Assistant Commissioner of Income-tax, V. Dr. Vikramsinha Kakasaheb Jadhav, Miraj

ITA 435/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0822 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Assessee Lawyers: HARI KRISHAN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.435/PN/2014 ASSESSMENT YEAR : 2009-10 THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 2, SANGLI. . APPELLANT VS. DR. SHRI VIKRAMSINHA KAKASAHEB JADHAV, JADHAV HOSPITAL & NEUROLOGY CENTRE, VANTMURE CORNER HIREMATH PLOTS, MIRAJ, DIST. SANGLI. PAN : ABPPJ3628L . RESPONDENT / APPELLANT BY : SHRI HITENDRA NINAWE / RESPONDENT BY : SHRI HARI KRISHAN / DATE OF HEARING : 10.11.2015 / DATE OF PRONOUNCEMENT: 27.11.2015 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL FILED BY THE REVENUE IS AGAINS T THE ORDER OF CIT(A), KOLHAPUR DATED 03.12.2013 RELATING TO ASSES SMENT YEAR 2009-10 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN RESTR ICTING THE ADDITION U/S 40A(2)(B) OF THE I.T. ACT, 1961 BEING EXCESSIVE AND UNREASONABLE PAYMENT MADE TO MRS. SHARVARI V. JADHAV, WIFE OF TH E ASSESSEE. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN RELYING UPON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE O F CIT VS. NEPC INDIA (MAD) 303 ITR 271; WHEREIN, IT WAS REVEALED THAT REASONAB LENESS OF PAYMENTS MADE TO RELATIVES HAS TO BE PROVED BY THE ASSESSEE AND NOT BY THE DEPARTMENT. 2 ITA NO.435/PN/2014 (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELET ING THE ADDITION ON ACCOUNT OF FOREIGN TOURS. (4) THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX [APPEALS], KOLHAPUR BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTOR ED. (5) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. THE GROUND NO.1 AND 2 RELATES TO DISALLOWANCE OF EXCESSIVE AND UNREASONABLE PAYMENTS TO THE RELATIVE UNDER SECTION 40A(2)(B) OF THE ACT. 4. BRIEFLY STATED, THE RELEVANT FACTS CONCERNING TH E GROUNDS ARE THAT THE ASSESSEE IS A DOCTOR BY PROFESSION AND IS A NEURO P HYSICIAN. DURING THE YEAR, THE ASSESSEE HAS PAID A SALARY OF RS.19,50,000/- TO HIS WIFE DR. MRS. SHARVARI VIKRAMSINHA JADHAV. SHE IS A QUALIFIED MEDICAL PRO FESSIONAL AND ASSISTS THE ASSESSEE IN THE HOSPITAL MANAGEMENT, ADMINISTRATION WORK DURING OPD HOURS IN CHECKING OPD PATIENTS, CHECK-UPS AND HEALTHCARE OF INDOOR PATIENTS AND HELPS THE TECHNICAL STAFF FOR VARIOUS SPECIAL INVES TIGATIONS AT THE HOSPITAL. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MA DE HIGHER PAYMENTS OF RS.19,50,000/- TO HIS WIFE AS COMPARED TO OTHER DOC TORS AND PROFESSIONALS WHO ARE LOOKING AFTER THE WORK OF THE NURSING HOME. HE ACCORDINGLY CONSIDERED RS.6,00,000/- PER ANNUM AS REASONABLE TOWARDS RENDE RING PROFESSIONAL SERVICES BY THE WIFE OF THE ASSESSEE AND BALANCE OF RS.13,50 ,000/- WAS CONSIDERED AS UNREASONABLE IN TERMS OF SECTION 40A(2)(B) OF THE A CT. 5. THE CIT(A) FOUND JUSTIFICATION IN PAYMENT OF PRO FESSIONAL FEES OF DR. MRS. SHARVARI VIKRAMSINHA JADHAV. HOWEVER, HE SUST AINED A DISALLOWANCE OF RS.2,00,000/- OUT OF 19,50,000/- PAID TO PLUG POSSI BLE LEAKAGES. THE RELEVANT PARAS CONCERNING THE ISSUE ARE REPRODUCED HEREIN FO R READY REFERENCE :- 7. THE APPELLANT HAS PAID A SALARY OF RS.19,50,000 /- TO HIS WIFE DR. MRS. SHARVARI VIKRAMSINHA JADHAV. THE ASSESSING OFF ICER ASKED THE APPELLANT TO JUSTIFY