DR. ANSHU SAHAI, Jaipur V. DCIT, Jaipur

ITA 888/JPR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62028 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 20-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: MADHUKAR GARG CAAR
• Keywords: Depreciation; Onus to prove
• Section: 143(3); 145

Judgement Text

1 IN THE INCOME TAX APPELLATE T RIBUNAL JAIPUR BENCHE S A, JAIPUR BEFORE S/SHRI R.K. GUPTA, JM AND SANJAY ARORA, AM I.T.A NO. 888/JP/2011 ASSESSMENT YEAR: 2007-08 DR. ANSHU SAHAI, PROP: SAHAI HOSPITAL & RESEARCH CENTRE, SP-15, BHABHA MARG, TILAK NAGAR, JAIPUR [PAN: ACZPS 7300 N] VS THE DY. CIT, CIRCLE- 7, JAIPUR (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI MADHUKAR GARG, CA-AR REVENUE BY SHRI D.K. MEENA, JR DR DATE OF HEARING 10/05/2012 DATE OF PRONOUNCEMENT 01/06/2012 O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, JAIPUR (CIT(A) FOR S HORT) DATED 23-08-2011, PARTLY ALLOWING THE ASSESSEE'S APPEAL CONTESTING HIS ASSE SSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DATED 29-12-2009 FOR THE ASSESSMENT YEAR (A.Y.) 2007- 08. 2. THE ASSESSEE, AN INDIVIDUAL, IS A DOCTOR, RUNNIN G A HOSPITAL. ON BEING SUBSTANTIALLY UNSUCCESSFUL IN FIRST APPEAL AGAINST HIS ASSESSMENT OF INCOME UNDER THE ACT FOR THE RELEVANT YEAR, IS NOW IN SECOND APPEAL. THE FIRST G ROUND ASSUMED BY THE ASSESSEE CHALLENGES THE SUSTENANCE OF TWO DISALLOWANCES ON A CCOUNT OF ELECTRICITY EXPENSES IN THE SUM OF RS. 16,497/- AND RS. 70,000/-, AS BEING ILLE GAL, UNJUSTIFIED AND EXCESSIVE. WE SHALL 2 TAKE UP BOTH THE DISALLOWANCES SEPARATELY, BEING SE PARATE AND DISTINCT, THOUGH CLUBBED TOGETHER BY THE ASSESSEE PER ITS GROUND NO.1. THE D ISALLOWANCE FOR RS. 16,497/- IS IN RESPECT OF ELECTRICITY EXPENSE FOR AN APARTMENT IN A BUILDING BY THE NAME `HEERA PANNA. THE ASSESSEE CLAIMS THAT THE APARTMENT, BELONGING T O A CLOSE RELATIVE, IS BEING USED AS A CONFERENCE ROOM, I.E., FOR MEETING THE PATIENTS, ET C. AND, THUS, BEING USED ONLY FOR HIS BUSINESS/PROFESSIONAL PURPOSES. HOWEVER, AS THE ASS ESSEE COULD NOT EVIDENCE THE SAID CLAIM, DISALLOWANCE FOR RS. 76,900/-, REPRESENTING 10% OF TOTAL EXPENDITURE CLAIMED ON ELECTRICITY (RS.7.69 LACS), WHICH APPROXIMATED THE ELECTRICITY EXPENDITURE IN RESPECT OF THE SAID APARTMENT, WAS MADE. IN APPEAL, THE DISALLOWAN CE STOOD RESTRICTED TO RS. 16, 497/-, ON THE ASSESSEE LEADING EVIDENCE TO THE EFFECT THAT THE ACTUAL EXPENDITURE QUA THE SAID APARTMENT HAD BEEN WRONGLY ASSUMED BY THE AO, AND W AS IN FACT ONLY AT THE SAID AMOUNT. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE ASSESSEE HAS NOT BEEN ABLE TO IMPROVE ITS CASE IN ANY MANNER BEF ORE US, AS WAS ADMITTEDLY THE CASE ON BEING INQUIRED DURING HEARING BY THE BENCH. ACCORDI NGLY, WE FIND NO MERIT IN THE ASSESSEES CHALLENGE, AND CONFIRM THE DISALLOWANCE OF THE IMPUGNED AMOUNT OF RS. 16,497/-. WE DECIDE ACCORDINGLY. 