ACIT, Chandigarh V. Dr. Neeraj Kumar, Chandigarh

ITA 863/CHANDI/2009

• Counselvise Citation: 86321514 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: NEERAJ JAIN
• Keywords: Unexplained cash credit; Depreciation; Source of fund; Proportionate interest; Revenue expenditure
• Section: 68; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: CHANDIGARH BENCH B BEFORE MS SUSHMA CHOWLA, JM AND SHRI MEHAR SINGH, AM ITA NO. 863/CHANDIGARH/2009 ASSESSMENT YEAR 2006-07 A.C.I.T. CIRCLE 5(1) V DR. NEERAJ KUMAR CHANDIGARH PLOT NO. 1 & 2, SECTOR 44-A CHANDIGARH PAN: ABOPK 0089N (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JAISHREE SHARMA RESPONDENT BY: SHRI NEERAJ JAIN DATE OF HEARING: 29.9.2011 DATE OF PRONOUNCEMENT: 17.10.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE FOR ASSESS MENT YEAR 2006- 07, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), CH ANDIGARH DATED 25.6.2009 U/S 250 (6) OF THE INCOME-TAX ACT (IN SHO RT THE ACT). 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) VIDE APPELLATE ORDER NO. 199/P/08-09 ON 25.6 .2009 HAS ERRED IN HOLDING THAT THE DISALLOWANCES OF RS. 4,61 ,278/- IS ADHOC AND HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT MAINTAINED THE RECORDS FROM WHICH HIS CLAIM REGARDING EXPENDIT URE ON MEDICINES, INDOOR PATIENTS COULD BE SUBSTANTIATED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY T HE AO ON ACCOUNT OF UNEXPLAINED CASH CREDITS OF RS. 2,12,20 0/-. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY T HE AO ON ACCOUNT OF DISALLOWANCES OF DEPRECIATION AS CLAIME D BY THE ASSESSEE ON CHAITANYA HOSPITAL BUILDING AS THE ASSE SSEE HAS NOT PROVED THAT THE ASSET WAS PUT TO USE. ITA NO. 863/CHANDI/2009 ACIT V. DR. NEERAJ KUMAR 2 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY T HE AO ON ACCOUNT OF DISALLOWANCES OF INTEREST BEING PERTAIN ING TO PRIOR PERIOD AS THE ASSET WAS NOT PUT TO USE DURING THE Y EAR UNDER CONSIDERATION . 6. IT IS PRAYED THAT THE ORDER OF THE LD. CIT( A) BE SET ASIDE AND THAT OF THE AO MAY BE RESTORED. 7 THE APPELLANT CRAVES LEAVE TO ADD OR AMEND A NY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 3. GROUNDS NO. 6 & 7 OF APPEAL RAISED BY THE REVENU E ARE PURELY GENERAL IN NATURE, HENCE, NEEDS NO SEPARATE ADJUDIC ATION. 4. IN GROUND NO. 2, THE REVENUE CHALLENGED THE UPHO LDING OF DISALLOWANCE OF RS.4,61,278/- BY THE CIT(A) WITHOUT APPRECIATING THE FACTUAL MATRIX OF THE EXPENSES INCURRED BY THE ASSE SSEE, ON MEDICINES, INDOOR PATIENTS ETC. 5. THE DR REFERRED TO VARIOUS PAGES OF THE ASSESS MENT ORDER AS ALSO THE ORDER PASSED BY THE LD. CIT(A). IT WAS ARGUED THAT NO PROPER NARRATION HAS BEEN MADE IN THE BILLS ISSUED BY THE ASSESSEE-APPELLANT. THE DR PLACED RELIANCE ON THE ORDER OF AO AND THE AR FOR THE ASSESSEE PLACED RELIANCE ON THE ORDER OF LD. CIT(A) . THE AR FOR THE ASSESSEE CONTENDED THAT TOTAL CHARGES RECEIVED HAVE BEEN DULY DISCLOSED IN THE PROFESSIONAL RECEIPTS INCLUDING CHARGES FOR MEDICINES AND CONSULTANCY, OPERATION AND SURGERY. IT WAS FURTHER CONTENDED THAT ALL THE DETAILS OF OPENING STOCK AND CLOSING STOCK WERE SUB MITTED BEFORE THE AO. 6. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE, RIVAL SUBMISSIONS AND RELEVANT RECORD. THE AO MADE THE IMPUGNED ADDI TION ON THE GROUND THAT MEDICINE EXPENSES OF RS. 18,45,114/- WERE NOT FULLY VERIFIABLE. THEREFORE, 25% OF SUCH EXPENSES WERE DISALLOWED BY THE AO. THE LD. CIT(A) RECORDED A CLEAR FINDING IN PARA 2.3. OF THE APPELLATE ORDER, WHICH ITA NO. 863/CHANDI/2009 ACIT V. DR. NEERAJ KUMAR 3 IS REPRODUCED HEREUNDER: 2.3 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. I AM IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE THAT NO ADHOC DISALLOWANCE CAN BE MADE IN THE ABSENCE OF ANY SPEC IFIC DISCREPANCY FOUND IN THE BOOKS OF ACCOUNT. THE AO H AS ALSO NOT PLACED ANY MATERIAL ON RECORD FOR MAKING SUCH DISAL LOWANCE. THE ASSESSEE FURNISHED COMPLETE DETAILS OF OPENING STOC K OR CLOSING STOCK BEFORE THE AO. THE AO HAS NOT DISPUTED THE FA CT THAT THE TOTAL CHARGES INCLUDING THE CHARGES FOR MEDICINES H AVE BEEN INCLUDED IN THE PROFESSIONAL RECEIPTS. IN VIEW OF T HESE FACTS, THE ADDITION MADE BY THE AO IS DELETED. THIS GROUND OF THE ASSESSEE IS ALLOWED. 7. HAVING REGARD TO THE FINDING OF LD. CIT(A) AND F ACTS OF THE CASE, IT IS EVIDENT THAT THE AO HAS NOT PLACED ANY MATERIAL ON RECORD TO JUSTIFY SUCH DISALLOWANCE. THEREFORE, THE FINDINGS OF LD. CIT(A) ARE UPHELD. GROUND NO. 2 OF REVENUES APPEAL IS DISMISSED. 8. IN GROUND NO. 3, THE REVENUE CONTENDED THAT ON T HE FACTS AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2,12,200/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 9. THE DR CONTENDED THAT NO COGENT AND CREDIBLE E VIDENCE HAS BEEN FILED BY THE ASSESSEE TO JUSTIFY SUCH CASH CREDITS APPEARING THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT WAS POINTED OUT THAT I T IS STATUTORILY INCUMBENT UPON THE ASSESSEE, TO EXPLAIN THE SOURCE OF SUCH CREDIT ENTRIES. HOWEVER, THE ASSESSEE FAILED TO FILE ANY EVIDENCE I N THE MATTER. THEREFORE, IT WAS PRAYED THAT THE ADDITION MADE BY THE AO BE UPHELD. 10. THE AR FOR THE ASSESSEE, ON THE OTHER HAND, A RGUED THAT DR. POONAM GARG IS AN EXISTING ASSESSEE. HE REFERRED TO THE IMPREST ACCOUNT OF DR.POONAM GARG IN THE BOOKS OF THE ASSESSEE. HE REFERRED TO PAGE 111 OF THE PAPER BOOK IN THE SPECIFIC CONTEXT. IT WAS, FURTHER, STATED BY THE LD AR FOR THE ASSESSEE THAT DR. POONAM GARG IS THE W IFE OF THE ASSESSEE- APPELLANT. THE DR FOR THE ASSESSEE CONTENDED THA T THERE IS NO CREDIT ITA NO. 863/CHANDI/2009 ACIT V. DR. NEERAJ KUMAR 4 BALANCE, IN THE SAID IMPREST ACCOUNT. HE JUSTIFIED THE DELETION MADE BY THE LD. CIT(A). 11. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS , FACTS OF THE CASE AND RELEVANT RECORD. THE AO IN PARA 3 OF THE ASSESS MENT ORDER, DATED, 29.12.2008 PASSED U/S 143(3) OF THE ACT HAS DISCUSS ED THE ISSUE IN DETAIL. PARA 3 OF THE IMPUGNED ASSESSMENT ORDER STANDS REPR ODUCED BY THE LD. CIT(A), IN HIS APPELLATE ORDER. IT IS IMPERATIVE TO REPRODUCE PARA 3 OF IMPUGNED APPELLATE ORDER AS IT CONTAINS ESSENTIAL F ACTUAL DETAILS OF THE CASE AND ISSUE INVOLVED THEREIN:- 3.1 THE AO HAS DISCUSSED THIS ISSUE IN PARA 3 OF THE ASSESSMENT ORDER WHICH IS REPRODUCED AS UNDER:- FROM THE PERUSAL OF DR. POONAM GARG (IMPREST ACCOU NT) AS APPEARING IN THE LEDGE BOOK OF THE ASSESSEE, IT WAS NOTICED THAT THERE WERE CASH CREDIT ENTRIES TO THE TUNE OF RS. 2 ,12,200/- ON THE FOLLOWING DATES: DATE AMOUNT (RS.) 22.5.2005 17,000 03.6.2005 18,000 21.6.2005 15,000 17.8.2005 18,000 8.9.2005 18,000 22.10.2005 14,000 26.12.2005 14,000 17.2.2006 17,000 28.2.2006 18,000 4.3.2006 17,000 13.3.2006 17,000 17.3.2006 15,000 25.3.2006 15,000 31.3.2006 200 TOTAL 2,12,200 3.1 THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF THESE DEPOSITS VIDE THIS OFFICE LETTER DATED 17.11.2008. THE ASSESSEE DID NOT GIVE ANY EXPLANATION IN THIS REGARD TILL THE DATE OF PASSING OF THIS ASSESSMENT ORDER. KEEPING THIS FACT IN VIEW, THE ENTIRE AMOUN T OF RS. 2,12,200/- IS ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF INCOME-TAX ACT. ITA NO. 863/CHANDI/2009 ACIT V. DR. NEERAJ KUMAR 5 12. THE ASSESSEE FILED THE FOLLOWING SUBMISSIONS BE FORE THE LD. CIT(A) ON THE ISSUE IN QUESTION:- 3.2 FURTHER THE AO HAS MADE AN ADDITION ON THE BASIS THAT THE ASSESSEE WAS ASKED TO EXPLAIN SOURCE OF THESE DEPOS ITS AND THE ASSESSEE DID NOT GIVE ANY EXPLANATION IN THIS REGAR D. IN THIS REGARD, WE SUBMIT THAT THE SOURCES OF DEPOSITS IS OBVIOUSLY FROM DR. POONAM GARG AS IT APPEARS IN THE ACCOUNT OF DR. POO NAM GARG, SO THERE IS NO QUESTION TO EXPLAIN THE SOURCES OF THES E DEPOSITS FROM WHOM THESE HAS BEEN RECEIVED. FURTHER DR. POONAM G ARG HAS ALSO BEEN ASSESSED U/S 143(3) FOR THE SAME ASSESSMENT YE AR I.E. ASSESSMENT YEAR 2006-07 IN THE SAME RANGE OF INCOME -TAX. THE COPY OF ASSESSMENT ORDER PASSED U/S 143(3) IN THE C ASE OF DR. POONAM GARG IS ENCLOSED P:B PAGE 114-115. THOUGH W E HAVE NOT BEEN ASKED TO PROVIDE THE SOURCES OF DR. POONAM GAR G I.E. THE SOURCE OF SOURCE, WE ARE ENCLOSING HEREWITH THE CAS H FLOW STATEMENT EXPLAINING THE SOURCE OF DR. POONAM GARG WAS HAVING ENOUGH CASH TO PAY BACK THE SAID AMOUNT TO THE APPE LLANT. IN THIS CASE, THE IDENTITY AND GENUINENESS OF THE TRANSACTI ONS ARE NOT DISPUTED BY THE AO BUT THE ADDITION HAS BEEN MADE O NLY ON THE BASIS THAT SOURCE OF THESE DEPOSITS HAS NOT BEEN EX PLAINED. IN THIS REGARD, WE SUBMIT THAT WE HAVE EXPLAINED THE SOURCE OF THESE DEPOSITS AS WELL SOURCE OF SOURCE ALSO AND THE CRED IT WORTHINESS OF DR. POONAM GARG. FURTHER, NO ADDITION ON ACCOUNT O F SHORTAGE OF FUNDS IN THE HANDS OF DR. POONAM GARG FOR GIVING SU CH AMOUNT TO THE APPELLANT HAS BEEN MADE WHICH IS VERY CLEAR FRO M THE ASSESSMENT ORDER OF DR. POONAM GARG. 13. ON APPRECIATION OF ABOVE REPRODUCED SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) GAVE THE FINDING IN PARA 3.3 OF THE APPELLATE ORDER WHICH ARE REPRODUCED HEREIN:- 3.3 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMI SSIONS. THE AO HAS MADE ADDITION WITHOUT PLACING ANY MATERIAL ON R ECORD JUSTIFYING THE ADDITION. THE ASSESSEE HAS GIVEN SU FFICIENT REASONS FOR NOT MAKING THE ADDITION ON ACCOUNT OF CASH CRE DITS. MOREOVER, THE CASE OF DR. POONAM GARG HAS BEEN DONE U/S 143(3 ). DR. POONAM GARG IS AN EMPLOYEE AND GET CERTAIN AMOUNTS AS IMPREST MONEY. THE WITHDRAWALS ARE FROM THE BANK BY ISSUAN CE OF CHEQUES. IN MY OPINION, THE AO COULD NOT MAKE OUT A CASE FOR MAKING THE ADDITION. THUS, THE ADDITION MADE BY THE AO IS DEL ETED AND THIS GROUND OF THE ASSESSEE IS ALLOWED. 14. WE HAVE CAREFULLY PERUSED THE FACT SITUATION OF THE CASE, RIVAL SUBMISSIONS AND AVAILABLE RELEVANT RECORD. TO ANAL YZE AND DISCUSS THE SCOPE OF THE PROVISIONS OF SECTION 68 OF INCOME-TA X ACT, IT IS RELEVANT TO ITA NO. 863/CHANDI/2009 ACIT V. DR. NEERAJ KUMAR 6 REPRODUCE THE SAME:- SEC 68- WHERE ANY SUM IS FOUND CREDITED IN THE BOO KS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE AO, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. A BARE PERUSAL OF THE PROVISIONS OF SECTION 68 REVE ALS THAT THE PARLIAMENT IN ITS OWN WISDOM HAS EXPRESSED THE SCOPE OF PROVIS ION IN THE WIDEST POSSIBLE LANGUAGE. IT IS WELL SETTLED PROPOSITION THAT SEC 68 OF THE ACT, CONTAINS A GOLDEN RULE OF EVIDENCE. IT PROVIDES TH AT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE, IT IS INCUMBENT UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF SUCH S UM FOUND CREDITED IN THE BOOKS OF ACCOUNT. IF NO EXPLANATION HAS BEEN O FFERED BY THE ASSESSEE OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE NOT SATISFACTORY IN THE OPINION OF THE AO, THEN THE REVENUE IS ENTIT LED TO CHARGE SUCH SUM AS INCOME OF THE ASSESSEE. THE INITIAL ONUS TO EST ABLISH THE CASE SQUARELY LIES ON THE ASSESSEE, BY WAY OF EXPLAINING THE NATU RE AND SOURCE OF SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT. THIS FACTUM OF INITIAL ONUS IS UNDISPUTEDLY ON THE ASSESSEE AS SANCTIFIED IN NUMER OUS DECISIONS OF HON'BLE APEX COURT. IN THE PRESENT CASE, THE SUBMI SSION FILED BY THE ASSESSEE BEFORE THE LD. CIT(A), STRIKES AT THE ROO T OF SEC 68 OF THE ACT, AS THE ASSESSEE SUBMITTED IN THIS REGARD WE SUBMIT THAT THE SOURCES OF DEPOSITS IS OBVIOUSLY FROM DR. POONAM GARG AS IT A PPEARS IN THE ACCOUNTS OF DR. POONAM GARG SO THERE IS NO QUESTION TO EXPLA IN THE SOURCE OF THESE DEPOSITS FROM WHOM THEE HAVE BEEN RECEIVED. THE A O HAS LISTED OUT CERTAIN CREDIT ENTRIES ON SPECIFIED DATES REPRESENT ING CREDITS APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, IN THE NAME O F DR. POONAM GARG. THE LD. CIT(A) HAS REPRODUCED SUCH CHART OF THE ENT RIES IN HIS APPELLATE ORDER IN PARA 3.1 AS REPRODUCED ABOVE. ITA NO. 863/CHANDI/2009 ACIT V. DR. NEERAJ KUMAR 7 14.1 A BARE PERUSAL OF SUCH ENTRIES OF VARIOUS DETA ILS CLEARLY REVEALS THAT ON THE SPECIFIC DATES SPECIFIC AMOUNTS OF CREDIT EN TRIES ARE APPEARING IN THE BOOKS OF ACCOUNT OF THE PRESENT ASSESSEE. THER EFORE, WE HOLD THAT IT IS INCUMBENT ON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF SUCH ENTRIES, AS CONTEMPLATED IN SEC 68 OF THE ACT. 14.2 WE HAVE ALSO CAREFULLY PERUSED THE IMPREST AMO UNT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS ANNEXED IN THE PAPER BOO K FROM PAGES 111 TO 113. AT PAGE 116 OF PAPER BOOK, THE CASH FLOW STAT EMENT FOR ASSESSMENT YEAR 2006-07 OF DR. POONAM GARG. THE ASS ESSEE HAS FILED ASSESSMENT ORDER OF DR.POONAM GARG PASSED U/S 143(3 ), DISCLOSING VARIOUS SOURCES OF INCOME, INCLUDING INCOME FROM OT HER SOURCES. HAVING REGARD TO THE NATURE OF EVIDENCES FILED BY THE ASSE SSEE AND THE FINDINGS OF THE LD. CIT(A), WE DO NOT FIND ANY INFIRMITY IN THE NOTING OF LD. CIT(A), AND HENCE, THE SAME ARE UPHELD 15. IN GROUND NO. 4, THE REVENUE CONTENDED THAT THE LD. CIT(A), ERRED ON FACTS AND LAW, IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION CLAIMED BY THE ASSESSE E ON CHETANYA HOSPITAL AS THE ASSESSEE FAILED TO PROVE THAT THE A SSET WAS TO BE USED. 16. THE DR REPEATED THE OBSERVATION OF THE AO, ON THE ISSUE IN QUESTION AND SAME ARE REPRODUCED HEREUNDER:- (I) IT WAS NOTICED FROM DVOS REPORT ANNEXURE III CONTAINING THE TECHNICAL DETAILS THAT EH BUILDING WAS UNDER CO NSTRUCTION DURING THE FINANCIAL YEAR 2005-06 AND THE CONSTRUCTION PER IOD WAS UPTO 2007. (II) IT WAS NOTICED FROM THE LETTER DATED 24.12.200 8 RECEIVED FROM THE OFFICE OF DISTT. REGISTRAR (BIRTHS & DEATHS)-CU M-MEDICAL OFFICER OF HEALTH, MUNICIPAL CORP, CHANDIGARH STATI NG THE DETAILS OF BIRTH EVENTS REGISTERED AT THE HOSPITAL THAT THE ADDRESS OF M/S ITA NO. 863/CHANDI/2009 ACIT V. DR. NEERAJ KUMAR 8 CHETANYA HOSPITAL FOR THE PERIOD FROM 1.4.2005 TO 3 1.3.2006 WAS : 1006, SEC 43-B, CHANDIGARH. (III) THE COPIES OF ELECTRICITY AND WATER BILLS SUB MITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE PERIOD 1.4 .2005 TO 31.3.2006 PERTAINS TO ADDRESS: # 1006, SEC 43-B, CH ANDIGARH. (IV) THE ASSESSEE HAS ALSO NOT SUBMITTED ANY OF THE BILL ISSUED BY THE HOSPITAL FROM THE ADDRESS OF PLOT NO. 1 & 2, S EC 44, CHANDIGARH FROM 16.3.2006 ONWARDS TO PROVE THE A SE HAS REALLY OPERATED FROM SECTOR 44, CHANDIGARH FOR THE LAST L1 5 DAYS OF THE YEAR. (V) THE ASSESSEE HAS ALSO FAILED TO BRING ANY INDEPENDE NT EVIDENCE LIKE INSPECTION REPORT FROM CIVIL SURGEON / MEDICAL AUTHORITY WHICH IS A REQUIREMENT FOR SHIFTING TO A NEW BUILDING FOR NURSING HOME. 17. THE LD AR FOR THE ASSESSEE CONTENDED THAT THE BUILDING WAS PUT TO USE AND REFERRED TO RELEVANT MATERIAL EVIDENCES IN THE MATTER. THE AR FOR THE ASSESSEE HAS RAISED CERTAIN BILLS PERTAININ G TO FURNISHING THE ADDRESS OF THE PREMISE UNDER REFERENCE. HE ALSO RE FERRED TO ADVERTISEMENT IN THE NEWSPAPER INDICATING SHIFTING OF HOSPITAL TO A NEW BUILDING. IT WAS ALSO CONTENDED BY THE LD AR FOR THE ASSESSEE THAT IT WAS PARTIAL COMPLETE BUILDING WHICH WAS USED FOR HO SPITAL PROFESSIONAL ACTIVITY. 18. WE HAVE PERUSED THE FACTS OF THE CASE, RIVAL SU BMISSIONS. THE LD. CIT(A) ON APPRECIATION OF THE SIMILAR SUBMISSIONS M ADE BY THE ASSESSEE, ALLOWED DEPRECIATION IN RESPECT OF SUCH PREMISES. THE RELEVANT FINDINGS OF THE LD. CIT(A) ARE REPRODUCED HEREUNDER:- 4.3 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN MY OPINION, THE ASSESSEE HAS GIVEN MORE THAN ADEQUATE EVIDENCE THAT THE BUILDING WAS OCCUPIED IN MARCH, 2006. THE AO HA S MADE ADDITIONS WITHOUT PROPERLY CONFRONTING THE MATERIAL TO THE ASSESSEE AND ASKING HIS EXPLANATION. THE ASSESSEE HAS GIVEN CLINCHING ITA NO. 863/CHANDI/2009 ACIT V. DR. NEERAJ KUMAR 9 EVIDENCE ABOUT THE PARTIAL OCCUPATION OF THE BUILDI NG. THE ASSESSEE HAS GIVEN A COPY OF LETTER NO. 1191 DATED 20.2.2006 ISSUED BY THE ESTATE OFFICER (COPY PLACED AT ANNEXURE -1). THE A SSESSEE HAS ALSO GIVEN THE ELECTRIC BILLS FOR THE SAID PLOT. THE AS SESSEE HAS ALSO GIVEN A COPY OF THE RECEIPT ISSUED BY THE HOSPITAL BEARING SITE NO. 1 & 2, SECTOR 44-C, CHANDIGARH. IN MY OPINION, THE ASSESSEE HAS SUCCESSFULLY REBUTTED THE CONTENTION OF THE AO. DURING THE COURSE OF HEARING, THE ASSESSEE WAS INFO RMED THAT 1 ST AND 2 ND FLOOR WAS NOT OCCUPIED. THE ASSESSEE OCCUPIED GRO UND FLOOR ONLY. THE DEPRECIATION CLAIMED ON THE AMOUNT OF INVESTMENT ON 1 ST AND 2 ND FLOOR CANNOT BE ALLOWED. THE ASSESSEE WAS ASKED T O GIVE A WORKING OF THE INVESTMENT ON 1 ST AND 2 ND FLOOR. THE ASSESSEE FILED A REPLY DATED 25.2.2009 (PLACED AT ANNEXURE 2 ). THE AO IS DIRECTED TO VERIFY THE FIGURES SUBMITTED BY THE ASS ESSEE. THE ASSESSEE IS TO BE ALLOWED DEPRECIATION ONLY IN RESP ECT OF GROUND FLOOR IN THIS ASSESSMENT YEAR AND PROPORTIONATE VAL UE OF CONSTRUCTION ON 1 ST AND 2 ND FLOOR WOULD NOT BE ELIGIBLE FOR THE PURPOSE OF DEPRECIATION IN THIS ASSESSMENT YEAR. T HIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. HAVING REGARD TO THE ABOVE DISCUSSION, WE FIND NO I NFIRMITY IN THE FINDINGS OF LD. CIT(A) AND HENCE, THE SAME ARE UPHE LD. 19. IN GROUND NO.5, THE REVENUE CHALLENGED THAT THE CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF INTEREST PERTAINING TO PRIOR PERIOD AS THE ASSET WA S NOT PUT TO USE DURING THE YEAR UNDER CONSIDERATION. LD. DR PLACED RELIA NCE ON THE ORDER OF THE AO WHEREAS THE LD. AR PLACED RELIANCE ON THE ORDE R OF THE CIT(A). 20. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS , FACTS OF THE CASE AND THE RELEVANT AVAILABLE RECORD. IN THE COURSE O F ASSESSMENT, IT WAS FOUND THAT THE ASSESSEE PAID A SUM OF RS.7,44,422/- AS INTEREST ON BORROWINGS PERTAINING TO PRE-OCCUPATION PERIOD. THE AO DISALLOWED THE SAID INTEREST. THE ASSESSEE PROVIDED DETAILS OF IN TEREST AS APPEARING AT PAGE 200 TO 203 OF THE PAPER BOOK AND CLAIMED THAT WHOLE OF THE INTEREST ITA NO. 863/CHANDI/2009 ACIT V. DR. NEERAJ KUMAR 10 REPRESENTS MONEY BORROWED FOR THE PURPOSES OF PROFE SSION OF THE ASSESSEE AND HENCE ALLOWABLE EXPENDITURE. THE ASSESSEE SHIFT ED TO ITS NEW BUSINESS PREMISES W.E.F. 16.3.2006 AND INTEREST UPTO THIS DA TE IS REQUIRED TO BE CAPITALIZED BEING EXPENDITURE PERTAINING TO PRE-OCC UPATION PERIOD. A PERUSAL OF THE FINDINGS OF THE LD. CIT(A) REVEALS T HAT THE ASSESSEE HAD WORKED OUT INTEREST OF RS.5,31,008/- PERTAINING TO THE INTEREST ON LOAN FOR CONSTRUCTION PURPOSES. A PERUSAL OF THE SUBMISSION MADE BY THE ASSESSEE BEFORE THE CIT(A) AND ALSO HAVING REGARD TO THE FI NDINGS OF THE CIT(A) THAT THE OTHER BORROWED FUNDS HAD BEEN UTILIZED FOR DAY-TODAY ACTIVITIES OF THE BUSINESS, INTEREST ON SUCH FUND IS AN ALLOWA BLE EXPENDITURE. HENCE, THE ASSESSEE IS REQUIRED TO CAPITALIZE THE INTEREST PAID ON BORROWINGS, BEFORE THE PRE-OCCUPATION PERIOD. ACCORDINGLY, HAV ING REGARD TO THE PROVISIONS OF SECTION 36(1)(III) AND PROVISO THERE- UNDER EFFECTIVE FROM 01.04.2004, THE INTEREST TO THE EXTENT OF RS.5,31,0 08/- IS REQUIRED TO BE CAPITALIZED. CONSEQUENTLY, PROPORTIONATE INTEREST W.E.F. 16.03.2006 TO 31.03.2006 IS TO BE EXCLUDED. THEREFORE, THIS GROU ND OF APPEAL OF THE REVENUE IS DISMISSED. HOWEVER, WITH A VIEW TO APPRE CIATE THE FINDINGS OF THE CIT(A) ON ADMISSION OF THE SUBMISSIONS FILED, T HE RELEVANT AND OPERATIVE PART OF THE ORDER AS CONTAINED IN PARA 5. 3 IS REPRODUCED HEREUNDER: I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN THE WRITTEN SUBMISSIONS, THE ASSESSEE HAS ADMITTED THAT THE ASSESSEE SHIFTED IN THE NEW PREMISES W.E.F. 16.03.0 6 AND THE INTEREST UPTO 15.3.06 MAY BE CAPITALIZED. THE ASSES SEE HAS WORKED OUT THE INTEREST OF RS.5,31,008/- WHICH IS P ERTAINING TO THE INTEREST ON LOAN FOR CONSTRUCTION PURPOSE. IN M Y OPINION, THE OTHER FUNDS WHICH WERE BORROWED HAVE BEEN UTILI ZED FOR DAY-TODAY ACTIVITIES OF THE BUSINESS. SUCH INTEREST WOULD BE ALLOWED AS REVENUE EXPENDITURE. THE BIFURCATION OF INTEREST HAS BEEN GIVEN BY THE ASSESSEE IN HIS WRITTEN SUBMI SSIONS. IN MY VIEW, INTEREST TO THE EXTENT OF RS.5,31,008/- BE CAPITALIZED. ITA NO. 863/CHANDI/2009 ACIT V. DR. NEERAJ KUMAR 11 FROM THIS AMOUNT, THE PROPORTIONATE INTEREST FOR TH E PERIOD 16.3.06 TO 31.3.06 IS TO BE EXCLUDED. THIS GROUND O F THE ASSESSEE IS PARTLY ALLOWED. 21. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED ORDER PRONOUNCED ON 17.10.2011 SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNANT MEMBER CHANDIGARH, THE 17.10.2011 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE CIT(A) / THE DR