THE PAYMENT MADE AS THE PERSON IS COVERED U NDER SECTION 40A(2)(B). IT WAS STATED THAT DR. MRS. S V JADHAV WAS PAID INTEREST O N UNSECURED LOANS AND PROFESSIONAL FEES. SHE IS A QUALIFIED MEDICAL PROFE SSIONAL. SHE ASSISTS THE ASSESSEE IN HOSPITAL MANAGEMENT AND ADMINISTRATION DURING OPD H OURS IN CHECKING OPD 3 ITA NO.435/PN/2014 PATIENTS, CHECK- UPS AND HEALTH CARE OF INDOOR PATI ENTS AND HELPS THE TECHNICAL STAFF FOR VARIOUS SPECIAL INVESTIGATIONS AT THE HOSPITAL. CONSIDERING THE FACT THAT SHE IS A QUALIFIED MEDICAL PROFESSIONAL, THE FEES PAID TO HE R ARE REASONABLE. THESE PAYMENTS ARE MADE AFTER DEDUCTION OF INCOME-TAX. COPIES OF I NCOME-TAX RETURNS HAVE BEEN ENCLOSED. VIDE FURTHER LETTER IT WAS SUBMITTED THAT DR. MILIND JOSHI, MBBS, MRS. PADMAVATI CHOUGULE, BHMS AND DR. SANJEEV KULKARNI A RE OTHER NEUROSURGEONS WHO ATTEND THE WORK IN THE HOSPITAL. DURING THE FIN ANCIAL YEAR 2008-09, 15429 CASES WERE ATTENDED IN OPD, COLLECTING FEES OF RS.2 7,14,450/-, 5790 NUMBERS OF FOLLOW UP CASES WERE ATTENDED, COLLECTIN G FEES OF RS.3,62,550/-, 6578 NUMBERS OF TESTS WERE CARRIED OUT, COLLECTING FEES OF RS.32,31,300/- AND 301 NUMBERS OF INDOOR PATIENTS WERE TREATED, COLLECTING FEES OF RS.34,99,950/-. DR. MRS. S V JADHAV ASSISTS IN MANAGEMENT OF THESE INDOOR PATIEN TS, VARIOUS INVESTIGATION TESTS ON PATIENTS AND IN HOSPITAL ADMINISTRATION. THE ASSESS ING OFFICER OBSERVED THAT WHEREAS DR. MRS. S V JADHAV WAS PAID RS.19,50,000/-, THE PA YMENTS OF DR. MILIND JOSHI, MRS. PADMAVATI CHOUGULE, AND DR. SANJEEV KULKARNI W ERE RS.1,43,000/-, RS.97,500/- AND RS.1,65,870/-, RESPECTIVELY. THE AS SESSING OFFICER CONSIDERED PAYMENT OF DR. MRS. S V JADHAV ON HIGHER SIDE. AS P ER HIM, SINCE MRS. CHOUGULE HAS COMPLETED COURSE OF HOSPITAL MANAGEMENT AND IS LOOKING AFTER MANAGEMENT OF THE HOSPITAL, THERE WAS NO NEED OF DR. MRS. S V JAD HAV FOR HOSPITAL MANAGEMENT AND OTHER DUTIES. IN VIEW OF THIS, THE ASSESSING OFFICE R HAS ALLOWED RS.6,00,000/- OUT OF THE TOTAL PAYMENT AND DISALLOWED RS.13,50,000/-. 8. BEFORE THE UNDERSIGNED, IT WAS SUBMITTED THAT AS SESSING OFFICER HAS NOT APPRECIATED FACTS OF THE CASE. DR. MRS. S V JADHAV MAINLY CONDUCTS VARIOUS SPECIALIZED INVESTIGATION TESTS WITH THE HELP OF ST AFF SUCH AS ECG, EMG, BRAIN MAP, BAER ETC. PATIENTS COME FROM CONSULTING ROOM OF THE ASSESSEE TO THE INVESTIGATION TEST DEPARTMENT WHERE DR. MRS. S V JADHAV TAKES OVE R AND MANAGES THE TESTS OF PATIENTS AND CARE OF INDOOR PATIENTS WITH THE HELP STAFF. IN THESE WORKS, ASSISTANCE OF MRS. CHOUGULE IS ALSO TAKEN WHO HAS COMPLETED THE C OURSE OF HOSPITAL MANAGEMENT. FOR HER SERVICES DR. MRS. S V JADHAV IS PAID RS.1,5 0,000/ - PER MONTH AS PROFESSIONAL CHARGES WHICH IS JUSTIFIED IN VIEW OF HER SERVICES. 9. I HAVE CONSIDERED THE REPLY OF THE APPELLANT AND GONE THROUGH THE ASSESSMENT ORDER. PRIMA FACIE, THE PAYMENT MADE TO DR. MRS. S V JADHAV IS ON HIGHER SIDE. LOOKING TO THE DUTIES OF VARIOUS DOCTORS I FIND THA T DR. MILIND JOSHI AND DR. SANJEEV KULKARNI ARE PART TIME VISITING DOCTORS. DR. MILIND JOSHI VISITS THE HOSPITAL ONCE OR TWICE A DAY AND HE LOOKS AFTER THE SPECIFIC PATIENT S WHO ARE ADMITTED IN ICU. DR. JOSHI UTILIZES THE ENTIRE INFRASTRUCTURE OF THE ASS ESSEE AND DOES NOT SPEND ANYTHING ON TREATMENT OF THE PATIENTS. THEREFORE, HE WAS PAI D PROFESSIONAL CHARGES OF RS.1,43,000/-. DR. SHRI SANJEEV KULKARNI IS ALSO A PART TIME VISITING DOCTOR AND HE HAS HIS OWN HOSPITAL AT MIRAJ. HE VISITS ONLY WHEN HIS SERVICES ARE REQUIRED FOR SURGERY. MRS. CHOUGULE WORKS FOR 5 TO 6 HOURS DAILY IN OPD AND SHE DOES NOT INCUR ANY EXPENDITURE SINCE SHE USES THE FACILITIES OF TH E HOSPITAL. WHEREAS MRS. CHOUGULE IS JUST BHMS, DR. MRS. S V JADHAV IS A FUL L FLEDGED MBBS DOCTOR. PAYMENTS FOR THE TWO CANNOT BE COMPARED. IN VIEW OF THE SERVICES BEING RENDERED BY DR. MRS. S V JADHAV THE SUBSTANTIALLY HIGHER PAYMENT OF PROFESSIONAL FEES IS JUSTIFIED. THEREFORE, THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. IN ANY CASE, TO PLUG AN Y LEAKAGES I SUSTAIN A DISALLOWANCE OF RS.2 LAKHS AND DIRECT THE ASSESSING OFFICER TO D ELETE THE BALANCE DISALLOWANCE. GROUND OF APPEAL IS PARTIALLY ALLOWED. 4 ITA NO.435/PN/2014 6. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE RELIED UPON THE ORDER OF THE ASSESSING OFFICER WHILE THE LD. AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE RELIED UPON THE ORDER OF THE CIT(A). 7. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE A UTHORITIES BELOW. WE FIND THAT THE REASONINGS GIVEN BY THE CIT(A) FOR GI VING RELIEF TO THE ASSESSEE ON SOUND BASIS. HE HAS COMPARED THE SERVICES RENDERED BY OTHER PROFESSIONALS AND DOCTORS VIS--VIS THE EXTENT OF THE SERVICES RE NDERED BY THE WIFE OF THE ASSESSEE WHILE COMING TO HIS CONCLUSION NOTED ABOVE . WE ARE IN COMPLETE AGREEMENT WITH THE REASONINGS OF THE CIT(A) AND THE REFORE DECLINE TO INTERFERE. 8. WE ALSO FIND THAT THE INITIAL ONUS WHICH LAY UPO N THE ASSESSEE TO SUBSTANTIATE THE REASONABLENESS OF PAYMENTS HAVE BE EN DULY DISCHARGED. THEREFORE, DECISION OF THE HONBLE MADRAS HIGH COUR T IN THE CASE OF CIT VS. NEPC INDIA 303 ITR 271 (MAD.) RELIED UPON BY THE AS SESSING OFFICER HAS NO APPLICATION TO THE FACTS OF THE CASE. 9. AS A RESULT, GROUNDS NO.1 & 2 RAISED BY THE REVE NUE ARE DISMISSED. 10. GROUND NO.3 RELATES TO CHALLENGING THE DECISION OF THE CIT(A) IN DELETING THE ADDITION ON ACCOUNT OF FOREIGN TOURS. IT IS SEEN FROM THE ORDERS OF THE AUTHORITIES BELOW THAT THE FOREIGN TOUR OF THE ASSESSEE WAS SPONSORED. THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF RS.75,00 0/- ON THE REASONING THAT EVEN IF THE FOREIGN TOUR WAS SPONSORED THE PERSONAL EXPENDITURE MADE DURING THE COURSE OF THESE TOURS WILL NOT BE SPONSORED BY ANY COMPANY. THE ASSESSING OFFICER, ACCORDINGLY, ESTIMATED THE EXPEN DITURE OF PERSONAL NATURE NOT ACCOUNTED FOR IN THE BOOKS AT RS.75,000/- AND A DDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE CIT(A) GRANTED RELIEF TO THE ASSESSEE ON THE GROUND THAT THERE IS NO EVIDENCE TO JUSTIFY IMPUGNE D PERSONAL EXPENDITURE. IN VIEW OF THE CATEGORICAL FINDING OF THE CIT(A) THAT THERE IS NO EVIDENCE OF 5 ITA NO.435/PN/2014 HAVING INCURRED ANY PERSONAL EXPENSES ON SUCH SPONS ORED WHICH REMAINED UNASSAILED, WE ARE NOT INCLINED TO INTERFERE WITH T HE SAME. 11. IN THE RESULT, GROUND NO.3 OF THE REVENUES APP EAL IS ALSO DISMISSED. 12. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED ON THIS 27 TH DAY OF NOVEMBER, 2015. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 27 TH NOVEMBER, 2015. & ' ()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT, KOLHAPUR; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE