Dr. Parimal Banerji, Kolkata V. ACIT, Circle - 55, Kolkata, Kolkata

ITA 817/KOL/2008

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8093 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2012
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 09-05-2008
• Court: TRIBUNAL
• Department Lawyers: R K SAHA
• Assessee Lawyers: M TIWARY
• Keywords: Depreciation; Business expenditure; Corroborative evidences
• Section: 143(3)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . . !' ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM ] # # # # / I.T.A NOS. 817 & 818/KOL/2008 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEARS: 2001-02 & 2004-05 DR. PARIMAL BANERJI VS. ASSISTANT COMMISSIONER OF INCOME-TAX, (PAN: ACVPB5707G) CIRCLE-55, KOLKATA. ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 10.10.2012 DATE OF PRONOUNCEMENT: 25.10.2012 FOR THE APPELLANT: SHRI M. TIWARY FOR THE RESPONDENT: SHRI R. K. SAHA !- / ORDER PER MAHAVIR SINGH, JM ( , , , , ) BOTH THESE APPEALS BY ASSESSEE ARE ARISING OUT OF S EPARATE ORDERS OF CIT(A)-XXXVI, KOLKATA IN APPEAL NOS. 38/A-XXXVI/C-55/04-05 AND 5 9/A-XXXVI/C-55/06-07 DATED 27.11.2007 AND 18.02.2008 RESPECTIVELY. ASSESSMENTS WERE FRAMED BY ACIT/DCIT, CIRCLE-55, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2001-02 TO 2004-05 VIDE THEIR SEPA RATE ORDERS DATED 31.03.2004 AND 19.12.2006 RESPECTIVELY. 2. THE FIRST ISSUE IN ITA NO.817/K/2008 IS AGAINST THE ORDER OF CIT(A) RESTRICTING THE DISALLOWANCE AT RS.1,66,456/- ON ACCOUNT OF DISALLO WANCE OF PURCHASE OF FOAR CORK BOX. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.1: 1. THAT ON THE FACT AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) HAS PROCEEDED ON ERRONEOUS BELIEF IN CONFIRMING THE DISALLOWANCE MAD E BY AO TOWARDS PURCHASE OF FOAR CORK BOX ETC. OF RS.1,66,456/-. 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSEE IS A MEDICAL PRACTITIONER IN HOMOEOPATHY SCIENCE OF MEDICINE AND HAVING HIS CLIN ICS AT ASANSOL AND KOLKATA. THE ASSESSEE HAS DISCLOSED TOTAL PURCHASE AT RS.2,76,456/- OUT O F WHICH A SUM OF RS.1,39,195/- IS IN RESPECT OF M/S. RADHESHYAM CHANDRA & CO. AND RS.27,261/- IS IN RESPECT OF SRI NIHAR RANJAN PAUL WHICH WERE DISALLOWED BY AO FOR THE REASON THAT NO PROPER SUPPORTING EVIDENCES WERE FILED AND EVEN THE CORRESPONDING PAYMENT TO THE CONCERNED PARTIES IS NOT THERE. BEFORE THE AO, WHEN REPRESENTATIVE OF RADHESHYAM CHANDRA & CO. WAS PRODUCED, HE FAIRLY STATED THAT NO SUCH 2 ITA NOS. 817 & 818/K/2008 DR. PARIMAL BANERJI A.Y. 2001-02 TO 2004-05 PURCHASE WAS MADE BY DR. PARIMAL BANERJI FROM HIM. HOWEVER, SHRI NIHAR RANJAN PAUL WAS NOT PRODUCED BEFORE THE AO