M/s.Al Madeena Institute of Medical Sciences P.Ltd(Almas hospital), Malappuram V. The Jt CIT, Calicut

ITA 56/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81370 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: C B M WARRIER
• Keywords: Depreciation
• Section: 133A

Judgement Text

ITA NO . 56/COCH/2014 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI N.R.S. GANESAN, JM & CHANDRA POOJARI , AM ITA NO . 56/COCH/2014 (ASST YEAR 2009 - 10 ) M/S AL MADEENA INSTITUTE OF MEDICAL SCIENCES P LTD (ALMAS HOSPITAL) CHANKUVETTY - KOTTAKKAL MALAPP URAM VS THE JT COMMR OF INCOME TAX RANGE 2 KOZHIKODE ( APPELLANT) (RESPONDENT) PAN NO. AAECA9226D ASSESSEE BY SRI C B M WARRIER REVENUE BY SHRI K K JOHN, SR DR DATE OF HEARING 13 TH OCT 2014 DATE OF PRONOUNCEMENT 14/11/ 2014 OR D ER PER CHAN DRA POOJARI , AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19.11.2013 OF THE CIT(A), KOZHIKODE AND ITS RELATES TO THE AY 2009 - 10. 2 THE ASSESSEE RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: 1. THE COMMISSIONER OF INCOME TAX (APPEALS) HA S GONE WRONG IN NOT ALLOWING THE DEPRECIATION @15% ON THE SP ECIALIZED AREA OF THE HOSPITAL BUILDING FOR WHICH THE ASSESSING OFFICER ALLOWED DEPRECIATION @ 15% FOR THE SUBSEQUENT A . Y . 2010 - 11 . 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GONE WRONG IN CO NFIRMING THE DISALLOWANCE OF PURCHASE RS. 62 , 61 , 7001 - WHICH ARE SUPPORT E D BY FULL AND PROPER VOUCHERS. ITA NO . 56/COCH/2014 2 3. THE CLAIM OF EXPENDITURE OF RS. 19 , 09 , 608/ - IS FULLY SUPPORTED BY BILL AND VOUCHERS AND THE DISALLOWANCE IS NOT JUSTIFIED . 4. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GONE WRONG IN NOT ALLOWING THE EXPENDITURE OF RS . 2 , 40,888/ - TOWARDS EXPENDITURE ON COMPUT E R SOFTWARE , BOOKS ETC. FOR WHICH THE EVIDENCE OF PURCHASE IS AVAILABL E . 3 THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED CO MPANY RUNNING 150 BEDDED HOSPITALS WITH MODERN FACILITIES. THE ASSESSEE DID NOT FILE ITS RETURN OF INCOME FOR THE AY 2009 - 10 TILL 22.2.2010. DURING THE SURVEY U/S 133A OF THE AT THE BUSINESS PREMISES OF THE ASSESSEE ON 23.2.2010 SEVERAL INCRIMINATING D OCUMENTS EVIDENCING HUGE SUPPRESSION OF INCOME RELEVANT TO AY 2009 - 10 WERE FOUND AND IMPOUNDED BY THE DEPARTMENT. CONSEQUENTLY, THE ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS. 4,38,26,960/ - . AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) . 3.1 THE FIRST GROUND RELATES TO RESTRICTING DEPRECIATION ON BUILDING AT 10% AS AGAINST 15% CLAIMED BY THE ASSESSEE. D URING THE YEAR, THE ASSESSEE HAS CLAIMED DEPRECIATION @ 15% ON RS. 1,65,00,000/ - BEING THE ADDITION OF FIXED ASSETS MADE BEFORE 30.9.2 008 WHICH ALSO INCLUDED ADDITION ON BUILDING OF SPECIALIZED AREA. WHEN ASKED TO SUBSTANTIATE THE ADMISSIBILITY OF THE DEPRECATION @ 15% AS AGAINST THE ADMISSIBLE RATE OF 10%, IT WAS CONTENDED THAT THE BUILDING OF SPECIALIZED AREA SHOULD BE CONSIDERED AS PL ANT FOR ALLOWING DEPRECIATION. IN SUPPORT OF HIS CONTENTION, HE RELIED ON THE ON THE DECISION OF ITA NO . 56/COCH/2014 3 THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS DR GANGA R MENON REPORTED IN 259 ITR 661. THE AO CONSIDERED THE CONTENTION OF THE ASSESSEE AND CAME TO THE CONCLUSION THAT THE TOTAL AREA OF VARIOUS UNITS ON WHICH DEPRECIATION @ 15% WA S CLAIMED BY TREATING IT AS 'PLANT' IS 70,000 SQ.FT. HIGHER DEPRECIATION HAS BEEN CLAIMED ON THE ENTIRE ADDITION OF RS. 1,65,00,000/ - MADE DURING THE YEAR. N O DETAILS OF ADDI TIONS MADE DURING THE YEAR ARE PRODUCED AND NO EVIDENCE WAS ALSO PRODUCED TO SUBSTANTIATE THAT TH E ENTIRE ADDITION OF RS 1,65,00,000/ - MADE DURING THE YEAR RELATED TO THE 'SPECIALIZED AREA' OF RS. 70,000 SQ.FT. ACCORDING TO THE AO, T HE ASSESSEE HAS BEEN RUNNING THE HOSPITAL IN THE PAST SEVERAL YEARS AS WELL AND FACILITIES OF OPERATION THEATRE SCAN, X - RAY AND LCU UNITS, ETC. WERE ALREADY AVAILABLE THERE. ACCORDING TO THE AO, THE ASSESSEE HAS NOT PROVED THAT THE ENTIRE ADDITION OF BUILDING OF VALUE OF RS . 1,65,00,000/ - MADE DURING FY 2008 - 09 RELATED TO 'SPECIFIED AREA' ONLY ENTITLING THE ASSESSEE FOR HIGHER RATE OF DEPRECIATION @ 15% BY TREATING THE SAME AS 'PLANT' AND ACCORDINGLY THE AO TREATED THE CLAIM WAS INADMISSIBLE AND THE EXCESS CLAIM OF DEPR ECIATION OF RS. 8,25,000/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3.2 DURING THE COURSE OF HEARING BEFORE THE CIT(A), IT WAS CONTENDED BY THE ID COUNSEL THAT IN THE AY 2010 - 11, THE ASSESSEE HAD CLAIMED HIGHER DEPRECIATION AT THE RATE OF 15 % O N THE 'BUILDING OF SPECIALIZED AREA' ON THE BASIS OF THE DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS DR GANGA R MENON 259 ITR 661, WHICH WAS ACCEPTED BY THE AO . ACCORDINGLY, IT WAS ITA NO . 56/COCH/2014 4 P L EAD E D BY THE ID CO U NSE L THAT DEPREC I ATION AT T HE HIG HE R RATE OF 1 5 % SHOU L D BE AL L OWED ON THE ' BUILDING OF SPECIALIZED AREA' IN THE A Y 2009 - 10 ALSO . 3.3 THE CIT(A), AFTER CONSIDERING THE SUBM I SSION OF THE ID COUNSEL , AND PERUSAL OF THE ASSESSMENT ORDER AND RELEVANT MATERIAL SUSTAINED THE ADDITION MADE B Y THE AO BY GIVING HIS FINDINGS IN PARA 4.1 OF HIS ORDER AS UNDER: 4.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE LD COUNSEL AND HAVE ALSO PERUSED THE ASSESSMENT ORDER. AS UNDER: AS CAN BE SEEN FROM THE ASSESSMENT ORDER PARA - 6 . 5 ; PAGE - 7 TO 9 , I FIND THAT THE AO HAD EXAMINED THE ISSUE I N DETAIL . AS STATED BY THE AO, THE ASSESSEE HAS BEEN RUNNING THE HOSP I TA L FOR THE PAST SEVERAL YEARS AND THE FAC I LITIES LIKE ICU , OPERAT I ON THEATRE , X - RAY , SCAN , ETC . WERE THERE . THE TOTAL AREA OF VARIOUS UN I TS ON WHICH D E PRE C I AT I ON @ 15 % I S CLAIMED BY TREATING IT AS ' PLANT' IS 70,000 SQ FT . DURING T H E YEAR , THE A SS ES S E E H A D MA D E A N ADDIT I ON O F RS. 1 , 65 , 00 , 000/ - AND C L A I MED HIGHE R DE PR E C I A TI O N. THE ASSESSEE HAS NOT PRODUCED BEFORE AO NOR BEFORE ME ANY DETAILS REGARD I NG THE ADDI TIONS MADE D URIN G T HE YEA R N O R A NY EVI DENCE S U B S TA N T I AT IN G T H AT T H E E NTI RE ADD I T I ON OF RS. 1 , 65 , 00 , 000 / - MADE W A S RE LAT E D TO T H E 'SP E CIA L IZ ED AR EA ' O F 70 , 000 SQ F T . M E R E L Y BECA U SE HI G H E R DEP R EC I AT ION WA S A LLOW ED IN A SU BS E Q U ENT YE AR WILL NOT AUTOMATICALLY ENTITLE ASSESSEE H I GHER DEPRE CI AT I ON THIS YEA R. THE ASSESSEE HAS FAILED TO PROVE WITH EVIDENCE THAT THE ENTIRE ADD I TION TO THE BU I LDING TO THE TUNE OF RS. L , 65 . 00 , OOO I - MADE DUR I N G T HE F Y 2008 - 0 9 RELATE D T O 'SPECIA L IZ ED AR EA' O NLY E NTI TL IN G THE ASSESSEE FO R H I G H ER R ATE O F DEPREC I ATIO N @ 15 % B Y T R EA TIN G T H E S A ME AS 'PLANT '. T HU S , TH E AO HA S RIGHTLY R ESTR I CTE D THE C L A I M OF DEPREC I AT I ON @ 10 %. I N VIEW OF THIS , I DO N OT F I ND AN Y REASON TO I NTERFERE IN THE ORDER OF TH E AO ON THIS P OINT , AND THE ADD I T I O N IS SU S TA I N ED . AGGRIEVED, BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4 WE HAVE HEARD THE PARTIES AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD AR SUBMITTED THAT THE ENTIRE ADDITION DURING THE YEAR WAS AT ITA NO . 56/COCH/2014 5 RS. 1,6 5,00,000/ - WITH REGARD TO BUILDING OF SPECIALIZED AREA AND THE ASSESSEE IS ENTITLED FOR HIGHER DEPRECIATION AT 15% INSTEAD OF 10% RESTRICTED BY THE AO. WE FIND THAT I N SPITE OF GIVING SUFFICIENT OPPORTUNITIES, THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE SPE CIALIZED AREA CONSTRUCTED AND WHATEVER THE ASSESSEE ABLE TO EXPLAIN WHICH WAS CONSIDERED BY THE LOWER AUTHORITIES AND GRANTED DEPRECIATION AT HIGHER RATE. IN THE ABSENCE OF REQUISITE DETAILS, THE LOWER AUTHORITIES WERE NOT ABLE TO GRANT HIGHER DEPRECIATIO N AS CLAIM ED BY THE ASSESSEE IN RESPECT OF THE CONSTRUCTION OF RS. 1.65 CRORES. BEFORE US ALSO, THE ASSESSEES COUNSEL WAS NOT ABLE TO PIN POINT THE SPECIALIZED AREA CONSTRUCTED BY THE ASSESSEE , WHICH INVOLVES COST OF CONSTRUCTION OF RS. 1.65 CRO RES. IN THE ABSENCE OF ANY EVIDENCE TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. ACCORDINGLY, THE GROUND TAKEN BY THE ASSESSEE IS REJECTED. 5 . THE SEC O N D AND THIRD ISS UE S RELATE TO THE ADDITION OF EXCESS CLAIM OF PURCHASES OF RS. 62,61,700/ - AND EXCESS CLAIM OF EXPENSES OF RS. 19,09,608/ - WHICH WERE NOT SUPPORTED BY PROPER EVIDENCE. 5.1 THE FACTS OF THE CASE ARE THAT T H E AO HAD T A KEN TH E F I G U RE O F RS. 5 , 07 ,7 6 , 222 / - AS T HE TOTA L PUR C HASES DU R IN G T HE YEAR ON THE BASIS OF MATER I ALS I MPOUNDED DURING THE COURSE OF SURVEY . H O WEV ER , I T W AS THE C L A IM O F THE ASSES S EE THAT ALL T HE PURCHASES WERE NOT ACCOUNT E D AND THE TOTAL PURCHASES ITA NO . 56/COCH/2014 6 DURING THE YEA R S T OOD ' AT RS. 5 , 70,37 , 922/ - . SIM I LA R L Y , THE AO HA D T AKE N RS. 5,0 7, 78 , L72 / - A S T H E TOTA L D IR ECT A ND INDIRECT EXPENSES DUR I NG THE YEAR O N THE BAS IS OF MATERIALS IMPO UN DED DU RING ' ) T H E CO U RSE OF SURVEY . HOWEVER , THE ASSESSEE HAD C L A I MED THE SAME TO BE RS. 5, 26, 87,780/ - . SINCE THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCES IN SUPPORT OF PURCHASE/EXPENSES WHICH REMAINED UNACCOUNTED, THE AO MADE THE ADDITION. 5.2 ON APPEAL, THE CIT(A) OBSERVED THAT I N SPITE OF SEVERAL OPPORTUNITIES GIVEN TO THE ASSESSEE BY THE AO , THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCES IN R ESPECT OF ALL PURCHASES/EXPENSES BEFORE THE AO AND BEFORE HIM TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE. THE CIT(A) FURTHER OBSERVED THAT THE POSSIBILITY OF FABRICATING ACCOMMODATION BILLS/VOUCHERS TO S UIT THE CONVENIENCE OF THE ASSESSEE CAN ALSO NOT BE RULED OUT AND ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE AO . 6 WE HAVE HEARD THE PARTIES AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN SPITE OF SEVERAL OPPORTUNITIES, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM BEFORE THE LOWER AUTHORITIES. EVEN BEFORE US ALSO THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CLAIM. IN THE ABSENCE OF ANY COGENT MATERIAL IN SUPPORT OF THE CLAIM OF EXPEND ITURE INCURRED WITH RELEVANT VOUCHERS/BILLS, IN THE ABSENCE OF ANY EVIDENCE TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE, WE DO NOT FIND ANY ITA NO . 56/COCH/2014 7 REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. ACCORDINGLY, THE GROUND TAKEN BY THE AS SESSEE IS REJECTED. 7 . THE LAST GROUND RELATES TO DISALLOWANCE OF RS. 2,40,888/ - OUT OF ADDITION OF RS. 5,61,038/ - UNDER THE HEAD COMPUTER, SOFTWARE, BOOKS ETC. 7.1 BRIEF FACTS OF THE CASE ARE THAT ON VERIFICAT ION OF PURCHASES MADE UNDER THE HEAD COMP UTER, SOFTWARE, BOOKS ETC. IT WA S NOTICED BY THE AO THAT THERE WERE NO PURCHASE BILLS IN RESPECT OF GOODS WORTH 2,40,888/ - AND THEREFORE HE DISALLOWED THE SAME. ON APPEAL, THE CIT(A) OBSERVED THAT I N SPITE OF SEVERAL OPPORTUNITIES GIVEN TO THE ASSESSE E BY THE AO, THE ASSESSEE COULD NOT PRODUCE ANY PURCHASE BILLS BEFORE THE AO AND BEFORE HIM TO SUBSTANTIATE THE CLAIM OF GOODS PURCHASED WORTH RS. 2,40,888/ - . THE CIT(A) FURTHER OBSERVED THAT THE POSSIBILITY OF FABRICATING ACCOMMODATION BILLS/VOUCHERS TO SUIT THE CONVENIENCE OF THE ASSESSEE CAN ALSO NOT BE RULED OUT AND ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE AO. 8 WE HAVE HEARD THE PARTIES AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN SPITE OF SEVERAL OPPORTUNITIES, THE ASS ESSEE COULD NOT PRODUCE ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM BEFORE THE LOWER AUTHORITIES. EVEN BEFORE US ALSO THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CLAIM. IN THE ABSENCE OF ANY PURCHASE BILLS/VOUCHERS IN SUPPORT OF ITA NO . 56/COCH/2014 8 THE CL AIM OF EXPENDITURE INCURRED, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. ACCORDINGLY, THE GROUND TAKEN BY THE ASSESSEE IS REJECTED. 9 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORD ER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF NOV 2014 . SD/ - SD/ - ( N.R.S. GANESAN ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER COCHIN: DATED 14 NOV 201 4 RAJ* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT , 5. DR 6. GUARD FILE BY ORDER ASSISTAN T REGISTRAR ITAT, COCHIN