DCIT, New Delhi V. Sh. Arvinder Singh Soin, Noida

ITA 738/DEL/2013

• Counselvise Citation: 73820114 RSA 2013
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHIM SINGH
• Assessee Lawyers: SACHIN VASUDEVA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.738/DEL/2013 738/DEL/2013 738/DEL/2013 738/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009- -- -10 1010 10 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -37(1), 37(1), 37(1), 37(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS VSVS VS. .. . SHRI ARVINDER SINGH SOIN, SHRI ARVINDER SINGH SOIN, SHRI ARVINDER SINGH SOIN, SHRI ARVINDER SINGH SOIN, 26A 26A 26A 26A- -- -GREEN VIEW APARTMENTS, GREEN VIEW APARTMENTS, GREEN VIEW APARTMENTS, GREEN VIEW APARTMENTS, SECTOR SECTOR SECTOR SECTOR- -- -15A, NOIDA, 15A, NOIDA, 15A, NOIDA, 15A, NOIDA, G.B.NAGAR, U.P. G.B.NAGAR, U.P. G.B.NAGAR, U.P. G.B.NAGAR, U.P. PAN : APGPS4947H. PAN : APGPS4947H. PAN : APGPS4947H. PAN : APGPS4947H. (RESPONDENT) APPELLANT BY : SHRI BHIM SINGH, SR.DR. RESPONDENT BY : SHRI SACHIN VASUDEVA, CA. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF LEARNED CIT(A)-XXVIII, NEW DELHI DATED 14 TH DECEMBER, 2012 FOR THE AY 2009-10. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) GROSSLY ERRED IN DELETING THE ADDITION MADE BY THE A.O. OF ` 69,29,500/- ON ACCOUNT OF ADVANCE RECEIVED FROM PATIENTS AS LIFETIME CONSULTANCY CHARGES SINCE, THE ASSESSEE HAS FAILED TO PROVIDE PROPER JUSTIFICATION OR NECESSARY DOCUMENTARY EVIDENCES INSPITE OF SEVERAL OPPORTUNITIES GIVEN BY THE A.O. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) GROSSLY ERRED IN DELETING THE ADDITION MADE BY THE A.O. OF ` 69,29,500/- ON ACCOUNT OF ADVANCE RECEIVED FROM PATIENTS AS LIFETIME CONSULTANCY CHARGES SINCE, THE ITA-738/DEL/2013 2 ASSESSEE HAS NOT PROVIDED PROPER EXPLANATION HOW THE ABOVE INCOME IS OFFERED FOR TAXATION IN SUBSEQUENT YEA R. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) GROSSLY ERRED IN DELETING THE ADDITION MADE BY THE A.O. OF ` 69,29,500/- ON ACCOUNT OF ADVANCE RECEIVED FROM PATIENTS AS LIFETIME CONSULTANCY CHARGES SINCE, THE ABOVE AMOUNTS WERE IN THE NATURE OF REGISTRATION CHAR GES WHICH ARE TAXABLE. 4. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 5. THE APPELLANT CRAVES LEAVE TO A, AMEND OR MODIFY ANY/ALL THE GROUND OF APPEAL BEFORE OR DURING THE C OURSE OF THE APPEAL. IT IS PRAYED THAT THE ORDER OF CIT(A) IS CONTRARY TO THE FACTS ON RECORD AND THE SETTLED POSITION OF LAW; AND THE O RDER OF THE A.O. DESERVES TO BE RESTORED. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED BY T HE LEARNED DR THAT THE ASSESSEE IS A DOCTOR BY PROFESSION AND DURING TH E YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN THE LIABILITY OF ` 69,29,500/- AS ADVANCE FROM PATIENTS. DURING THE ASSESSMENT PROCEEDING S, THE ASSESSEE DID NOT FURNISH THE SCHEME WHICH WAS FURNISHED BEF ORE THE LEARNED CIT(A). THAT THE CIT(A) FORWARDED THE SCHEM E TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER IN HIS REMAND REPORT C LEARLY STATED THAT THE LIFETIME CONSULTANCY SCHEME IS NOTHING BUT ON LY AN AFTER- THOUGHT. THE CIT(A), IGNORING THE ABOVE REMAND REP ORT, DELETED THE ADDITION ACCEPTING THE SCHEME. HE STATED THAT THE ASSE SSEE HAS DEFERRED THE PAYMENT OF TAX BY SHOWING PART OF THE RECEIPT AS ADVANCE FROM PATIENTS. THEREFORE, HE REQUESTED THAT THE ORDE R OF THE CIT(A) SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE SC HEME CANNOT BE AN AFTER-THOUGHT BECAUSE THE ASSESSEE RECEIVED ADVANCE AS ITA-738/DEL/2013 3 PER THE SCHEME FROM VARIOUS PERSONS AND THE AMOUNT RECE IVED FROM THEM HAS BEEN ADJUSTED AGAINST THE PROFESSIONAL SERVICES R ENDERED IN THE SUBSEQUENT YEARS AND THE INCOME HAS BEEN OFFERED BY THE ASSESSEE AS AND WHEN THE SERVICES HAVE BEEN RENDERED. THE ASSESSEE HAS FURNISHED THE COMPLETE DETAILS IN RESPECT OF EACH AND EVERY PATIENT. HE FURTHER SUBMITTED THAT THE ASSESSEE IS FOLL OWING MERCANTILE SYSTEM OF ACCOUNTING BUT, EVEN IN MERCANTILE SYSTEM OF ACCOUNTING, THE ADVANCE RECEIVED FROM THE PATIENTS CANNOT BE TRE ATED AS INCOME. THE INCOME WOULD ACCRUE ONLY WHEN THE SERVICES WOULD BE RENDERED BY THE ASSESSEE. 5. IN THE REJOINDER, IT IS STATED BY THE LEARNED DR T HAT NO ALLOCATION OF THE RECEIPT HAS BEEN MADE BY THE ASSESSEE FOR THE YEA R ENDED ON 31 ST MARCH, 2009 EVEN THOUGH ALL THE ADVANCES WERE RECEI VED IN THIS YEAR. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOCTOR BY PROFESSION. HE IS A SURGEO N SPECIALIZED IN LIVER TRANSPLANT. IN THE CASE OF A LIV ER TRANSPLANT PATIENT, REGULAR CONSULTANCY AND CHECK UP FOR SEVERAL YEARS I S REQUIRED. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS RECEIVED THE SUM OF ` 69,29,500/- FROM PATIENTS WHICH WAS ACCOUNTED FOR AS A DVANCE FROM PATIENTS. THE SCHEME BY WHICH SUCH ADVANCES WERE TAKEN FROM THE PATIENTS WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER B UT WAS PRODUCED BEFORE THE LEARNED CIT(A) AND COPY OF WHIC H IS PLACED AT PAGE 42 OF THE ASSESSEES PAPER BOOK. FOR READY REFERE NCE, WE REPRODUCE THE SAME HEREIN BELOW:- CONCEPT OF CONSULTATION ADVANCE 1. PATIENT IS ELIGIBLE FOR FREE CONSULTATION FOR FIRST 12 MONTHS FROM THE DATE OF PAYMENT. THUS, THE PATIENT ITA-738/DEL/2013 4 UTILISES THE ADVANCE AMOUNT ONLY AFTER THE EXPIRY OF FIRST 12 MONTHS FROM THE DATE OF PAYMENT. 2. THE ADVANCE SHALL BE ADJUSTED IN SUBSEQUENT THREE YEARS AS PER THE FOLLOWING: A. PERSONAL MEETING 1000/- PER VISIT B. E-MAIL 1000/- C. TELEPHONE 500/- 3. THE ADVANCE IS REFUNDABLE (UNUTILIZED BALANCE) IN CASE THE PATIENT DOES NOT FIND THE SERVICES APPROPRIATE . 4. THE MINIMUM AMOUNT OF ADVANCE IS RS.10000/-. 7. FROM THE ABOVE SCHEME, IT IS EVIDENT THAT ANY PATI ENT WHO IS AVAILING OF THIS SCHEME IS ELIGIBLE FOR FREE CONSULTATI ON FOR THE FIRST 12 MONTHS. AFTER 12 MONTHS ONLY, THE ASSESSEE IS ENTITLED TO CHARGE THE PROFESSIONAL FEE FOR CONSULTATION. THEREFORE, OBVIOU SLY, AS PER THE SCHEME, NO INCOME WOULD ACCRUE TO THE ASSESSEE IN THE FI RST 12 MONTHS. AS PER THE SCHEME, IT IS EVIDENT THAT THE AMOU NT RECEIVED DURING THE YEAR UNDER CONSIDERATION IS ONLY ADVANCE AND THE SAME IS ADJUSTABLE AGAINST THE CONSULTANCY CHARGES WHICH WOULD BE PAYABLE BY THE PATIENT AFTER 12 MONTHS OF THE DEPOSIT AS PER THE RATE PRESCRIBED IN THE SCHEME. ADMITTEDLY, SUBSEQUENTLY, AS AND WHEN CONS ULTATION HAS BEEN TAKEN BY THE PATIENTS, THE INCOME ACCRUED IN TH OSE YEARS HAS BEEN ACCOUNTED FOR AND OFFERED AS INCOME. A DETAILE D CHART RUNNING FROM PAGES 43 TO 73 IS GIVEN IN THIS REGARD. THUS, AS P ER THE SCHEME, THE ADVANCE RECEIVED BY THE ASSESSEE DURING THE YEAR UN DER CONSIDERATION CANNOT BE TREATED AS PROFESSIONAL FEES OF THE ASSESSEE. NOW, THE ONLY GROUND IN THE REMAND REPORT FOR REJEC TING THE SCHEME IS THE CLAIM OF THE ASSESSING OFFICER THAT THE SCHEME IS AN AFTER-THOUGHT. THE MAIN REASON FOR CONSIDERING THE SCHEME TO BE AN A FTER-THOUGHT IS THAT DESPITE SPECIFIC QUERIES DURING THE ASSESSMENT PROCEE DINGS, THE ASSESSEE HAS NOT SUBMITTED THE COPY OF SUCH SCHEME BEFORE T HE ITA-738/DEL/2013 5 ASSESSING OFFICER. HOWEVER, MERELY BECAUSE THE SCHEME WA S NOT SUBMITTED BEFORE THE ASSESSING OFFICER BY ITSELF CANNOT P ROVE THAT THE SCHEME IS AN AFTER-THOUGHT. THAT THE ASSESSEE HAS ADJUSTED THE AMOUNTS RECEIVED FROM VARIOUS PATIENTS IN RESPECTIVE YE ARS AS AND WHEN PROFESSIONAL SERVICES HAVE BEEN RENDERED TO THOSE P ATIENTS. COMPLETE DETAILS IN THIS REGARD HAVE BEEN FURNISHED BY THE ASSESSEE. NO ADVERSE COMMENT IS MADE BY THE REVENUE IN THIS REGA RD. THAT BEFORE THE CIT(A), THE ASSESSEE ALSO FURNISHED THE CONFIR MATIONS FROM VARIOUS PATIENTS AND HAS ALSO FURNISHED THE E-MAILS RECE IVED FROM VARIOUS PATIENTS. ALL THESE EVIDENCES CLEARLY PROVE TH AT THE SCHEME IS NOT AN AFTER-THOUGHT. THE SCHEME WAS VERY MUCH IN EX ISTENCE, ADVANCE WAS TAKEN AS PER SCHEME AND ADJUSTMENT OF THE F EES WAS ALSO MADE AS PER CONSULTANCY TAKEN BY THE PATIENTS AS PER T HE SCHEME. THE ONLY DEFAULT OF THE ASSESSEE WAS OF NOT PRODUCING TH E SCHEME BEFORE THE ASSESSING OFFICER, THEREFORE, ALL THESE EVIDE NCES INCLUDING THE SCHEME WERE FRESH EVIDENCE BEFORE THE CIT(A). HO WEVER, THE CIT(A) HAS ALREADY ALLOWED OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THOSE FRESH EVIDENCES AND CALLED FOR HIS REMAND REPORT. AFTER CONSIDERING HIS REMAND REPORT, THE CIT(A) ALLOWED THE RELIEF WITH THE FOLLOWING FINDING:- 5. I HAVE CONSIDERED THE ISSUE RAISED IN APPEAL, THE ARGUMENTS OF THE ASSESSING OFFICER AND CONTENTIONS OF THE APPELLANT. THE APPELLANT IS A DOCTOR, SURGEON SPECI ALIZING IN LIVER TRANSPLANT. IT IS A FACT THAT THE APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING ON A REGULA R BASIS. THE APPELLANT HAS RECEIVED LIFE TIME CONSULTANC Y FEES WHICH IS ACCOUNTED AS ADVANCE FROM PATIENTS AS PER THE PRINCIPLES OF MERCANTILE SYSTEM OF ACCOUNTING. TH IS IS NOTHING BUT ADVANCE FROM PATIENTS TO BE UTILIZED IN DUE COURSE AS PER THE SCHEME. ON VERIFICATION OF THE EVI DENCE GIVEN DURING APPEAL PROCEEDINGS WHICH WAS GIVEN TO ASSESSING OFFICER ALSO FOR HIS COMMENTS, IT IS FOUND THAT THE APPELLANT HAS NOT UTILIZED THE AMOUNT DURING THE YEA R. THIS WAS BOOKED ONLY AT THE TIME OF ACTUAL CONSULTATIONS WI TH ITA-738/DEL/2013 6 THE DOCTOR IN DUE COURSE. THE APPELLANT HAS GIVEN AM PLE PROOF IN ORDER TO PROVE HIS CONTENTIONS. COPY OF BA LANCE SHEET, P & L ACCOUNT AND FORM 3CD FOR FINANCIAL YEAR S 2009-10 & 2010-11 ALSO ARE EVIDENCE THAT THE APPELLA NT HAS ACCOUNTED THE SAID EVIDENCES IN THE SUBSEQUENT YEARS ON REALIZATION OF THE SAME. THE APPELLANT HAS RECEIV ED THE AMOUNT AS ADVANCE IN CONTEMPLATION OF THE SERVICES TO BE OFFERED IN FUTURE. UNLESS THE SERVICES ARE OFFERED TH E SAID ADVANCES CANNOT CHANGE THE NATURE FROM ADVANCE TO THAT OF THE RECEIPT. ONCE THE SERVICES HAVE BEEN OFFERE D, THE APPELLANT HAS BROUGHT THE AMOUNTS TO HIS INCOME AT TH AT TIME. THE SCHEME OF LIFE TIME CONSULTANCY HAS BEEN PERUSED IN DETAIL. THE NAME IS ONLY LIFE TIME, WHERE AS SERVICES ARE MEANT FOR A PERIOD OF 48 MONTHS POST SURGE RY WITH A PERIOD OF 12 MONTHS IMMEDIATELY AFTER THE SURG ERY AS FREE OF CHARGE, MEANING THERE BY THE AMOUNT OF ADVANCE WOULD HAVE TO BE EXHAUSTED WITH IN A PERIOD OF THREE YEARS FROM SURGERY OR ELSE WOULD HAVE TO BE RETU RNED IN CASE OF NON UTILIZATION OF THE SAME OR IN CASE OF D EATH OF THE PATIENT. THE APPELLANT HAS DONE EXACTLY THE SAM E. THE APPELLANT HAS ACCOUNTED THE SAID ADVANCES AS AND WHEN REALIZED. THE SAME ARE ACCOUNTED IN THE YEARS O F REALIZATION. SUFFICIENT PROOF IN THE NAME OF BALAN CE SHEET AND P & L ACCOUNT AND FORM 3CD TO SUPPORT THE CASE OF THE APPELLANT HAS BEEN FILED, WHICH IS ENOUGH PROOF TO AC CEPT THAT WHAT HAS BEEN RECEIVED AS ADVANCE UNDER THE LIFE TIME CONSULTANCY FEE IS ONLY TO BE TAXED AS INCOME WHEN SERVICES TO THAT EFFECT ARE OFFERED. TILL THEN THE A MOUNT REMAINS A LIABILITY IN THE BOOKS OF THE APPELLANT. CONSIDERING THE DETAILS FILED IT IS FOUND THAT THE ADV ANCE NEED NOT BE BOOKED AT THE TIME OF RECEIPT NOR IT IS A REGISTRATION CHARGE. THE APPELLANT HAS STRICTLY FOLLO WED THE PRINCIPLES OF MERCANTILE SYSTEM OF ACCOUNTING. ACCORD INGLY, I HOLD THAT THE APPELLANT HAS CORRECTLY FOLLOWED THE PRINCIPLES OF MERCANTILE SYSTEM OF ACCOUNTING AND THE AMOUNT OF ADVANCE RECEIVED DURING THE YEAR CANNOT B E BOOKED AS INCOME. THE DISALLOWANCE TO THAT EFFECT IS DIRECTED TO BE DELETED. APPEAL IS ALLOWED. 8. AFTER CONSIDERING THE FACTS OF THE CASE AND THE ARG UMENTS OF BOTH THE SIDES, WE DO NOT FIND ANY INFIRMITY IN THE ABOVE FINDING OF LEARNED CIT(A). THE CIT(A) HAS RECORDED THE ABOVE FINDING A FTER CONSIDERING ALL THE EVIDENCES PRODUCED BEFORE HIM AND THE FACT THAT THE RECEIPT HAS ITA-738/DEL/2013 7 ALREADY BEEN BOOKED AS INCOME AT THE TIME OF ACCRUAL OF INCOME BY THE ASSESSEE I.E., AS AND WHEN ACTUAL CONSULTATION WITH THE D OCTOR HAS TAKEN PLACE. THE ABOVE FINDING RECORDED BY THE CIT (A) COULD NOT BE CONTROVERTED BEFORE US. AFTER CONSIDERING THE ARGUME NTS OF BOTH THE SIDES AND THE FACTS OF THE CASE, WE DO NOT FIND ANY JU STIFICATION TO INTERFERE WITH THE ORDER OF LEARNED CIT(A). THE SAM E IS SUSTAINED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . DECISION PRONOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER, 2013. SD/- SD/- ( (( (A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 20.09.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -37(1), NEW DELHI. 37(1), NEW DELHI. 37(1), NEW DELHI. 37(1), NEW DELHI. 2. RESPONDENT : SHRI ARVINDER SINGH SOIN, SHRI ARVINDER SINGH SOIN, SHRI ARVINDER SINGH SOIN, SHRI ARVINDER SINGH SOIN, 26A 26A 26A 26A- -- -GREEN VIEW APARTMENTS, GREEN VIEW APARTMENTS, GREEN VIEW APARTMENTS, GREEN VIEW APARTMENTS, SECTOR SECTOR SECTOR SECTOR- -- -15A, NOIDA, G.B.NAGAR, U.P. 15A, NOIDA, G.B.NAGAR, U.P. 15A, NOIDA, G.B.NAGAR, U.P. 15A, NOIDA, G.B.NAGAR, U.P. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR