POSE OF BUSINESS, IT WAS ARGUED THAT THE EXPENSES ARE ALLOW ABLE. THE LD. CIT (A) CONFIRMED THE ADDITION ON THE GROUNDS THAT ALL THE PAYMENTS WERE MADE IN CASH AND NO DETAILS OF THE PE RSON LIKE THE ADDRESS, PAN NUMBER TO WHOM SUCH PAYMENTS WERE MADE AND THE PURPOSE THEREOF. THE LD. CIT (A) HELD THAT THE ASSESSEE FAILED TO PROVIDE ANY RELIABLE EVIDENCES EITHER DUR ING ASSESSMENT PROCEEDINGS OR DURING THE APPELLATE PROC EEDINGS. 14. DURING THE ARGUMENTS BEFORE US, THE LD. AR ARGU ED THAT SUCH EXPENSES HAVE BEEN ALLOWED IN THE EARLIER ASSE SSMENT YEARS 2009-10. HENCE, THE SAME SHOULD BE ALLOWED DU RING THE YEAR ALSO. IT WAS ARGUED THAT IT IS A COMMON PRACT ICE IN THE FIELD OF HOSPITAL INDUSTRY AND THE ASSESSEE HAS BEE N CLAIMING THE SIMILAR EXPENDITURE EARLIER WHICH HAS BEEN ALLO WED BY THE REVENUE. THE LD. AR ARGUED THAT THE SAME NEEDS TO B E ALLOWED BASED ON THE PRINCIPLE OF CONSISTENCY. ITA NOS. 2916 & 3339/DEL/2016 DR. AJIT GUPTA 7 15. WE HAVE GONE THROUGH THE PAPER BOOK FILED BEFOR E US. WE FIND THAT THE REVENUE HAS ALLOWED THE EXPENDITURE U NDER THE SIMILAR HEAD IN THE EARLIER YEAR. ALL THE EXPENSES INCURRED BY THE ASSESSEE HAVE TO BE SUPPORTED WITH EVIDENCES SO THAT THE CLAIM CAN BE ALLOWED TO THE RESPECTIVE YEARS. FOR T HE INSTANT YEAR BEFORE US, ON GOING THROUGH THE PAPER BOOK, WE FIND THAT THE DETAILS OF THE RECIPIENTS OR THE RECEIPTS GIVEN BY RECIPIENTS HAVE BEEN FILED. THERE ARE CERTAIN RECEIPTS WHICH D O NOT APPEAR TO BE COMPLETE IN ALL RESPECTS. HENCE, KEEPING IN V IEW THE ENTIRETY OF THE PROFESSIONAL OPERATION OF HOSPITAL AND THE EVIDENCES PRODUCED, WE HEREBY HOLD THAT INTEREST OF JUSTICE WOULD BE WELL SERVED IF THE ASSESSEE IS ALLOWED 50% OF THE EXPENSES CLAIMED UNDER THIS HEAD. 16. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE I S DISMISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/09/2020. SD/- SD/- (SUSHMA CHOWLA) (DR. B. R. R. KUMAR) VICE PRESIDENT ACCOU NTANT MEMBER DATED: 15/09/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR