THE ITO, Vijayawada V. Charitasri Hospitals Ltd., Vijayawada

ITA 53/VIZ/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8969 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 28-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S RAVI SHANKAR NARAYAN
• Keywords: Unexplained cash credit; Non-deduction of tax
• Section: 142(1); 68

Judgement Text

ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.3/VIZAG/2015 ( / ASSESSMENT YEAR: 2011-12) CHARITASRI HOSPITALS LTD., VIJAYAWADA ACIT, RANGE - 2, VIJAYAWADA [PAN NO. AACCC2726L ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.53/VIZAG/2015 ( / ASSESSMENT YEAR: 2011-12) ITO, WARD - 2(1), VIJAYAWADA CHARITASRI HOSPITALS LTD., VIJAYAWADA ( % / APPELLANT) ( &' % / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI S. RAVI SHANKAR NARAYAN, DR / DATE OF HEARING : 28.04.2017 / DATE OF PRONOUNCEMENT : 05.05.2017 / O R D E R PER SHRI G. MANJUNATHA, ACCOUNTANT MEMBER: THESE CROSS APPEALS FILED BY THE ASSESSEE, AS WELL AS THE REVENUE ARE DIRECTED AGAINST ORDER OF THE COMMISSIO NER OF INCOME TAX ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 2 (A), VIJAYAWADA DATED 28.11.2014 AND IT PERTAINS TO THE ASSESSMENT YEAR 2011-12. SINCE, THE FACTS ARE IDENTICAL AND I SSUES ARE COMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED-OFF B Y WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E M/S. CHARITASRI HOSPITALS LIMITED IS A COMPANY ENGAGED IN THE BUSIN ESS OF RUNNING HOSPITAL, FILED ITS RETURN OF INCOME FOR THE ASSESS MENT YEAR 2011-12 ON 20.9.2011 DECLARING TOTAL INCOME OF RS.99,51,387/-. THE CASE HAS BEEN SELECTED FOR SCRUTINY AS PER THE GUIDELINES OF CBDT AND HENCE, NOTICES U/S 143(2) & 142(1) OF THE INCOME TAX ACT, 1961 (HE REINAFTER CALLED AS THE ACT) WERE ISSUED. IN RESPONSE TO NOTICES, TH E AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME T O TIME AND PRODUCED THE RELEVANT DETAILS AS CALLED FOR. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED FROM THE B ALANCE SHEET FILED FOR THE YEAR THAT THE ASSESSEE HAS SHOWN AN AMOUNT OF RS.1,17,53,802/- UNDER THE HEAD CURRENT LIABILITIES AS SUNDRY CRED ITORS FOR OTHERS. THE A.O., TO ASCERTAIN THE NATURE OF LIABILITY ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXPLAIN THE ASSESSEE TO FURNISH DETAILS OF CREDITORS LIKE PARTY- WISE BREAKUP OF ALL THE CREDITORS, CONFIRMATIONS DU LY ATTESTED IN THE ACCOUNT COPY AND BANK ACCOUNT OF THE CREDITOR FROM WHOM THE CREDITS ARE SHOWN AS OUTSTANDING. IN RESPONSE TO NOTICE, T HE ASSESSEE VIDE ITS ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 3 REPLY DATED 17.1.2014 SUBMITTED THAT DURING THE FIN ANCIAL YEARS 2009-10 TO 2011-12, THE ASSESSEE HAS PARTICIPATED WITH THE RAJIV AROGYA SHREE SCHEME FOR TREATING THE PATIENTS SPONSORED BY THE G OVERNMENT OF ANDHRA PRADESH AND ACCORDINGLY, THE HOSPITAL HAS CO NDUCTED MEDICAL CAMPS ACROSS THE STATE TO IDENTIFY THE PATIENTS FOR THE BENEFIT OF AROGYA SHREE SCHEME FOR WHICH IT HAS INCURRED CERTAIN EXPE NDITURE, WHICH HAS BEEN SHOWN AS PAYABLE IN THE BOOKS OF ACCOUNTS. TH E ASSESSEE FURTHER SUBMITTED THAT THE COMPANY CONDUCTS VARIOUS MEDICAL CAMPS TO SCREEN THE PATIENTS FOR WHICH IT HAS ENGAGED MARKETING TEA M. THE MARKETING TEAM ARRANGES MEDICAL CAMPS AROUND 300 VILLAGES IN THE NEIGHBORING DISTRICT, FOR WHICH IT HAS SPENT EXPENDITURE IN THE NATURE OF PROVISION OF FREE FOOD, MEDICINES AND TRANSPORT PATIENTS TO HOSP ITALS. THE SAID MARKETING AGENTS SUBMIT THEIR CLAIMS AFTER THE CAMP IS OVER, WHICH WILL BE REIMBURSED BASED ON THE CLAIM MADE BY THE TEAM. DURING THE YEAR THE COMPANY HAS INCURRED AN AMOUNT OF RS.1,49,63,56 3/- TOWARDS AROGYA SHREE EXPENDITURE, OUT OF WHICH AN AMOUNT OF RS.32,09,761/- HAS BEEN PAID AND THE REMAINING AMOUNT WAS SHOWN AS PAYABLE BECAUSE OF INSUFFICIENT FUNDS. THE ASSESSEE FURTHE R SUBMITTED THAT AS AND WHEN THE GOVERNMENT OF ANDHRA PRADESH RELEASES PAYMENTS TOWARDS AROGYA SHREE SCHEME, THE ASSESSEE REIMBURSE D EXPENDITURE TO THE MARKETING TEAM. ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 4 3. THE A.O. AFTER CONSIDERING THE EXPLANATIONS OF T HE ASSESSEE OBSERVED THAT THE ASSESSEE FAILED TO FURNISH NECESS ARY DETAILS OF SUNDRY CREDITORS FOR OTHERS SUCH AS PARTY-WISE BREAKUP OF ALL THE CREDITORS, CONFIRMATION DULY ATTESTED IN THE ACCOUNT COPY AND BANK ACCOUNT OF THE CREDITORS. THE A.O. FURTHER OBSERVED THAT IN THE A BSENCE OF IDENTITY PROOF, WHICH IS PRIMARY ONUS OF THE ASSESSEE, IT IS HARD TO BELIEVE THE VERSION OF THE ASSESSEE, MORE SO WHEN THE EXPENSES ARE INCURRED IN THE FORM OF CASH AND NO BANK TRANSACTIONS THAT CAN REVE AL THE RECEIPT FROM THE CREDITOR, THE SECOND STEP OF INVESTIGATION IS A LSO BARRED. WHEN THE IDENTITY OF THE CREDITOR IS ITSELF IN QUESTION, THE CREDITWORTHINESS OF THE CREDITOR IS A MATTER, WHICH IS FAR BEYOND THE SCOPE OF VERIFICATION. THE A.O. FURTHER OBSERVED THAT UNDER THE SCHEME OF AROG YA SHREE, A PATIENT APPROACHES A RECOGNIZED HOSPITAL FOR PRELIMINARY ES TIMATE OF THE BILL AMOUNT BASED ON WHICH THE DISTRICT MEDICAL AUTHORIT IES WILL AUTHORIZE THE ESTIMATE DUE TO WHICH THE CONCERNED PATIENT WILL BE GIVEN TREATMENT IN THE HOSPITAL. IN THE SCHEME, THE ROLE OF INTERMEDI ATE MARKETING PEOPLE IS VERY MINIMAL AND THE EXPLANATION OF THE ASSESSEE IN THE ABSENCE OF SUPPORTED EVIDENCE CANNOT BE RELIED UPON AND ACCORD INGLY SUNDRY CREDITORS OF RS.1,70,53,802/- SHOWN AS OUTSTANDING IS ADDED AS UNEXPLAINED CREDITS. SIMILARLY, THE A.O. HAS MADE ADDITIONS OF ADHOC DISALLOWANCE OF 10% TOWARDS AROGYA SHREE EXPENSES F OR THE REASON THAT ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 5 OUT OF TOTAL EXPENDITURE OF RS.1,49,63,563/-, A SUM OF RS.32,09,761/- WAS INCURRED IN CASH FOR WHICH THE ASSESSEE FAILED TO FURNISH NECESSARY BILLS AND VOUCHERS. SIMILARLY, THE A.O. MADE ADDIT IONS OF RS.16,62,503/- U/S 40(A)(IA) OF THE ACT, TOWARDS PROFESSIONAL CHAR GES PAID TO DOCTORS FOR FAILURE TO DEDUCT TAX AT SOURCE U/S 194J OF THE ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE CIT(A) AF TER CONSIDERING EXPLANATIONS OF THE ASSESSEE, OBSERVED THAT THE AMO UNT SHOWN UNDER SUNDRY CREDITORS FOR OTHERS REPRESENTS OUTSTANDING EXPENDITURE PAYABLE IN RESPECT OF AROGYA SHREE EXPENSES BECAUSE OF DELA Y IN REALIZATION OF BILLS FROM THE GOVERNMENT. THE CIT(A) FURTHER OBSE RVED THAT THE ASSESSEE HAS FURNISHED DETAILS OF EXPENDITURE INCUR RED ALONG WITH LEDGER EXTRACTS. ON VERIFICATION OF THE LEDGER EXTRACTS F ILED BY THE ASSESSEE, IT WAS NOTICED THAT THE ASSESSEE HAS INCURRED AN AMOUN T OF RS.1,49,63,563/- TOWARDS AROGYA SHREE EXPENSES, OUT OF WHICH AN AMOUNT OF RS.1,33,13,563/- HAS BEEN PAID/REIMBURSED DURING THE YEAR LEAVING THE OUTSTANDING BALANCE OF RS.1,17,53,802/- , INCLUDING THE BROUGHT FORWARD BALANCE OF RS.1,01,03,802/- IT IS OBSERVED FROM THE LEDGER EXTRACT FILED BY THE ASSESSEE THAT THE ASSES SEE IS PROVIDING EXPENDITURE INCURRED TOWARDS AROGYA SHREE SCHEME AN D SUBSEQUENTLY ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 6 REIMBURSED THE SAME TO THE MARKETING TEAM AS AND WH EN IT GETS AMOUNT FROM THE STATE GOVERNMENT. FROM THE ABOVE DESCRIPT ION, IT IS CLEAR THAT THE AMOUNT SHOWN UNDER THE HEAD SUNDRY CREDITORS F OR OTHERS ARE NOTHING BUT AROGYA SHREE EXPENSES OUTSTANDING AT TH E END OF THE YEAR AND NOT SUNDRY CREDITORS IN THE GENERAL SENSE AS NO RMALLY APPEAR IN TRADING AND OTHER BUSINESS CONCERNS. HENCE, THE AD DITIONS MADE BY THE A.O. TREATING THEM AS UNEXPLAINED CREDITS U/S 68 OF THE ACT IS NOT IN ORDER, PARTICULARLY IN VIEW OF THE FACT THAT THE A. O. HAS NOT DOUBTED THE GENUINENESS OF EXPENSES CLAIMED UNDER THE HEAD AROG YA SHREE EXPENSES EXCEPT MAKING A DISALLOWANCE OF 10% FOR WA NT OF PROPER BILLS AND VOUCHERS. WITH THESE OBSERVATIONS, CIT(A) DELE TED ADDITIONS MADE BY THE A.O. TOWARDS SUNDRY CREDITORS FOR OTHERS U/S 68 OF THE ACT. THE CIT(A), FURTHER, OBSERVED THAT AS THE EXPENDITURE C LAIMED IS NOT SUPPORTED, THE A.O. OUGHT TO HAVE DISALLOWED 10% ON TOTAL EXPENDITURE INCURRED IN THE YEAR, HOWEVER, HE HAS DISALLOWED 10 % ON EXPENDITURE INCURRED BY CASH. THEREFORE, DIRECTED THE A.O. TO DISALLOW 10% OF THE TOTAL EXPENDITURE INCURRED OF RS.1,49,63,563/-. IN SO FAR AS DISALLOWANCE OF PROFESSIONAL CHARGES U/S 40(A)(IA) OF THE ACT, F OR FAILURE TO DEDUCT TAX AT SOURCE U/S 194J OF THE ACT, THE ASSESSEE FAILED TO OFFER ANY EXPLANATIONS FOR NON-DEDUCTION OF TAX AT SOURCE ON REMAINING AMOUNT OF PROFESSIONAL CHARGES PAID TO THE DOCTORS. DURING T HE APPELLATE ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 7 PROCEEDINGS ALSO, THE ASSESSEE DID NOT BRING ANY AD DITIONAL INFORMATION/EVIDENCE IN SUPPORT OF ITS CLAIMS. HEN CE, THE ADDITION MADE BY THE A.O. TOWARDS DISALLOWANCE OF PROFESSIONAL CH ARGES U/S 40(A)(IA) OF THE ACT IS UPHELD. AGGRIEVED BY THE CIT(A) ORDE R, THE REVENUE AS WELL AS THE ASSESSEE ARE IN APPEAL BEFORE US. 5. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM THE ASSESSEE, AS WELL AS THE REVENUE APPEAL IS ADDITION TOWARDS SUNDRY CREDITORS FOR OTHERS U/S 68 OF THE ACT AND DISALLOW ANCE OF 10% EXPENDITURE INCURRED UNDER THE HEAD AROGYA SHREE SC HEMES. THE A.O. MADE ADDITIONS OF RS.1,17,53,802/- U/S 68 OF THE AC T, ON THE GROUND THAT THE ASSESSEE FAILED TO FURNISH DETAILS OF CRED ITORS, CONFIRMATION FROM THE PARTIES AND ALSO BANK ACCOUNT DETAILS OF THE CR EDITORS PROVING THE IDENTITY AND GENUINENESS OF THE TRANSACTIONS. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE FAILED TO PROVE THE IDENT ITY OF THE CREDITORS, THEREFORE, THE QUESTION OF VERIFICATION OF GENUINEN ESS OF THE TRANSACTIONS DOES NOT ARISE, HENCE, DISALLOWED THE ENTIRE CREDIT ORS SHOWN UNDER THE HEAD CREDITORS FOR OTHERS. IT IS THE CLAIM OF THE ASSESSEE THAT THE CREDITORS FOR OTHERS SHOWN UNDER THE HEAD CURRENT L IABILITIES IS EXPENSES PAYABLE TOWARDS REIMBURSEMENT OF EXPENDITURE INCURR ED TOWARDS AROGYA SHREE EXPENSES. THE ASSESSEE FURTHER CONTENDED THA T IT HAD INCURRED VARIOUS EXPENDITURES TOWARDS THE SCHEME FOR CONDUCT ING MEDICAL CAMPS ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 8 THROUGH MARKETING AGENTS AND THE SAME HAS BEEN REIM BURSED SUBSEQUENTLY AS AND WHEN THE BILLS ARE RECEIVED FRO M THE STATE GOVERNMENT. THE ASSESSEE HAS ACCOUNTED BILLS SUBMI TTED BY THE MARKETING AGENTS TOWARDS EXPENDITURE INCURRED FOR A ROGYA SHREE SCHEMES, HOWEVER SETTLED THE BILLS SUBSEQUENTLY IN THE NEXT FINANCIAL YEAR BECAUSE OF DELAY IN REALIZATION OF BILLS FROM THE STATE GOVERNMENT. THE A.O. WITHOUT EXAMINING THE DETAILS SIMPLY MADE ADDITIONS U/S 68 OF THE ACT TOWARDS OUTSTANDING EXPENSES PAYABLE WHICH IS INCORRECT. 6. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATER IAL ON RECORD, WE FIND THAT THE A.O. MADE ADDITIONS SOLELY ON THE GROUND THAT THE ASSESSEE FAILED TO FURNISH DETAILS OF CREDITORS LIK E PARTYWISE BREAKUP, CONFIRMATION DULY ATTESTED IN THE ACCOUNT COPY AND BANK ACCOUNT DETAILS OF THE CREDITORS. THE A.O. NEVER DOUBTED THE GENUI NENESS OF THE EXPENDITURE, WHICH IS EVIDENT FROM THE FACT THAT OU T OF THE TOTAL EXPENDITURE INCURRED UNDER THE HEAD AROGYA SHREE SC HEMES OF RS.1,49,63,563/-, THE A.O. HIMSELF IDENTIFIED AN AM OUNT OF RS.32,09,761/- WAS INCURRED IN CASH WHICH WAS NOT S UPPORTED BY PROPER BILLS AND VOUCHERS. FROM THIS, IT IS CLEAR THAT TH E REMAINING AMOUNT OF EXPENDITURE HAS BEEN ACCEPTED GENUINE. ONCE THE GE NUINENESS OF THE EXPENDITURE WAS NOT DOUBTED, THE CREDITORS ARISED O UT OF SUCH EXPENDITURE CANNOT BE ADDED U/S 68 OF THE ACT, FOR THE SIMPLE REASON ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 9 THAT THE ASSESSEE HAS FAILED TO FURNISH CONFIRMATIO N LETTERS FROM PARTIES. WE FURTHER OBSERVED THAT THE ASSESSEE HAS FILED A PA PER BOOK CONTAINING DETAILS OF EXPENDITURE INCURRED UNDER THE HEAD AROG YA SHREE SCHEMES ALONG WITH LEDGER EXTRACT. ON PERUSAL OF THE DETAI LS FILED BY THE ASSESSEE, WE FIND THAT THE ASSESSEE HAS PROVIDED EX PENDITURE INCURRED TOWARDS MEDICAL CAMPS THROUGH MARKETING AGENTS AND THE SAME HAS BEEN SETTLED SUBSEQUENTLY IN THE NEXT FINANCIAL YEA R AS AND WHEN THE AMOUNT HAS BEEN RECEIVED FROM STATE GOVERNMENT. TH EREFORE, WE ARE OF THE VIEW THAT ONCE THE EXPENDITURE HAS BEEN ACCE PTED AS GENUINE, THE A.O. WAS ERRED IN TREATING THE CREDITORS ARISED OUT OF SUCH EXPENDITURE AS UNEXPLAINED CREDITS U/S 68 OF THE AC T. THE CIT(A) AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AN D ALSO ANALYZING THE LEDGER EXTRACTS, RIGHTLY DIRECTED THE A.O. TO DELET E THE ADDITIONS MADE TOWARDS SUNDRY CREDITORS FOR OTHERS SHOWN UNDER THE HEAD CURRENT LIABILITIES. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT T HE GROUND RAISED BY THE REVENUE. 7. IN SO FAR AS ADHOC DISALLOWANCE OF EXPENDITURE, THE A.O. DISALLOWED 10% EXPENDITURE INCURRED UNDER THE HEAD AROGYA SHREE SCHEMES ON THE GROUND THAT OUT OF THE TOTAL EXPENDI TURE OF RS.1,49,63,563/-, A SUM OF RS.32,09,761/- WAS INCUR RED IN CASH, WHICH ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 10 WAS NOT SUPPORTED BY PROPER BILLS AND VOUCHERS. TH E CIT(A) ENHANCED THE DISALLOWANCE OF EXPENDITURE TO THE EXTENT OF 10 % ADHOC DISALLOWANCE OF TOTAL EXPENDITURE INCURRED UNDER TH E HEAD AROGYA SHREE SCHEMES AS AGAINST THE DISALLOWANCE MADE BY THE A.O . TOWARDS EXPENDITURE INCURRED IN CASH. THE ASSESSEE CLAIMS THAT THE CIT(A) OUGHT NOT TO HAVE DIRECTED THE A.O. TO DISALLOW 10% EXPENDITURE INCURRED UNDER AROGYA SHREE SCHEMES, AS THE ASSESSE E HAS FILED NECESSARY BILLS AND VOUCHERS IN SUPPORT OF EXPENDIT URE. WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE ASSESSEE, FOR TH E REASON