FOR EXAMINATION. THE AO MADE DISALLOWANCE OF RS.1,66,456/- AND CIT(A) RESTRICTED THE ENTIRE DISALLOWANCE OF PURCHA SE. THE CIT(A) CONFIRMED THE DISALLOWANCE RELYING UPON THE RATIO OF USE OF PHIALS AND CORKS T O THE NUMBER OF PATIENTS TREATED. THE ASSESSEES CONTENTION WAS THAT PAYMENT TO SHRI NIHA R RANJAN PAUL AS WELL AS PAYMENT TO RADHESHYAM CHANDRA & CO. IS SUPPORTED BY SELF MADE VOUCHERS AND EVEN IN EARLIER YEARS, THE PURCHASES WERE MADE FROM THESE PARTIES. ACCORDING TO ASSESSEE, BOTH THE AUTHORITIES BELOW HAVE ERRED IN MAKING ADDITION OF THESE PURCHASES AN D HENCE, AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ON BEHALF OF RADHESHYAM CHANDRA & CO. IT WAS FAIRLY ADMITTED BEFORE THE AO DURING EXAMINATION THAT NO PURCHASES WHATSOEVER WER E MADE FROM IT BY DR. P. BANERJI AND ONCE RADHESHYAM CHANDRA & CO. ADMITTED THIS FACT AN D IT IS ALSO NOT CONTROVERTED BY ANY EVIDENCE BY THE ASSESSEE EVEN BEFORE US NOW ON A SP ECIFIC QUERY. HENCE, THE ADDITION CANNOT BE DELETED. HOWEVER, IN RESPECT TO NIHAR RANJAN PAUL, THE PURCHASE OF RS.27,261/- DOES NOT CONCLUSIVELY PROVE THAT THE PURCHASES WERE MADE. L ATER ON, THE ASSESSEE HAS PROVED THAT THE PAYMENTS WERE MADE TO THE CONCERNED PARTY AND ALSO PRODUCED SELF MADE VOUCHERS WHICH WERE NEVER CONTROVERTED BY AO. IN SUCH CIRCUMSTANCES, T HE PURCHASE TO THE TUNE OF RS.27,261/- IS TREATED AS GENUINE AND WE ACCEPT THE SAME. ACCORDI NGLY, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE OF RS.1,39,195/- IN RESPECT OF RADHESH YAM CHANDRA & CO. AND ALLOWED THE PURCHASE IN RESPECT OF NIHAR RANJAN PAUL AT RS.27,2 61/-. THIS ISSUE OF ASSESSEES APPEAL IS PARTLY ALLOWED. 5. THE NEXT ISSUE IN ITA NO. 817/K/2008 OF ASSESSEE S APPEAL IS AS REGARDS TO DISALLOWANCE OF INTEREST ON CASH LOAN AT RS.1,38,19 9/-. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. CIT(A) IS MISDIRECTED IN CONFIRMING DISALLOWANCE OF INTEREST PAID ON CAR LOA N OF RS.1,38,199/-. 6. BRIEFLY STATED FACTS ARE THAT THE AO MADE DISALL OWANCE BY STATING THAT ASSESSEE HAS AVAILABLE FUNDS WHICH WAS ADVANCED WITHOUT CHARGING OF INTEREST AND ASSESSEE HAS TAKEN INTEREST BEARING LOAN FOR PURCHASE OF A CAR. ACCOR DING TO AO, AVERAGE RATE OF INTEREST @10% FOR NON PERFORMING ADVANCE HAS TO BE CALCULATED. H ENCE, HE DISALLOWED INTEREST ON CAR LOAN AT RS.1,38,199/-. THE CIT(A) ALSO CONFIRMED THE DISAL LOWANCE. AGGRIEVED ASSESSEE CAME IN APPEAL BEFORE US. 3 ITA NOS. 817 & 818/K/2008 DR. PARIMAL BANERJI A.Y. 2001-02 TO 2004-05 7. WE HAVE HARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT INTEREST FREE ADVANCE PAID TO THE PERS ON HAD NO NEXUS WITH INTEREST PAID ON CAR LOANS. WE FIND THAT THE FUNDS WERE BORROWED FOR HA VING CAR OWNED AND USED BY ASSESSEE FOR HIS BUSINESS PURPOSE. ONCE THERE WAS NO NEXUS BETW EEN INTEREST FREE ADVANCE AND INTEREST BEARING LOANS, THE INTEREST PAID IS ALLOWABLE EXPEN DITURE U/S. 36(1)(III) OF THE ACT. ACCORDINGLY, WE ALLOW THIS CLAIM OF THE ASSESSEE. 8. THE NEXT COMMON ISSUE IN BOTH THE APPEALS IN ITA NO. 817/K/2008 AND ITA NO. 818/K/2008 IS AS REGARDS TO TREATING THE AGRICULTUR AL INCOME AT RS.1,65,400/- AND RS.2,03,480/- IN AY 2001-02 AND 2004-05 RESPECTIVELY BY CIT(A). THE ASSESSEE CLAIMED THAT HE HAS PLOUGHED 7.5 BIGHAS OF CULTIVABLE LAND DURING THE RELEVANT PREVIOUS YEAR COMPRISING 3.5 BIGHAS OWNED BY HIM AND 4 BIGHAS OWNED BY HIS WIFE. ACCOR DING TO ASSESSEE, THE ABOVE LANDS ACCOUNT FOR ALMOST 150 COTTAHS AS AGAINST 8 COTTAHS CONSIDERED BY AO AND CIT(A) ON THE BASIS OF INSPECTORS REPORT. THE LD. COUNSEL FOR THE ASS ESSEE BEFORE THE LOWER AUTHORITIES AND EVEN NOW BEFORE US CONTENDED THAT THE CONVEYANCE DEED FO R SUCH LANDS WERE ALSO PRODUCED. HE ALSO RELIED ON THE CERTIFICATES OF REVENUE AUTHORITIES, WHICH READS AS UNDER: TO WHOM IT MAY CONCERN THIS IS TO CERTIFY THAT THE LAND OF PLOT NO. 858, 859 AND 860 NAMED ALOBARI ADMEASURING 4 BIGHAS EQUIVALENT TO 57,600 SQ. FT. U NDER MOUZA:MIHIJAM, SITUATED ON MAHARSHI PARESHNATH BANERJEE ROAD, MIHIJAM, DIST. J AMTARA (DUMKA), JHARKHAND IS SUITABLE FOR AGRICULTURAL PURPOSES, AND IS OWNED BY DR. PARIMAL BANERJI AND OUT OF THE TOTAL LAND ABOUT 2,874 SQ. FT. OF THE SAID LAND IS COVERED BY BUILDING. THIS IS TO FURTHER CERTIFY THAT THE SAID OPEN LAND IS USED AS AGRICULTURAL PURPOSE AS AN ORCHARD AS WELL AS FOR CULTIVATION. THE SAID LAND IS HIGHLY FERTILE AND SUITABLE FOR GROWING AT LEAST TWO CROPS EVERY YEAR. BESIDES GRO WING OTHER VEGETABLES AND FRUITS, THE SAID LAND IS ALSO CAPABLE OF PRODUCING POTATO. THE AVERAGE YIELD OF POTATO PER CROP ON SUCH LAND COULD BE BETWEEN 250 TO 300 KGS PER COTTA H. TO WHOM IT MAY CONCERN THIS IS TO CERTIFY THAT THE LAND OF PLOT NO. 74 NA MED AS NANDALAYA ADMEASURING MORE THAN 6 BIGHAS EQUIVALENT TO 86,506 SQ. FT. UN DER MOUZA:MIHIJAM, SITUATED ON MAHARSHI PARESHNATH BANERJEE ROAD, MIHIJAM, DIST. J AMTARA (DUMKA), JHARKHAND IS SUITABLE FOR AGRICULTURAL PURPOSES, IS OWNED BY SMT . LINA BANERJI AND OUT OF THE TOTAL 86,506 SQ. FT. (113 COTTAHS) OF THE SAID LAND ABO UT 4,986 SQ. FT. IS COVERED BY A BUILDING AND THE REST 81520 SQ. FT. IS FOR CULTIVATION PURPO SES. THE SAID LAND IS HIGHLY FERTILE AND SUITABLE FOR GR OWING AT LEAST TWO CROPS EVERY YEAR. BESIDES GROWING OTHER VEGETABLES AND FRUITS, THE SA ID LAND IS ALSO CAPABLE OF PRODUCING POTATO. THE AVERAGE YIELD OF POTATO PER CROP ON SU CH LAND COULD BE BETWEEN 250 TO 300 KGS. PER COTTAH. 9. WE FIND THAT THE AO IN AY 2001-02 ALLOWED AGRIC ULTURAL INCOME OF RS.74,950/- AS AGAINST THE CLAIM OF ASSESSEE OF RS.1,85,480/- AND IN AY 2004-05 RS.1,84,089/- AS AGAINST THE 4 ITA NOS. 817 & 818/K/2008 DR. PARIMAL BANERJI A.Y. 2001-02 TO 2004-05 CLAIM OF ASSESSEE AT RS.2,25,480/-. THE CIT(A) RES TRICTED THE CLAIM AT RS.20,000/-AND RS.22,000/- IN BOTH THE AY I.E. 2001-02 AND 2004-05 . THE MAIN CONTENTION OF THE ASSESSEE WAS THAT THE CIT(A) ENHANCED THE ADDITION BY TREATING T HE AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES IN BOTH THE YEARS RELYING ON THE REPORT OF SPOT ENQUIRY CONDUCTED BY INCOME-TAX INSPECTOR THAT IT HAS ONLY 8 COTTAHS OF AGRICULTURA L LAND AND EVEN THE REPORT OF INSPECTOR WAS NOT PROVIDED TO THE ASSESSEE FOR CONTRADICTION. THE AS SESSEE PRODUCED RECORDS/MEMORANDUM OF SALE OF AGRICULTURAL PRODUCE AS WELL AS RELEVANT VO UCHERS OF EXPENSES. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY STATED THAT A REASONABLE ESTIMATE C AN BE ACCEPTED AS AO HAS ALREADY ACCEPTED IN 2004-05 RS.1,84,019/- AS AGAINST CLAIM OF ASSESSEE AT RS.2,24,480/-. WE FIND REASON IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE AND G OING BY THE LAND HOLDING CERTIFICATES OF REVENUE DEPARTMENT, WE ARE OF THE VIEW THAT THE AO IN AY 2004-05 HAS RIGHTLY TREATED RS.1,84,019/- AS AGRICULTURAL INCOME AND BALANCE RS .41,166/- AS INCOME FROM OTHER SOURCES, WE CONFIRM THE SAME AND TO THAT EXTENT CIT(A)S ORDER IS REVERSED. IN RESPECT OF AY 2001-02, THE ASSESSEE IS HAVING 7.5 BIGHAS OF AGRICULTURAL LAND AND WE ARE OF THE VIEW THAT A REASONABLE ESTIMATE OF AGRICULTURAL INCOME AT RS.1,50,000/- WI LL MEET THE END OF JUSTICE AND THE BALANCE RS.35,480/- SHOULD BE TREATED AS INCOME FROM OTHER SOURCES. HENCE, WE DIRECT THE AO TO RECOMPUTE THE INCOME ACCORDINGLY. THIS ISSUE OF AS SESSEES APPEAL IS PARTLY ALLOWED. 10. THE NEXT COMMON ISSUE IN THESE TWO APPEALS OF T HE ASSESSEE IS AGAINST THE DISALLOWANCE OF RS.1,40,000/- AS AGAINST THE CLAIM OF ASSESSEE A T RS.1,30,000/- IN AY 2004-05 AND RS.45,000/- AS AGAINST THE CLAIM OF ASSESSEE AT RS. 1,30,000/- IN AY 2001-02. THE AO DISALLOWED RELYING ON THE INSPECTORS REPORT WHICH STATES THAT THERE IS NO RESEARCH ACTIVITY CARRIED OUT BY MISS KALPANA CHATTERJEE. THE CIT(A) CONFIRMED THE DISALLOWANCE BY STATING THAT PAYMENTS MADE TO HER IS NOT LINKED TO ANY SERV ICES. AGGRIEVED, NOW ASSESSEE IS IN APPEAL FOR BOTH THE YEARS. 11. BEFORE US, IT WAS CONTENDED THAT MISS. KALPANA CHATTERJEE IS PERFORMING THE JOB OF RESEARCH ANALYST WHICH INCLUDES COMPILING OF CLINIC AL DATA, DISEASE WISE AND AGE WISE CLASSIFICATION OF SUCH DATA, IMAGE OF DIFFERENT CLI NICAL REPORTS E.G. RADIOLOGICAL, SONOLOGICAL AND OTHER PATHOLOGICAL REPORTS. ACCORDING TO ASSESSEE, MISS. KALPANA CHATTERJEE MAINTAINS DATA I.E. THE CLINICAL DATA FOR FACILITATING RESEARCH WORK AN D SUCH DATA ARE REGULARLY USED BY ASSESSEE IN HIS ONGOING RESEARCH WORK WHICH IN TURN HELP HIM IN HIS PRESCRIPTION TO PATIENTS. ACCORDING TO ASSESSEE, THIS IS ALLOWABLE EXPENDITURE NO DOUBT M AY BE UNDER THE HEAD SALARIES OR RESEARCH ACTIVITY OR ANY OTHER NOMENCLATURE CAN BE GIVEN TO IT. WE FIND THAT IT IS NOT DENIED BY THE AO THAT PAYMENT MADE TO MISS. KALPANA CHATTERJEE IS NO T IN THE NATURE OF BUSINESS EXPENDITURE AND HE HAS ACTUALLY CARRIED OUT SERVICES TO THE ASSESSE E I.E. COMPILING OF DATA AS NARRATED ABOVE. WE 5 ITA NOS. 817 & 818/K/2008 DR. PARIMAL BANERJI A.Y. 2001-02 TO 2004-05 FIND THAT THIS EXPENDITURE IS ALLOWABLE AND WE DO T HE SAME. THIS COMMON ISSUE OF THE ASSESSEES APPEALS IS ALLOWED. 12. THE NEXT ISSUE IN ITA NO. 818/K/2008 OF ASSESSE ES APPEAL IS AS REGARDS TO DISALLOWANCE OF DEPRECIATION BY RESTRICTING THE DEP RECIATION AT RS.73,333/- AS AGAINST CLAIM OF ASSESSEE AT RS.2,20,000/- CONFIRMED BY CIT(A). AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THE AO HAS RIGHTLY RESTRICTED THE DEPRECIATION TO PROPORTIONATE USE OF BUSINESS AND HE ACCEPTED THE SAME BEFORE US. AS TH E ASSESSEES COUNSEL CONCEDED THE POSITION, WE DISMISS THIS ISSUE. 13. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IN IT A NO. 818/K/2008 IS AS REGARDS TO DISALLOWANCE OF 2/3 RD TRAVELLING EXPENSES TO AND FRO RANCHI IN CONNECTI ON WITH PURCHASE OF MEDICINE ETC. THE AO MADE DISALLOWANCE OF RS.9490/ - AND CIT(A) CONFIRMED THE SAME. THE CONTENTION OF THE ASSESSEE BEFORE US AS WELL AS BEF ORE THE LOWER AUTHORITIES WAS THAT THE AO HAS ERRONEOUSLY DISALLOWED 2/3 RD TRAVELLING EXPENSES WITHOUT GOING INTO THE FACTS O F THE CASE. BEFORE US, LD. COUNSEL FOR THE ASSESSEE COULD NOT P LACE RELIANCE ON ANY OF THE FACTS. HENCE, WE DISMISS THIS ISSUE OF ASSESSEES APPEAL. 14. IN THE RESULT, APPEALS OF ASSESSEE ARE PARTLY A LLOWED. 15. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCT., 2012. SD/- SD/- . . !' , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED : 25TH OCTOBER, 2012 ./ $01 2 JD.(SR.P.S.) 6 ITA NOS. 817 & 818/K/2008 DR. PARIMAL BANERJI A.Y. 2001-02 TO 2004-05 !- 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT DR. PARIMAL BANERJI, 5/1D, DESHAPRIYA P ARK EAST, KOLKATA-700 029. 2 +,)* / RESPONDENT ACIT, CIRCLE-55, KOLKATA. 3 . -$ ( )/ THE CIT(A), KOLKATA 4. 5. -$ / CIT KOLKATA 4<= +$ / DR, KOLKATA BENCHES, KOLKATA ,4 +/ TRUE COPY, !-$>/ BY ORDER, 1 /ASSTT. REGISTRAR .