4. THE SECOND DISALLOWANCE, I.E., FOR RS. 70,0 00/-, WAS EFFECTED AS THE SAME REPRESENTED THE AMOUNT PAID IN ADVANCE, WHILE THE A SSESSEE MAINTAINED HIS ACCOUNTS ON MERCANTILE BASIS, SO THAT THE SAME WOULD FALL TO BE DEDUCTIBLE ONLY IN THE YEAR OF ITS ACCRUAL. THE SAME STOOD CONFIRMED IN FIRST APPEAL, FOR, PRINCIPALLY, THE SAME REASONS. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL. 5. BEFORE US, IT WAS EXPLAINED BY THE ASSESSEE THAT THE ADVANCE WAS NO DOUBT PAID IN THE MONTH OF MARCH, 2007, BUT THE SAME WAS ONLY ON CONSIDERING AND TOWARD THE AMOUNT THAT HAD BEEN SINCE DETERMINED ON THE BASIS OF THE ELECTRIC METER READINGS. IN FACT, THE ASSESSEE HAD DULY DEBITED THE PRE-PAID EXPENSE ACCO UNT BY CREDITING THE ELECTRICITY 3 EXPENSE ACCOUNT AT A NET AMOUNT OF RS. 6,259/-, WHI CH REPRESENTS THE AMOUNT WHICH COULD BE SAID TO HAVE BEEN PAID IN ADVANCE. A CHART, BILL -WISE, FOR THE VARIOUS ELECTRICITY METERS, SHOWING THE BASIS OF THE NET PROVISION, BEING THE D IFFERENCE BETWEEN THE AMOUNT PREPAID (RS. 18,447/-) AND PAYABLE (RS. 12,188/-) (I.E., WH EN RECKONED SEPARATELY FOR DIFFERENT METERS), STANDS ALSO ADDUCED (REFER PB PGS. 1 AND 2 ). HOWEVER, THE SAME DID NOT FIND FAVOUR WITH THE LD. CIT(A), BEFORE WHOM THE SAME WA S ALSO PRODUCED, FOR THE REASON THAT THE CORRESPONDING BILLS FROM THE ELECTRICITY DEPART MENT WERE RECEIVED IN THE MONTH OF APRIL, 2007 (WRONGLY NOTED AS APRIL, 2008 BY THE LD . CIT(A)), WHICH, THOUGH, WOULD NOT IMPACT THE ACCRUAL OF THE LIABILITY. THE LD. DR, ON THE OTHER HAND, CONTENDED THAT IT IS ONLY ON THE RAISING OF THE BILL/S THAT THE CORRESPONDING LIABILITY CAN BE SAID TO HAVE CRYSTALLIZED OR BECOME DUE FOR PAYMENT, AND ITS ALLOWABILITY AS AN ACCRUED LIABILITY IN LAW ARISES. 6. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 6.1 THE ISSUE THAT THUS FALLS FOR OUR CONSIDERA TION AND, THEREFORE, ADJUDICATION, IS THE POINT OF TIME WHEN THE LIABILITY CAN BE SAID TO HAV E ARISEN. THIS IS AS UNDISPUTEDLY ALL THE BILLS IN THE PRESENT CASE STAND RAISED ONLY IN THE MONTH OF APRIL, 2007. IN FACT, THE AMOUNT DOES NOT BECOME DUE FOR PAYMENT IMMEDIATELY ON THE RAISING OF THE BILL, AS CERTAIN TIME LAG IS NECESSARY FOR ITS COMMUNICATION TO THE PAYER , BESIDES ALLOWANCE OF CERTAIN TIME PERIOD FOR EFFECTING THE PAYMENT IS ALSO NECESSARY. THE DUE DATE, WHICH REPRESENTS THE LAST DATE FOR PAYMENT, THOUGH NOT CLARIFIED, WOULD ONLY BE SUBSEQUENT TO THE RAISING OF THE BILL, WHICH ITSELF IS IN THE SECOND WEEK OF APRIL, 2007. THE REVENUES CASE IS THAT, BEING A CONTRACTUAL LIABILITY, THE RELEVANT DATE WOULD BE T HE DUE DATE OF PAYMENT IN TERMS OF THE CONTRACT, WHEREAT ONLY THE LIABILITY CAN BE SAID TO HAVE CRYSTALLIZED. IN ANY CASE, IT CANNOT BE PRIOR TO THE DATE OF THE RAISING OF THE RELEVANT BILL. IN OUR VIEW, THE SERVICES HAVING BEEN AVAILED, AND VALUED ONLY AT THE CONTRACTED RAT E, THE CORRESPONDING LIABILITY HAS ARISEN. 6.2 TRUE, THE LIABILITY CAN NOT BE SAID TO HAVE BECOME PAYABLE BY THE YEAR-END, WHICH IT IN FACT WOULD ONLY ON THE DUE DATE, BEFORE WHICH TH E SAME CANNOT BE ENFORCED, IN TERMS OF THE RELEVANT CONTRACT ITSELF. HOWEVER, THE QUESTION IS NOT WHETHER THE LIABILITY BECOMES 4 DUE FOR PAYMENT BY THE YEAR-END OR NOT, BUT WHETHER , THE CORRESPONDING SERVICES HAVING BEEN AVAILED OF, HAS THE ASSESSEE ASSUMED OR INCURR ED A LIABILITY IN ITS RESPECT. WITH REGARD TO THE ARGUMENT THAT THE PAYMENT HAS NOT BEC OME DUE FOR PAYMENT, SO THAT NO CONTRACTUAL LIABILITY CAN BE SAID TO HAVE ARISEN OR COULD BE ENFORCED, SUFFICE TO SAY THAT, THOUGH TRUE, BEING ONLY A MATTER OF FACT, WHAT HAS ARISEN, AND DEFINITELY, IS THE LIABILITY TO PAY A CERTAIN SUM BY A DEFINED, FUTURE DATE. IN THE INSTANT CASE, IF THE LIABILITY BECOMES DUE FOR PAYMENT ON, SAY, APRIL 20, FOLLOWING MARCH 31, 2007, THAT BY ITSELF IS RELEVANT AND SUFFICIENT FOR MAKING A CLAIM FOR EXPENDITURE I N ITS RESPECT, WHERE THE CORRESPONDING SERVICES STAND AVAILED OF DURING THE RELEVANT PREVI OUS YEAR FOR BUSINESS PURPOSES, AND ON WHICH THERE IS NO DOUBT. BOTH IN TERMS OF THE ACCEP TED ACCOUNTING PRINCIPLES, AS WELL AS THE ACCOUNTING STANDARDS 1 & 2, ISSUED BY THE CBDT U/S. 145 OF THE ACT, PROVISION IS TO BE MADE FOR ALL KNOWN LIABILITIES, WHICH IN FACT RE PRESENTS A FUNDAMENTAL ACCOUNTING ASSUMPTION, I.E., PRUDENCE. THE ONLY VALID ARGUMENT AGAINST THIS PROPOSITION THAT WOULD HOLD, MORE SO WHERE THE LIABILITY IS DUE FOR PAYMEN T ONLY AFTER A LAPSE OF CONSIDERABLE TIME, IS THAT THE SAME, TO BE VALIDLY CLAIMED, WOUL D HAVE TO BE SUITABLY DISCOUNTED, BEING NOT DUE FOR PAYMENT, THE AMOUNT OF WHICH, THOUGH, S TANDS CRYSTALLIZED. IN THE CONTEXT OF THE PRESENT CASE, IF, FOR EXAMPLE, THE ELECTRICITY DEPARTMENT HAS ALLOWED A CREDIT PERIOD OF ONE OR TWO YEARS FOR PAYMENT. THOUGH APPLICABLE IN PRINCIPLE FOR SHORTER PERIODS AS WELL, A DISCOUNTING FOR A FEW DAYS; THE LIABILITY, IN THE FACTS OF THE PRESENT CASE, BEING DUE FOR PAYMENT IN THE MONTH OF APRIL, 2007 ITSELF, WOULD R ESULT IN THE CLAIM FOR LIABILITY BEING REDUCED BY A FEW RUPEES, FOR WHICH A CLAIM WOULD AR ISE IN THE SUBSEQUENT PERIOD, ONLY CREATING AN UNNECESSARY TEDIUM. 6.3 THE LAW IN THE MATTER IS ABUNDANT AND WELL- SETTLED, HAVING BEEN CLARIFIED BY THE HIGHER COURTS ON A NUMBER OF OCCASIONS, FOR WHICH T HE FOLLOWING DECISIONS COME READILY TO MIND: ROTORK CONTROLS INDIA (P.) LTD. V. CIT (2009) 314 ITR 62 (SC); BHARAT EARTHMOVERS LTD. V. CIT (2000) 245 ITR 428 (SC); MADRAS INDUSTRIAL INVESTMENT CORPORATION V. CIT (1997) 225 ITR 802); CIT V. VINITEC CORPORATION (P.) LTD ., 278 ITR 5 337 (DEL); R.C. GUPTA V. CIT , 298 ITR 161 (DEL). THE ASSESSEE, THEREFORE, SUCCE EDS. WE DECIDE ACCORDINGLY. 7. THE NEXT ISSUE, RAISED PER GROUND NO. 4, IS IN RESPECT OF A DISALLOWANCE IN THE SUM OF RS. 11,42,678/- ON ACCOUNT OF NON-DEDUCTION OF T AX AT SOURCE ON TECHNICAL SERVICES COVERED U/S. 194J, I.E., BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. THE BRIEF FACTS IN THIS REGARD ARE THAT THE ASSESSEE IS A PRO PRIETOR OF AN OPTHOMATICAL HOSPITAL & RESEARCH CENTRE BY THE NAME `SAHAI HOSPITAL AND RES EARCH CENTRE AT JAIPUR. THE SAME IS ACCREDITED BY THE NATIONAL BOARD OF EXAMINATIONS, M INISTRY OF HEALTH AND FAMILY WELFARE, GOVT. OF INDIA, NEW DELHI, AS AN INSTITUTI ON FOR CONDUCTING VARIOUS TRAINING COURSES LEADING TO INTER ALIA DIPLOMA IN OPHTHAMALIC TECHNIQUES; DNB (DIPLOMATE OF NATIONAL BOARD); HOUSE OFFICER IN OPHTHALMOLOGY. ST IPEND IS PAID TO THE STUDENTS ENROLLED WITH THE INSTITUTION. THE SAME STANDS CONS IDERED BY THE REVENUE AS BEING A FEE FOR PROFESSIONAL AND TECHNICAL SERVICES, LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S. 194J OF THE ACT. AS NO TAX STOOD DEDUCTED THEREON, THE PROV ISION OF SECTION 40(A)(IA) WAS APPLIED. 8. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 8.1 THE ASSESSEE'S CASE IS THAT THE PAYEE-STUDEN TS, WHO ARE ALLOWED STIPEND, WORK AS APPRENTICES TOWARD ACQUIRING EXPERIENCE QUA THE CLINICAL AND PRACTICAL ASPECTS OF THEIR COURSES AND, THEREFORE, THE SAME IS NOT A FEE FOR E ITHER PROFESSIONAL OR TECHNICAL SERVICES. THE REVENUE'S CASE, ON THE OTHER HAND, IS THAT THE PAYMENT OF STIPEND TO THE PERSONS UNDERGOING VARIOUS ADVANCED COURSES, THOUGH NO DOUB T AN INTEGRAL PART OF THEIR PROGRAMS, YET, IS ONLY TOWARD SERVICES WHICH ARE PROFESSIONAL AND TECHNICAL IN NATURE, QUALIFYING FOR TAX DEDUCTION AT SOURCE U/S. 194J OF THE ACT. THE S AME BEING NOT DEDUCTED OR PAID, DISALLOWANCE U/S. 40(A)(IA) WOULD FOLLOW. 8.2 WE MAY, FIRSTLY, CLARIFY THAT THE PAYMENT I S NOT FOR PROFESSIONAL SERVICES, AS FOR THE SAME TO BE SO, THE SERVICES HAVE TO BE RENDERED BY THE PAYEE IN THE COURSE OF CARRYING ON HIS PROFESSION, WHICH IS DECIDEDLY NOT THE CASE, AS WOULD BE APPARENT FROM THE FOREGOING UNDISPUTED FACTS OF THE CASE. THE LD. CIT(A), WE FU RTHER OBSERVE, FOUND THE SAME TO BE IN 6 NATURE OF TECHNICAL SERVICES (AS AGAINST PROFESSION AL SERVICES, AS OBSERVED BY THE AO). WITH REGARD TO THE APPLICATION OF SECTION 194J, I.E ., QUA TECHNICAL SERVICES, IN OUR VIEW THE PAYMENTS UNDER REFERENCE WOULD NOT STAND TO BE COVE RED THERE-UNDER. THE PAYMENT IN FACT IS TO TWO CATEGORIES OF STUDENTS. THE FIRST, AT RS. 3,62,938/-, IS TO UNDER-GRADUATE STUDENTS, UNDERGOING THREE-YEAR DIPLOMA IN OPHTHALMOLOGY, LEA DING TO THE QUALIFICATION OF AN OPHTHALMOLOGY ASSISTANT, PAID DURING THIRD (FINAL) YEAR OF THEIR COURSE. THE STUDENTS ARE ENROLLED FOR THE PROGRAM AFTER PASSING CLASS 12. IT IS ONLY AFTER THE SUCCESSFUL COMPLETION OF THIS PROGRAM THAT THEY WOULD QUALIFY AS PROFESSI ONALS, CAPABLE OF RENDERING EITHER PROFESSIONAL OR TECHNICAL SERVICES. THE SAME IS ONL Y AN ALLOWANCE TO AN APPRENTICE OR AN INTERN, RIGHTLY TERMED AS A STIPEND, WHICH IS DEFIN ED AS A SUM OF MONEY PAID TO THE STUDENTS FOR LIVING EXPENSES. 8.3 AS REGARDS THE BALANCE PAYMENT (OF RS. 7,79 ,740/-) TO THE DOCTORS UNDERGOING POST GRADUATION; RATHER SUPER-SPECIALTY COURSES, THE SAM E ARE HIGHLY TECHNICAL COURSES, ADMISSION TO WHICH IT IS SEVERELY RESTRICTED AND RE GULATED, AND ONLY UPON MEETING HIGH STANDARDS OF PROFESSIONAL COMPETENCE PRESCRIBED FOR THE PURPOSE. THE HOSPITAL IS ENGAGED IN BASIC, CLINICAL AND OPERATIONAL RESEARCH ACTIVIT IES. THE NATURE OF SERVICE RENDERED BY THE DOCTORS IS, WITHOUT DOUBT, HIGHLY TECHNICAL IN NATU RE; RATHER, PERFORMED IN THE SAME MANNER, I.E., WITH THE SAME DEGREE OF PROFICIENCY, AS WOULD BE BY THE OTHER RESIDENT OR EMPLOYED DOCTORS OF THE INSTITUTE. SO, HOWEVER, THE STIPEND PAID TO THEM CANNOT BE REGARDED AS A FEE CHARGED BY THEM TOWARD THE SERVIC ES RENDERED BY THEM; THE SAME BEING A NECESSARY PART OF THEIR PROGRAM, AND WHICH THEY A RE OBLIGED TO UNDERTAKE FOR THE SUCCESSFUL COMPLETION OF THEIR COURSE. IT IS ONLY W HEN WHAT CHARGED IS BY WAY OF A `FEE THAT THE PROVISION OF SECTION 194J WOULD STAND TO B E ATTRACTED. THE PAYMENT TO THE DOCTORS, IRRESPECTIVE OF ITS NOMENCLATURE, WHICH CA NNOT BE DETERMINATIVE THOUGH, WOULD NOT THUS QUALIFY TO BE TERMED AS A FEE, WHICH, BY D EFINITION, IS THE AMOUNT THAT ONE PAYS OR IS TO BE PAID TO ALLOW A PERSON TO DO SOMETHING. AN D, CORRESPONDINGLY, ENTITLE THE PAYER TO A PARTICULAR FACILITY, VIZ. ENTRANCE FEE, COLLEGE F EE, ETC. SPEAKING IN THE CONTEXT OF THE PRESENT CASE, IT IS RATHER THE PAYMENT BY THE DOCTO R-STUDENTS, IF ANY, TO THE INSTITUTE, FOR 7 BEING ALLOWED TO UNDERGO THE ACADEMIC AND PRACTICAL TRAINING, EVEN IF IN PURSUANCE TO A RECOGNIZED STUDY PROGRAM OR PROFESSIONAL COURSE, TH AT WOULD QUALIFY TO BE A FEE. THE PAYMENT ALLOWED TO THE DOCTORS, THOUGH FIXED WITH R EFERENCE TO THEIR PROFESSIONAL QUALIFICATION, INCLUDING WORK EXPERIENCE, IS, IN OU R VIEW, ESSENTIALLY NOT A CHARGE AGAINST THE SERVICES RENDERED BY THEM, BUT ONLY A STIPEND, BY WAY OF A LIVING ALLOWANCE, ALLOWED THERETO. 8.4 AS SUCH, NO PART OF THE IMPUGNED AMOUNT OF RS. 11.43 LACS IS EXIGIBLE TO DEDUCTION OF TAX AT SOURCE U/S. 194J OF THE ACT. THE ASSESSEE BEFORE US HAS ALSO RELIED UPON, IN THE ALTERNATIVE, A RECENT SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS VS. ADDL. CIT , 70 DTR 81 (VISH.) (SB), AND WHICH WOULD FURTHER S UPPORT ITS CASE. PER THE SAID DECISION, WHICH IS BINDING ON US , IT STANDS HELD THAT THE PROVISION OF SECTION 40(A)(IA) WOULD APPLY ONLY TO THE AMOUNT OU TSTANDING AS AT THE YEAR-END. THE ASSESSEES ALTERNATE GROUND IS ALSO TO BE ALLOWED, EVEN AS WE HAVE ALREADY FOUND THAT NO AMOUNT OF STIPEND IS LIABLE FOR DISALLOWANCE U/S. 4 0(A)(IA) OF THE ACT. THE ASSESSEE SUCCEEDS. WE DECIDE ACCORDINGLY. 9. THE THIRD ISSUE IN THE PRESENT APPEAL IS QUA DISALLOWANCE IN RESPECT OF HOSPITAL MAINTENANCE EXPENSES (RS. 20,601/-); REPAIR AND MAI NTENANCE (RS. 91,812/-); AND EXPENSES ON ELECTRICITY, TELEPHONE, PETROL DIESEL A ND CAR DEPRECIATION, AT RS. 1,34,266/-. THE SAME STOOD DISALLOWED AND CONFIRMED AT 20% OF T HE AMOUNT CLAIMED IN RESPECT OF THE SAID EXPENSES IN VIEW OF THE EXPENDITURE BEING NOT PROPERLY VOUCHED AND BOOKED PER INTERNAL VOUCHERS, SO THAT THE EXPENDITURE IS NOT A MENABLE TO PROPER VERIFICATION. RELIANCE STANDS PLACED BY THE REVENUE ON THE DECISION IN THE CASE OF KANHAIYA LAL JANGID V. ASSTT. CIT , 217 CTR 354 (RAJ.), WHEREIN DISALLOWANCE ON LUMPS UM BASIS IN THE ABSENCE OF RELEVANT DETAILS, FOUND THE APPROVAL BY THE HON'BLE JURISDICTIONAL HIGH COURT. THE DISALLOWANCE STOOD CONFIRMED IN APPEAL FOR THE SAME REASONS. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 8 10. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE'S CASE, AS WE DISCERN FROM ITS WRITTEN SUBMISSIONS, IS THAT NO ITEM OF DISALLOWABLE NATURE HAS BEEN POINTED OUT BY THE REVENUE. THE ONUS TO PROVE THE EXPENDITURE TO THE SATISFACTION OF THE AO IS ON THE ASSESSEE. BESIDES, THE EXPENDITURE CLAIMED IS U/S. 37(1), WHICH, THEREFORE, HAS NECESSARILY TO BE PROVED AS HAVING B EEN ACTUALLY INCURRED AND, FURTHER, WHOLLY AND EXCLUSIVELY OF THE PURPOSE OF THE ASSESS EE'S BUSINESS. WHEN THE FACTUM OF THE EXPENDITURE IS NOT PROVED, WHICH CAN ONLY BE ON THE BASIS OF SOME RELIABLE EVIDENCES/ MATERIALS, WHICH HAVE BEEN FOUND MISSING IN THE PRE SENT CASE, A PART DISALLOWANCE BY THE REVENUE CANNOT BE FAULTED WITH. THE ASSESSEE HAS, A PART FROM RELYING ON CASE LAW, NOT SUBSTANTIATED ITS CASE IN ANY MANNER. THE MATTER, A S WOULD BE APPARENT FROM THE FOREGOING ANALYSIS, WITH THE LAW IN THE MATTER BEING TRITE, I S PURELY FACTUAL, I.E., WHETHER THE ASSESSEE HAS BEEN ABLE TO PROVE ITS CLAIM OF HAVING INCURRED THE IMPUGNED EXPENDITURE AND, FURTHER, ONLY FOR THE PURPOSES OF ITS BUSINESS. THE RELIANCE ON CASE LAW, DE HORS THE FACTS, WOULD THUS BE OF LITTLE ASSISTANCE. HOWEVER, AS NO BASIS FOR QUANTIFICATION OF THE DISALLOWANCE AT 20% HAS BEEN SPECIFIED BY THE REVEN UE FOR US TO ASCERTAIN THE REASONABILITY THEREOF, WITH NO MENTION OF THE EXPEN DITURE INCURRED IN THE PAST, WE ARE INCLINED TO RESTRICT THE SAME TO 10%, AS AGAINST 20 % BY THE REVENUE, WHICH IN OUR VIEW WOULD MEET THE ENDS OF JUSTICE. WE DECIDE ACCORDING LY. 11. THE LAST GROUND IS AGAINST THE SUSTENANCE OF AN ADDITION IN THE SUM OF RS. 5.03 LACS IN RESPECT OF THE DISCOUNT ALLOWED BY THE ASSESSEE, AT RS. 1 LAC. THE ASSESSEES GROSS RECEIPT OF RS. 201.21 LACS WAS FOUND TO BE AT NET O F DISCOUNT ALLOWED BY IT, WHICH WAS FOUND TO BE AT ABOUT 5% OF THE BILLED AMOUNT. THE A SSESSEE WAS REQUIRED TO FURNISH THE TOTAL AMOUNT OF DISCOUNT ALLOWED, AND WHICH WAS EXP LAINED BY HIM AS NOT FEASIBLE IN VIEW OF THE VOLUMINOUS RECORD. THE DISCOUNT WAS THUS CON SIDERED AS HAVING BEEN ALLOWED AT 5% ON THE ENTIRE RECEIPT AND, THUS, CLAIMED IN THE SUM OF RS. 10.06 LACS. THE ASSESSEE HAVING BEEN UNABLE TO PROVE THE BUSINESS PURPOSE IN ALLOWING THE SAME (DISCOUNT), 50% THEREOF, I.E., RS. 5.03 LACS, STOOD DISALLOWED. IN APPEAL, THE LD. CIT(A) FOUND THE ASSESSEES BOOKS AS BEARING ONLY MINOR DISCREPANCIE S AND DEFECTS, SO THAT THEY WERE NOT 9 LIABLE FOR REJECTION U/S. 145(3) OF THE ACT. SO, HO WEVER, AS THE INCRIMINATING ASPECTS, AS POINTED OUT BY THE AO, HAD NOT BEEN MET, HE SUSTAIN ED THE ADDITION AT RS. 1.00 LAC TO COVER THE LEAKAGE OF INCOME, IF ANY. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 12. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. OUR FIRST OBSERVATION IS THAT THE ADDITION IS NOT ON ACCOUNT OF ENHANCEMENT IN INCOME, AS STATED BY THE AO, WHO IN FACT HAS DISALLOWED THE DISCOUNT PRE SUMED TO HAVE BEEN ALLOWED BY THE ASSESSEE ON HIS RECEIPTS. WE FIND NO BASIS WHATSOEV ER, INCLUDING THE ABSENCE OF THE PATIENT REGISTER, TO INFER THE ASSESSEE AS HAVING A LLOWED THE DISCOUNT AGAINST EVERY BILL RAISED BY IT AND, SECONDLY, OF THE SAME BEING NOT G ENUINE. WE, THEREFORE, FIND NO MERIT IN HIS SUSTENANCE OF THE SAID DISALLOWANCE BY THE LD. CIT(A). THE SAME IS THEREFORE DELETED. WE DECIDE ACCORDINGLY. 13. IN THE RESULT, THE ASSESSEE'S APPEAL IS PART LY ALLOWED. SD/- SD/- (R.K. GUPTA) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: JAIPUR, DATED: JUNE 1, 2012 *MISHRA COPY TO: 1. DR. ANSHU SAHAI, PROP. M/S. SAHAI HOSPITAL & RE SEARCH CENTRE, JAIPUR 2. THE DCIT, CIRCLE- 7, JAIPUR 3. THE CIT (APPEALS)-III, JAIPUR 4. THE CIT CONCERNED 5. THE D.R., I.T.A.T. 6. GUARD FILE (ITA NO.888/JP/2011) BY ORDER (ASSISTANT REGISTRAR) ITAT, JAIPUR BENCHES