Dr Aftab Ashrafuddin Khan, Kolkata V. PCIT, KOLKATA -8, Kolkata

ITA 771/KOL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4683 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 16-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2015
• Court: TRIBUNAL
• Keywords: Business expenditure; Assessment record
• Section: 143(3); 263

Judgement Text

I.T.A. NO. 771/KOL./2015 ASSESSMENT YEAR: 2010-2011 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISHWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 771 /KOL/ 2015 ASSESSMENT YEAR: 2010-2011 DR. AFTAB ASHRAFUDDIN KHAN,........................ ..................................APPELLANT 1050/1, SURVEY PARK, BENGAL AMBUJA COMPLEX, EM BYE PASS, KOLKATA-700 075 [PAN: AIEPK 9946 M] -VS.- PRINCIPAL COMMISSIONER OF INCOME TAX,.............. .........................RESPONDENT KOLKATA-8, 54/1, RAFI AHMED KIDWAI ROAD, 1 ST FLOOR, KOLKATA-700 016 APPEARANCES BY: SHRI MANOJ KATARUKA, ADVOCATE, FOR THE ASSESSEE SHRI G. MALLIKARJUNA, CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 16, 2016 DATE OF PRONOUNCING THE ORDER : AUGUST 10, 2016 O R D E R PER SHRI P.M. JAGTAP, A.M .: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX-8, KOLKATA DATED 27.03.2 015 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS DOCTOR BY PROFESSION. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 29.09.2008 DECLARING TOTAL INCOME O F RS.72,49,064/-. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 05.03.2013, THE TOTAL INCOME OF THE ASSESSEE WAS DE TERMINED BY THE ASSESSING OFFICER AT RS.76,16,490/-. THE RECORDS OF THE SAID ASSESSMENT SUBSEQUENTLY CAME TO BE EXAMINED BY THE LD. CIT AND ON SUCH EXAMINATION, HE WAS OF THE VIEW THAT THERE ARE FOLL OWING ERRORS IN THE I.T.A. NO. 771/KOL./2015 ASSESSMENT YEAR: 2010-2011 PAGE 2 OF 5 ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3), WHICH ARE PREJUDICIAL TO THE INTEREST OF THE REVENUE:- IN HIS P&L A/C. THE ASSESSEE HAS DEBITED RS.83,300 /- ON ACCOUNT OF RENT AND RS.8,11,000/- UNDER THE HEAD SA LARY. THE A.O. DISALLOWED SALARY EXPENSES AMOUNTING TO RS.50,000/- ONLY AND OTHER EXPENDITURE I.E. RS.7,61 ,000/- ON ACCOUNT OF SALARY AND RS.83,100/- ON ACCOUNT OF RENT TOTALLING TO RS.8,44,100/- WERE ALLOWED. IN VIEW OF AN AGREEMENT WITH THE APOLLO GLENEAGLES HOSPITAL, KOLK ATA WITH THE ASSESSEE, THE ASSESSEE WAS NOT SUPPOSED TO PRACTICE OUTSIDE IN ANY FORM. THEREFORE, ALLOWING RS.8,44,000/- WAS ALSO NOT IN ORDER. (II)THE ASSESSEE HAS SHOWN INCOME FROM HOUSE PROPER TY AT RS.(-)1,50,000/- IN HIS COMPUTATION OF INCOME ON ACCOUNT OF INTEREST PAYABLE U/S.24(B) AND THE AO ACCEPTED IT AS LOSS OF PREVIOUS YEAR AT THE TIME OF ASSESSMENT OF HIS INCOME. HOWEVER IN HIS BALANCE SH EET AS ON 31.03.2010 AND PROFIT AND LOSS ACCOUNT FOR THE P ERIOD FROM 01.04.2009 TO 31.03.2010 FOR THE ASSESSEE HAS SHOWN NEITHER ANY HAWSE BUILDING LOAN NOR ANY EXPENDITURE BOOKED ON INTEREST PAYMENT ON SUCH LOAN. THE HOUSE PROPERTY HAS BEEN REGISTERED ON 09.09.2011 IN THE P ERIOD RELATING TO ASSESSMENT YEAR AY-2012-IS AND NOT A.Y- 2010- 11. HENCE THE LOSS ON HOUSE PROPERTY CLAIMED BY THE ASSESSEE WAS WRONGLY ALLOWED BY THE AO. (III) THE ASSESSEE DEBITED RS.37,299/- IN HIS P&L A /C AS LOSS ON SALE OF CAR. AS THE LOSS ARISES OUT OF SALE OF CAPITOL ASSETS, IT IS NOT A PART OF BUSINESS EXPENDITURE/IN COME, HENCE SHOULD HAVE BEEN DISALLOWED BY A0. 3. A NOTICE UNDER SECTION 263, THEREFORE, WAS ISSUE D BY THE LD. CIT REQUIRING THE ASSESSEE TO SHOW-CAUSE AS TO WHY THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) SHOULD NOT B E REVISED ON THE ABOVE ISSUES. IN REPLY, WRITTEN SUBMISSIONS WERE FI LED BY THE ASSESSEE, WHICH WERE NOT FOUND TO BE ACCEPTABLE BY THE LD. CI T FOR THE FOLLOWING REASONS:- (A) WITH REGARD TO ISSUE RAISED IN PARA NO, 2(I): IN HIS SUBMISSION ATED 25.03.2015 THE A/R OF THE ASSESSEE HAS STRONGLY DENIED THAT THERE WAS ANY SUCH AGREEMENT BETWEEN THE ASSESSEE AND APOLLO GLENEAGLES HOSPITAL , KOLKATA, WHICH RESTRICTS HIM FROM PRACTISING OUTSID E IN I.T.A. NO. 771/KOL./2015 ASSESSMENT YEAR: 2010-2011 PAGE 3 OF 5 ANY FORM. HOWEVER, FROM THE ASSESSMENT RECORDS, IT IS FOUND THAT APOLLO GLENEAGLES HOSPITAL, KOLKATA IN I TS OFFER LETTER TO ASSESSEE VIDE PARA 3 OF RE. NO. 2918/APPT/AGH/DT. 30.09.2002 CATEGORICALLY STATED T HAT YOU WILL BE FULLY DEDICATED TO THE HOSPITAL AND WI LL NOT PRACTICE OUTSIDE IN ANY FORM INDEPENDENTLY. IN VIE W OF THIS, THE SUBMISSIONS OF THE ASSESSEE ARE PRIMA FAC IE UNTENABLE. THE AO IS REQUIRED TO MAKE FURTHER ENQUI RIES FROM THE ASSESSEE AS WELL AS FROM THE ABOVE MENTION ED HOSPITAL TO DETERMINE THE ALLOWABILITY OF THESE EXPENDITURES. (B) WITH REGARD TO ISSUE RAISED IN PARA NO.2(II).: THE ASSESSEE HAS NOT PRESSED HIS CONTENTION WITH ANY EV IDENCE. THE AO IS DIRECTED TO CALL FOR THE REQUISITE EVIDEN CE IN SUPPORT THEREOF AND MAKE FURTHER ENQUIRIES FROM THE SETTLER/BUILDER OF THE HOUSE PROPERTY AND THE BANK AND TAKE NECESSARY COGNIZANCE AS WARRANTED BY THE FACTS UNRAVELLED. (C) THAT THE ASSESSEE DEBITED RS.37,299/- IN HIS P& L A/C AS LOSS ON SALE OF CAR. AS THE LOSS ARISES OUT OF SALE OF CAPITOL ASSETS, IT IS NOT A PART OF BUSINESS EXPENDITURE/IN COME HENCE SHOULD BE DISALLOWED. THE A/R IN HIS SUBMISSI ON ON THIS COUNT STATED THAT LOSS ON SALE OF CAR OF RS.3 7299/ IS THE DIFFERENCE BETWEEN WRITTEN DOWN VALUE AND THE S ALE PROCEEDS OF THE CAR. LEDGER COPY OF THE CAR IS ENCL OSED HEREWITH (ANNEXURE-E). HOWEVER, BY MISTAKE THE SAME WAS NOT ADDED BACK IN THE COMPUTATION. FOR THE REASONS GIVEN ABOVE, THE LD. CIT HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) WAS ERRONEOU S AS IT WAS PASSED WITHOUT PROPER EXAMINATION OR ENQUIRY OR VERIFICATI ON OR OBJECTIVE CONSIDERATION OF THE CLAIMS MADE BY THE ASSESSEE. H E, THEREFORE, SET ASIDE THE SAME BY EXERCISING THE POWERS CONFERRED UPON HI M UNDER SECTION 263 WITH A DIRECTION TO THE ASSESSING OFFICER TO MAKE T HE ASSESSMENT AFRESH ON THE ISSUES POINTED OUT BY HIM. AGGRIEVED BY THE ORDER OF THE LD. CIT PASSED UNDER SECTION 263, THE ASSESSEE HAS PREFERRE D THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. CIT BY HIS I.T.A. NO. 771/KOL./2015 ASSESSMENT YEAR: 2010-2011 PAGE 4 OF 5 IMPUGNED ORDER PASSED UNDER SECTION 263 HAS SET ASI DE THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) ON TH E BASIS OF THREE ERRORS POINTED OUT BY HIM, THE LD. COUNSEL FOR THE ASSESSE E HAS SUBMITTED THAT THE ASSESSEE WANTS TO CHALLENGE THE IMPUGNED ORDER OF THE LD. CIT ONLY IN RESPECT OF ONE ISSUE RELATING TO THE ALLOWABILITY O F EXPENSES CLAIMED ON RENT AND SALARY. IN THIS REGARD, HE HAS INVITED OUR ATTENTION TO THE RELEVANT PORTION OF THE WRITTEN SUBMISSIONS MADE BE FORE THE LD. CIT DURING THE COURSE OF PROCEEDINGS UNDER SECTION 263 TO SHOW THAT IT WAS SPECIFICALLY BROUGHT TO THE NOTICE OF THE LD. CIT T HAT THERE WAS NO SUCH AGREEMENT BETWEEN THE ASSESSEE AND APOLLO GLENEAGLE S HOSPITAL, KOLKATA RESTRICTING THE ASSESSEE FROM PRACTICING OUTSIDE. H E HAS SUBMITTED THAT THE OFFER LETTER DATED 30.09.2002 PUTTING SUCH REST RICTION WAS NOT RELEVANT FOR THE YEAR UNDER CONSIDERATION, I.E. ASS ESSMENT YEAR 2010-11 AND THE LD. CIT, THEREFORE, WAS NOT CORRECT IN PLAC ING RELIANCE ON THE SAME. HOWEVER, AS RIGHTLY SUBMITTED BY THE LD. D.R., THE OFFER LETTER DATED 30.09.2002 RESTRICTING THE ASSESSEE FROM PRACTICING OUTSIDE IN ANY FIRM INDEPENDENTLY WAS AVAILABLE ON RECORD AND IN THE AB SENCE OF ANYTHING TO SHOW THAT SUCH RESTRICTION WAS REMOVED, THERE WAS A N ERROR IN THE ORDER OF THE ASSESSING OFFICER IN ALLOWING THE CLAIM OF T HE ASSESSEE FOR RENT AND SALARY WITHOUT MAKING THE REQUIRED ENQUIRY AS CALLE D FOR IN THE FACTS AND CIRCUMSTANCES OF THE CASE. MOREOVER, THE LD. CIT VI DE HIS IMPUGNED ORDER PASSED UNDER SECTION 263 HAS NOT DECIDED THIS ISSUE RELATING TO THE ASSESSEES CLAIM FOR DEDUCTION ON ACCOUNT OF RENT A ND SALARY EXPENSES ON MERIT AND HAS MERELY DIRECTED THE ASSESSING OFFICER TO CONSIDER THE SAME AFRESH AFTER MAKING THE NECESSARY ENQUIRY. THE ASSE SSEE, THEREFORE, IS FREE TO MAKE OUT HIS CASE ON THIS ISSUE BY ESTABLIS HING THAT THERE WAS NO SUCH RESTRICTION ON HIM IN THE YEAR UNDER CONSIDERA TION AND HE WAS FREE TO PRACTISE INDEPENDENTLY ON HIS OWN. IN OUR OPINIO N, THE ENQUIRY AS REQUIRED IN THE FACTS AND CIRCUMSTANCES OF THE CASE THUS WAS NOT MADE BY THE ASSESSING OFFICER BEFORE ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF RENT AND SALARY EXPENSES AN D THE ORDER PASSED BY HIM UNDER SECTION 143(3) ALLOWING THE CLAIM OF THE ASSESSEE WITHOUT CONDUCTING THE NECESSARY ENQUIRY WAS ERRONEOUS AS W ELL AS PREJUDICIAL TO I.T.A. NO. 771/KOL./2015 ASSESSMENT YEAR: 2010-2011 PAGE 5 OF 5 THE INTEREST OF THE REVENUE AS RIGHTLY POINTED OUT BY THE LD. CIT. IN THAT VIEW OF THE MATTER, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT PASSED UNDER SECTION 263 AND DISMISS THIS APPEAL FILED BY THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 10, 20 16. SD/- SD/- (S.S. VISHWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT ME MBER KOLKATA, THE 10 TH DAY OF AUGUST, 2016 COPIES TO : (1) DR. AFTAB ASHRAFUDDIN KHAN, C/O. V.N. PUROHIT & CO., CHARTERED ACCOUNTANTS, DIAMOND CHAMBERS, UNIT-III, 4 TH FLOOR, SUIT NO. 4G, 4, CHOWRINGHEE LANE, KOLKATA-700 016 (2) PRINCIPAL COMMISSIONER OF INCOME TAX, KOLKATA-8, 54/1, RAFI AHMED KIDWAI ROAD, 1 ST FLOOR, KOLKATA-700 016 (3) JOINT COMMISSIONER OF INCOME TAX, RANGE-22, KO LKATA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.