THAT SINCE THE EXPENDITURE INCURRED UNDER THE HEAD AROGYA SHRE E SCHEMES MOSTLY REMAINS PAYABLE AT THE END OF THE YEAR, IT IS VERY DIFFICULT TO ASCERTAIN THE GENUINENESS OF EXPENDITURE AND ALSO MODE OF PAY MENT, WHETHER THE SAME HAS BEEN PAID BY CHEQUE OR CASH. THE A.O. HAS IDENTIFIED THE CASH PAYMENTS AND DISALLOWED 10% OF SUCH EXPENDITUR E. IN CASE OF THE REMAINING EXPENDITURES, BECAUSE THE ENTIRE EXPENDIT URE HAS BEEN TREATED AS UNEXPLAINED CREDITS, THE A.O. WOULD NOT HAVE GONE INTO THE GENUINENESS OF EXPENDITURE. THE CIT(A) AFTER CONSI DERING THE NATURE OF EXPENDITURE AND ALSO FACT THAT MOST OF THE EXPENDIT URE ARE SUPPORTED BY SELF-MADE VOUCHERS RIGHTLY DIRECTED THE A.O. TO DIS ALLOW 10% OF TOTAL EXPENDITURE INCURRED UNDER THE HEAD AROGYA SHREE SC HEME. WE DO NOT ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 11 FIND ANY ERROR IN THE ORDER OF THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY TH E ASSESSEE. 8. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N IS DISALLOWANCE OF PROFESSIONAL CHARGES PAID TO DOCTORS U/S 40(A)(I A) OF THE ACT, FOR FAILURE TO DEDUCT TAX AT SOURCE U/S 194J OF THE ACT . THE A.O. DISALLOWED A SUM OF RS.16,62,503/-, OUT OF THE TOTAL EXPENDITU RE INCURRED OF RS.1,74,28,000/- ON THE GROUND THAT THE ASSESSEE FA ILED TO OFFER ANY EXPLANATIONS FOR NON-DEDUCTION OF TAX AT SOURCE ON THE BALANCE AMOUNT OF RS.16,62,503/-. IT IS THE CONTENTION OF THE ASS ESSEE THAT OUT OF THE TOTAL EXPENDITURE OF RS.1,74,28,000/-, THE ASSESSEE HAS DEDUCTED TDS FOR AN AMOUNT OF RS.1,57,66,000/- WHEREVER THE PAYM ENT EXCEEDS THE THRESHOLD LIMITS PROVIDED U/S 194J OF THE ACT. IN CASE, WHERE THE PAYMENTS DOES NOT EXCEED THE THRESHOLD LIMIT PROVID ED U/S 194J OF THE ACT, THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE AS THE ASSESSEE NOT OBLIGED TO DEDUCT TAX AT SOURCE IN CASE THE PAYMENT DOES NOT EXCEED THE THRESHOLD LIMIT. THE ASSESSEE ALTERNATIVELY CONTEN DED THAT THE EXPENDITURE INCURRED UNDER THE HEAD PROFESSIONAL CH ARGES HAS BEEN PAID DURING THE SAME FINANCIAL YEAR ON OR BEFORE 31 ST MARCH, THEREFORE, NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT, IF THE EXPENDITURE INCURRED IS PAID WITHIN THE END OF THE FINANCIAL YE AR IN VIEW OF THE SPECIAL ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 12 BENCH DECISION OF ITAT, VISAKHAPATNAM IN THE CASE O F MERILYN SHIPPING & TRANSPORTERS VS. ACIT 136 ITD 23. 9. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATER IALS ON RECORD, WE FIND THAT THE A.O. MADE ADDITIONS OF RS.16,62,50 3/- ON THE GROUND THAT THE ASSESSEE FAILED TO DEDUCT TAX AT SOUIRCE U /S 194J OF THE ACT. THE ASSESSEE CLAIMS THAT IT HAD DEDUCTED TDS WHEREV ER THE PAYMENTS EXCEEDS THE THRESHOLD LIMITS PROVIDED U/S 194J OF T HE ACT, BUT NOT DEDUCTED TDS IN CASE THE PAYMENTS DOES NOT EXCEED T HE LIMIT PROVIDED U/S 194J OF THE ACT. THE ASSESSEE HAS FILED A LEDG ER EXTRACT OF PROFESSIONAL CHARGES PAID TO DOCTORS. ON PERUSAL O F THE LEDGER EXTRACT FILED BY THE ASSESSEE, WE NOTICED THAT THE ASSESSEE HAS PAID PROFESSIONAL CHARGES TO VISITING CONSULTANTS ON DAY TO DAY BASIS , WHICH IS MUCH BELOW THE THRESHOLD LIMIT PROVIDED U/S 194J OF THE ACT FO R DEDUCTION OF TAX AT SOURCE. THEREFORE, WE ARE OF THE VIEW THAT THE ASS ESSEE NOT OBLIGED TO DEDUCT TAX AT SOURCE ON SUCH PROFESSIONAL CHARGES. THE A.O. WITHOUT APPRECIATING THE FACTS SIMPLY MADE ADDITIONS U/S 40 (A)(IA) OF THE ACT. 10. IN SO FAR AS ALTERNATIVE PLEA OF THE ASSESSEE T HAT EXPENDITURE INCURRED TOWARDS PROFESSIONAL CHARGES TO DOCTORS HA S BEEN PAID ON OR BEFORE 31 ST MARCH OF THE FINANCIAL YEAR, THEREFORE, NO DISALLO WANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT, IF EXPENDITURE HA S BEEN PAID BEFORE THE END OF THE FINANCIAL YEAR. WE FIND THAT THE CO ORDINATE BENCH OF ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 13 ITAT, IN THE CASE OF MERILYN SHIPPING AND TRANSPORT ERS VS. ACIT (SUPRA) HAS CONSIDERED THE ISSUE AND AFTER CONSIDERING THE RELEVANT PROVISIONS OF THE ACT, OBSERVED THAT NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT, IF EXPENDITURE HAS BEEN PAID ON OR BEFORE 31 ST MARCH OF THE FINANCIAL YEAR. IN THIS CASE, THE ASSESSEE HAS FILED NECESS ARY EVIDENCES TO PROVE THAT THE EXPENDITURE HAS BEEN PAID BEFORE 31 ST MARCH OF THE FINANCIAL YEAR. THEREFORE, WE ARE OF THE VIEW THAT THE ASSES SEE NEED NOT TO DEDUCT TAX AT SOURCE U/S 194J OF THE ACT ON PROFESS IONAL CHARGES PAID TO DOCTORS AS THE SAID PAYMENT DOES NOT EXCEED THE PRE SCRIBED LIMIT PROVIDED U/S 194J OF THE ACT FOR DEDUCTION OF TAX A T SOURCE. THE A.O. WITHOUT APPRECIATING THE FACTS SIMPLY MADE ADDITION S. THEREFORE, WE DIRECT THE A.O. TO DELETE ADDITIONS MADE TOWARDS PR OFESSIONAL CHARGES U/S 40(A)(IA) OF THE ACT. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN ITA NO.53/VIZAG/2015 IS DISMISSED AND APPEAL FILED BY T HE ASSESSEE IN ITA NO.3/VIZAG/2015 IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 5 TH MAY17. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 05.05.2017 VG/SPS ITA NOS.3&53/VIZAG/2015 CHARITASRI HOSPITALS LTD., VIJAYAWADA 14 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT CHARITASRI HOSPITALS LIMITED, D. NO.29-6-8/1, RAMACHANDRA RAO ROAD, SURYARAOPET, VIJAYAWADA-520 0 02. 2. / THE RESPONDENT THE ACIT, RANGE-2, VIJAYAWADA 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA. 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM