The DCIT, Circle-1(1)(1), Ahmedebad V. M/s. Maniar Health Care Pvt. Ltd., Ahmedabad

ITA 476/AHD/2020

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4772 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 05-12-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 22-09-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHRIASHOKKUMARSUTHAR
• Assessee Lawyers: SHRIS.N.DIVATIA; SHRISAMIR; .IHAVECONSIDEREDTHEASSESSMENTORDER; FACTSOFTHECASEANDSUBMISSIONMADEBYTHE; .IHAVECAREFULLYCONSIDEREDTHERIVALCONTENTIONSHAVEALSOPERUSEDTHECASELAWS
• Keywords: Depreciation

Judgement Text

INTHEINCOMETAXAPPELLATETRIBUNAL AHMEDABAD“D”BENCH BEFORE:SHRIWASEEMAHMED,ACCOUNTANTMEMBERAND SHRISIDDHARTHANAUTIYAL,JUDICIALMEMBER ITANo.476/Ahd/2020 (AssessmentYear:2013-14) D.C.I.T, Circle-1(1)(1), Ahmedabad V/SM/s.A.ManiarHealth CarePvt.Ltd. 1,ManiarHouse,Opp. NeminathSociety,Shantivan, Paldi, Ahmedabad (Appellant)(Respondent) PAN:AAJCA1607R Appellantby:ShriAshokKumarSuthar,Sr.DR Respondentby:ShriS.N.Divatia&ShriSamir Vora,A.Rs. आदेश /ORDER Dateofhearing:06-12-2023 DateofPronouncement:08-12-2023 PERWASEEMAHMED,ACCOUTANTMEMBER: TheappealhasbeenpreferredbytheRevenueagainsttheorderofthe CommissionerofIncomeTax(Appeals)-1,Ahmedabad(‘CIT(A)’inshort)dated 28.07.2020arisingintheassessmentorderdated28.01.2016passedbythe ITANo.476/Ahd/2020 A.Y.2013-14(DCITvs.M/s.A. ManiarHealthCarePvt.Ltd.) 2 AssessingOfficer(AO)unders.144oftheIncomeTaxAct,1961(theAct) concerningAY2013-14. 2.TheRevenuehasraisedfollowinggroundsofappeal: (1)TheId.C*Pi(A)haserredinlawandonthefactsindeletingthedisallowanceof businesslossofRs.1,90,60,313/-madebyAObyignoringthattheassessmentorderwas passedu/s.144oftheActandtheRule46A(3)oftheIncomeTaxRuleshadnotbeen adheredto. (2)TheId.CIT(A)haserredinlawandfactsbyrelyingonRule46Ainspiteofthefactthat remandreportdated19.12.2016wascalledforbytheCIT(A)onlyinrespectoftheissueof theunsecuredloansofRs.44,99,466/-andsecuredloansofRs.2,51,18,998/-. (3)TheId.CIT(A)haserredinlawandfactsindeletingtheadditionofRs.44,99,466/- u/s.68oftheAct. (4)Itis,therefore,prayedthattheorderofId.CIT(A)maybesetasideandthatofthe AssessingOfficerberestored. 3.The1 st issueraisedbytherevenueingroundnumbers1and2isthatthe learnedCIT-AerredindeletingthedisallowancemadebytheAOfor₹ 1,90,60,313.00representingthebusinesslossincontraventiontotheprovisionsof rule46A(3)ofIncomeTaxRule. 4.Thebrieffactsarethattheassesseeinthepresentcase,aprivatelimited company,claimedtobeengagedinthebusinessofhealthcareservices.The assesseeintheyearunderconsiderationhasfiledthereturnofincomedeclaring lossof₹1,90,60,313.00only.AspertheAO,thelosswasarisingtotheassessee merelyonaccountofinterestexpensesandthedepreciationclaimedbyit. Likewise,theAOalsofoundthattherewasnorevenueshownbytheassesseein theprofitandlossaccountfromhealthcareservices.Thus,theAOwasoftheview thatthebusinessoperationoftheassesseehasnotcommencedintheyearunder consideration.Hence,theassesseeshouldnotbeallowedthedeductionofinterest expensesbutthesameshouldbetreatedascapitalexpenditure.Similarly,theAO ITANo.476/Ahd/2020 A.Y.2013-14(DCITvs.M/s.A. ManiarHealthCarePvt.Ltd.) 3 wasoftheviewthatthebuildingandtheplant&machineryhasnotbeenputto useintheyearunderconsiderationandtherefore,thedepreciationshouldalsonot beallowedtotheassessee.Inviewoftheabove,theAOsoughtanexplanation fromtheassesseeabouthisobservationasdiscussedabove.Buttherewasno compliancefromthesideoftheassessee.Accordingly,theAO,intheabsenceof anyrebuttal,disallowedthelossclaimedbytheassessee. 5.AggrievedassesseepreferredanappealtothelearnedCIT-A.Thelearned CIT-AcalledfortheremandreportfromtheAOontheadditionaldocuments furnishedbytheassessee.Subsequently,thelearnedCIT-Aafterconsideringthe remandreportandthesubmissionoftheassesseeconcludedthatthecommercial activityoftheassesseehascommencedintheyearunderconsiderationand therefore,theassesseeiseligibletoclaimthelossshownbyit.Hence,theld.CIT- Aallowedthegroundofappealoftheassesseebyobservingasunder: 5.2Ihaveconsideredtheassessmentorder,factsofthecaseandsubmissionmadebythe appellant.Duringthecourseofappellateproceedings,itwasclaimedbytheappellantthat thecompanyhasstarteditsbusinesson14thFebruary,2012aftergettingregistration certificateundertheBombayNursingHomesRegistrationAct,1949fromAhmedabad MunicipalCorporation.Thesameisverifiedfromthesubmissionmadebytheappellant. Theappellantrunsmultispecialtyhospitalwhichoffercomprehensiveclinicalprogrammes supportedbyavariousancillaryservice.Therevenueandexpendituresweresupportedin auditedaccountswhichwerefiledbeforetheAO.TheA.O.hasnotcommentedanyofthe itemsofincomes,expenditures,businessactivitybooksofaccountswhicharerelevantto thecase.Therule46Aapplicationfiledbytheappellantgavefulldisclosureaboutthe expendituresclaimedintheProfit&lossAccountbutitisnotconsideredbyAO.Duringthe courseofappellantproceedings,theARsubmittedTaxauditreportinform3CDaswellas CompanyAuditreportwhich,clearlystatethattheappellantcompanyhasmaintained booksofaccountwithrelevantallrecordsundertheITact.Itisalsoconsideredthatthe Annexure-1totheform3CDgivesaboutthedepreciationallowableundertheActwhich submitfulldisclosureaboutthefixedassetspurchaseanddateofputtousebythe appellant.ItismentionedbytheA.O.thatPART-BofANN-1ofform3CDgivesaboutthe expendituresofinterestanddepreciationbutGrossTurnovernotreported.Thereisno ambiguityinrelationofbusinessactivityandturnover,Theincome-expenditureswerefully vouchedandgiveninrule46Aapplicationwhichclearlyacknowledgeaboutthebusiness activityoftheappellantcompany.TheA.O.hasnotrejectedthebooksofaccountwhichis maintainedunderthelawtherebybusinessexpendituresisfullyallowablewhichwere incurredinconnectionwiththebusinessoperation.Accordingly,thisadditioncan’tstand ITANo.476/Ahd/2020 A.Y.2013-14(DCITvs.M/s.A. ManiarHealthCarePvt.Ltd.) 4 thescrutinyoflaw,therefore,isorderedtobedeleted.Itgoeswithoutsayingthatany individualadditionisalsorequiredtobeadjudicatedseparatelyasdoneinensuingparas. Thisgroundno.2isallowed. 6.BeingaggrievedbytheorderoflearnedCIT-A,therevenueisinappeal beforeus. 7.ThelearnedDRbeforeusfiledapaperbookrunningfrompages1to539 andcontendedthattheremandreportwascalledbytheLd.CIT-Awithrespectto thesecuredandunsecuredloanreceivedbytheassesseeintheyearunder consideration.Assuch,therewasnoremandreportcalledbytheLd.CIT-Awith respecttothelossshownbytheassesseeintheyearunderconsideration. Accordingly,theld.DRcontendedthattheadditionaldocumentssubmittedbythe AssesseebeforetheLd.CIT-Ahavebeenadmittedforthepurposeofthe adjudicationincontraventiontotheprovisionsofRule46A(3)ofIncomeTaxRule. 8.Ontheotherhand,theld.ARcontendedthattheactivityoftheassessee hascommencedfromtheyearunderconsideration.ThelearnedARsubmittedthat allthenecessarydetailsaboutthecommencementofthebusinesswerefurnished duringremandproceedingswhichhavenotbeendisputedbytheAO. 9.Boththeld.DRandtheARbeforeusvehementlysupportedtheorderof therespectiveauthoritiesbelowasfavourabletothem. 10.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Attheoutset,wenotethattheassessmentorder waspassedbytheAOintheabsenceofnecessarydetails,whichwerefiledbythe assesseebeforetheLd.CIT(A).OnperusaloftheremandreportsoughtbytheLd. CIT(A),placedonpage65ofthepaperbook,wenotethattheremandreportwas soughtwithrespecttotheunsecuredloanandsecuredloan,assuch,therewasno ITANo.476/Ahd/2020 A.Y.2013-14(DCITvs.M/s.A. ManiarHealthCarePvt.Ltd.) 5 remandreportcalledforbytheLd.CIT(A)withrespecttothelossclaimedbythe assessee.Thus,weholdthattheLd.CIT(A)hasadmittedtheadditional submissionmadebytheassesseeincontraventiontotheprovisionofRule46A(3) ofIncomeTaxRulesi.e.withoutgivingopportunitytotheAO.Accordingly,inthe interestofjusticeandfairplay,weareinclinedtorestorethisissuetothefileof theAOforfreshadjudicationaspertheprovisionsoflaw.Hence,thegroundof appealraisedbytheRevenueisallowedforstatisticalpurposes. 11.NextissueraisedbytheRevenueisthattheLd.CIT(A)erredindeletingthe additionmadebytheAOofRs.44,99,466/-representingtheunexplainedcash creditunderSection68oftheAct. 12.TheAOduringtheassessmentproceedingsfoundthattheloanofthe assesseeincreasedbyanamountofRs.44,99,466/-intheyearunder consideration,thesourceofwhichwasnotexplained.Therefore,theAOtreated thesameasunexplainedcashcreditunderSection68oftheActandaddedtothe totalincomeoftheassessee. 13.Aggrieved,theassesseepreferredanappealbeforetheLd.CIT(A)whohas allowedthegroundofappealoftheassesseebyobservingasunder: “6.2Ihavecarefullyconsideredtherivalcontentionshavealsoperusedthecaselaws relieduponbytheappellant.havealsocarefullygonethroughtheevidencesplacedon recordduringthecourseofremandproceedingsaswellasappellateproceedings.During theremandassessmentproceedings,theappellanthasfurnishedcopyofledgeraccountof thesepersonsalongwithcopiesofcontraaccountmentioningPANumbers,complete address,bankstatementreflectingloangivenandparticularsofward/circlewheresuch personsareassessed.TheA.O.hasalsoissuednoticesu/s133(6)oftheActdated 08.08.2018to4personsforconfirmingthefactsofthecasewhichdulyconfirmedbyfilling relevantdetails.Theappellanthaddischargedonuscastuponitbytheprovisionsof section68oftheITAct,1961.Duringtheremandassessmentproceedings,theAOhas madeenquiriesundertheActbutnothingcontrovertedonrecordtoshowthatconditionof section68oftheActi.eidentity.genuinenessofthetransactionandcreditworthinessof thecreditorisnotsatisfied.Thesescreditorshadfiledreplyinresponsetotheenquiry ITANo.476/Ahd/2020 A.Y.2013-14(DCITvs.M/s.A. ManiarHealthCarePvt.Ltd.) 6 letters.Thosecreditorstowhomnoticeswerenotreceived,theappellanthassubmitted clearevidencestoprovetheidentity,genuinenessandcreditworthinessofthecreditors, Perusaloftheledgeraccountsfurtherrevelsthattheseloanshavebeenreceivedthrough thebankingchannels.Inthisregard,theappellanthasrightlyplacedrelianceonthecase ofRohiniBuilders256ITR360(Guj.).Inmyconsideredviewthefactssubmittedbythe appellantclearlyestablishesidentity,genuinenessofthetransactionandcreditworthiness ofthecreditor.Ontheotherhand,theA.O.hadmadeanassumptionaboutsourceof sourcewhichcanitbehispurviewandaccordinglythecreditworthinessofthesepersonsis notdoubtfulinoffollowingcaselaws. 1.CITVISRANCHHODJIVABHAINAKHAVAreportedat208Taxmann35 2.DCITvRohiniBuilders(2002)256ITR360(Guj) 3.MurlidharLahorimalVs.CIT280ITR$12(Guj) 4.CITVsPragatiCo-opBankLtd278ITR170(G) 5.CITVs.OrissaCorporationPvtLtd159ITR78(SC) 6.CITvs.SanjayKThakkarTaxAppealNox324of2004,523and126of2004583of 2003dated12-9-2005(GaHC) 7.ITOV'sKailparCredit&MercantilePvtLadinITANo421ATAN) Accordingly.Iamoftheconsideredviewthatadditionagainstthesecashcreditsus58is nottenableasconditionstoinvokeprovisionsus.68aremissinginthiscase.Thisgroundof appealisallowed.” 14.BeingaggrievedbytheorderoftheLd.CIT(A),theRevenueisinappeal beforeus. 15.TheLd.DRandLd.ARbeforeusvehementlysupportedtheorderofthe authoritiesbelowasfavourabletothem. 16.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Fromtheprecedingdiscussion,wenotethatthere were46partiesintotalfromwhomtheassesseehascarriedoutloantransactions. TheAOhastakentheopeningbalanceofloanandcompareditwithclosing balanceandfoundthattherewasanincreaseintheamountofloanwhichwas treatedasunexplainedcashcreditunderSection68oftheAct.Fromthefinding oftheAO,thereisnoclaritywithrespecttotheloanwhichwastreatedas unexplainedcashcredit.Inmanyofthecases,theassesseehasclaimedinterest expenseontheloanswhichwasnotdisturbedbytheAO.Thus,wefindthatAO ITANo.476/Ahd/2020 A.Y.2013-14(DCITvs.M/s.A. ManiarHealthCarePvt.Ltd.) 7 hasnotprovidedthenecessarydetailsoftheloanpartieswhichwereconsidered asunexplainedcashcredit.Accordingly,wedonotfindanyreasontointerfere withthefindingoftheLd.CIT(A).Hence,thegroundofappealoftheRevenueis herebydismissed. 17.Intheresult,appealoftheRevenueispartlyallowedforstatisticalpurposes. OrderpronouncedinOpenCourton08-12-2023 Sd/-Sd/- (SIDDHARTHANAUTIYAL)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER Ahmedabad:Dated08-12-2023 CopyoftheOrderforwardedto:- 1.TheAppellant. 2.TheRespondent. 3.TheCIT(Appeals)– 4.TheCITconcerned. 5.TheDR.,ITAT,Ahmedabad. 6.GuardFile. (TRUECOPY)ByORDER Deputy/Asstt.Registrar ITAT,Ahmedabad